Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date: April 25, 2017

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces 2017 First Quarter Earnings

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three month period ended March 31, 2017. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective November 14, 2016.

SUMMARY:

Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the same period in 2016. The first quarter of 2017 represents an excellent start to the year given that the first quarter is typically a seasonal low revenue point for Horizon.

Net income, excluding acquisition-related expenses, gain on sale of investment securities and purchase accounting adjustments (“core net income”), for the first quarter of 2017 increased 38.9% to $7.5 million or $0.34 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the same period of 2016.

Return on average assets was 1.07% for the first quarter of 2017 compared to 0.83% for the same period in 2016.

Net interest income for the first quarter of 2017 increased $5.8 million, or 29.3%, compared to the same period in 2016.

Net interest margin was 3.80% for the first quarter of 2017 compared to 2.92% for the prior quarter and 3.45% for the same period in 2016. The improvement in net interest margin reflects Horizon’s execution on its plan to reduce expensive funding costs, which was accomplished in the fourth quarter of 2016.

Net interest margin, excluding the impact of prepayment penalties on borrowings and purchase accounting adjustments (“core net interest margin”), was 3.66% for the first quarter of 2017 compared to 3.45% for the prior quarter and 3.36% for the same period in 2016.

Horizon’s tangible book value per share rose to $11.79 at March 31, 2017, compared to $11.48 at December 31, 2016.

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Pg. 2 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Commercial loans, excluding acquired commercial loans, increased by an annualized rate of 12.8%, or $33.8 million, during the first quarter of 2017.

Consumer loans, excluding acquired consumer loans, increased by an annualized rate of 18.8%, or $18.5 million, during the first quarter of 2017.

On February 3, 2017, Horizon completed the purchase and assumption of certain assets and liabilities of a single branch of First Farmers Bank & Trust Company located in Bargersville, Indiana. The acquired office was closed and consolidated into Horizon’s existing Bargersville location.

Our Grand Rapids team moved to their new downtown loan production office during February 2017. This office was approved to continue as a full service branch which will take place in the second quarter of 2017.

Early in the second quarter, Horizon hired two additional seasoned commercial lenders for our Fort Wayne, Indiana loan production office.

At the beginning of the second quarter of 2017, Michael Lamping, joined Horizon as Central Ohio Market President. A loan production office will be opened in the greater Columbus, Ohio area during the second quarter of 2017 and will focus on commercial business.

Horizon received regulatory approval to open a new office in Noblesville, Indiana, which will be open later this year.

Horizon, for the first time, hired a corporate general legal counsel in the first quarter. The objective for this position is, in part, to better manage legal costs and to more closely monitor changes in the regulatory and legal landscape.

Craig Dwight, Chairman and CEO, commented: “During the first quarter of 2017, Horizon’s business model of diversified and balanced revenue streams was proven to be effective as an increase in commercial and consumer lending helped to offset the seasonal low in residential mortgage revenues. Excluding non-core items, Horizon realized an increase in net income of $2.1 million, or 38.9%, in the first quarter of 2017 when compared to the same period of 2016 resulting in an increase in core diluted earnings per share of 13.3%. Core net interest margin increased in the first quarter of 2017 to 3.66% from 3.36% for the same period in 2016. Horizon also realized solid growth in service charges on deposit accounts of 8.7%, interchange fees of 26.3% and fiduciary activities of 17.6% in the first quarter of 2017 when compared to the same period in 2016.”

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Pg. 3 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Mr. Dwight continued, “Although commercial and consumer loan growth was strong in the first quarter of 2017, total loan growth was tempered by a decrease in our mortgage warehouse portfolio. Excluding acquired loans, commercial loan growth increased by an annual rate of 12.8% and was fueled by our growth markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo, which combined produced total loan growth of $39.7 million for the quarter. Additionally, consumer loans, excluding acquired consumer loans, increased by 18.8% on an annualized basis during the quarter as a result of a new seasoned consumer loan portfolio manager in the third quarter of 2016 and increasing our focus on the management of direct consumer loans. The increases in commercial and consumer loans were offset by a decrease in mortgage warehouse loans of $46.4 million from December 31, 2016 to March 31, 2017. The decrease in mortgage warehouse loans was primarily due to quicker turn-around times by the end investors to fund loans which resulted in a lower average balance in the portfolio during the first quarter of 2017. With our established presence in the growth markets of Kalamazoo and Indianapolis, coupled with our recent investments in Fort Wayne, Grand Rapids and Columbus, Horizon is well positioned to continue our growth momentum. In addition, Horizon’s solid growth in trust and service fee income has contributed to our plan to decrease dependence on margin income. ”

Dwight concluded, “We are pleased to have completed the purchase of certain assets totaling $3.5 million and the assumption of certain deposits totaling $14.8 million from First Farmers Bank & Trust Company’s Bargersville, Indiana branch which closed on February 3, 2017, enhancing our presence in this attractive and growing central Indiana market.”

Income Statement Highlights

Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.6 million or $0.25 diluted earnings per share for the fourth quarter of 2016. The increase in net income and diluted earnings per share from the previous quarter reflects increases in net interest income of $4.6 million and a decrease in non-interest expense and provision for loan losses of $1.1 million and $293,000, respectively, which was partially offset by a decrease in non-interest income of $1.9 million and an increase in income tax expense of $1.4 million. Interest expense decreased $5.2 million primarily due to prepayment penalties on borrowings of $4.8 million during the fourth quarter of 2016. Interest income decreased $555,000 due to a decrease in loan interest income of $924,000, offset by an increase in interest on investment securities of $369,000 during the first quarter of 2017. The decrease in loan interest income was primarily due to the decrease in mortgage warehouse loan balances in the first quarter. The decrease in non-interest income was primarily due to a decrease in the gain on sale of investments of $926,000 and a decrease in gain on mortgage loan sales of $590,000.

Net income for the first quarter of 2017 was $8.2 million or $0.37 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share for the first quarter of 2016. The increase in net income and diluted earnings per share from the same period of 2016 reflects increases in net interest income and non-interest income of $5.8 million and $172,000, respectively, and a decrease in provision for loan losses of $202,000, partially offset by an increase in non-interest expense and income tax expense of $2.3 million and $1.1 million, respectively.

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Pg. 4 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

The increase in diluted earnings per share was partially offset by an increase in dilutive shares outstanding as a result of the stock issued in the Kosciusko Financial, Inc. and LaPorte Bancorp, Inc. acquisitions in 2016. Excluding acquisition-related expenses, gain on sale of investment securities and acquisition-related purchase accounting adjustments, net income for the first quarter of 2017 was $7.5 million or $0.34 diluted earnings per share compared to $5.4 million or $0.30 diluted earnings per share in the first quarter of 2016.

Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
(Dollars in Thousands Except per Share Data)

	Three Months Ended
	March 31
Non-GAAP Reconciliation of Net Income	2017			2016
	(Unaudited)
Net income as reported	$	8,224		$	5,381
Merger expenses		-			639
Tax effect		-			(165	)
Net income excluding merger expenses		8,224			5,855

Gain on sale of investment securities		(35	)		(108	)
Tax effect		12			38
Net income excluding gain on sale of investment securities		8,201			5,785

Acquisition-related purchase accounting adjustments (“PAUs”)		(1,016	)		(547	)
Tax effect		356			191
Net income excluding PAUs	$	7,541		$	5,429

Non-GAAP Reconciliation of Diluted Earnings per Share
Diluted earnings per share as reported	$	0.37		$	0.30
Merger expenses		-			0.04
Tax effect		-			(0.01	)
Diluted earnings per share excluding merger expenses		0.37			0.33

Gain on sale of investment securities		(0.00	)		(0.01	)
Tax effect		0.00			0.00
Net income excluding gain on sale of investment securities		0.37			0.32

Acquisition-related PAUs		(0.05	)		(0.03	)
Tax effect		0.02			0.01
Diluted earnings per share excluding PAUs	$	0.34		$	0.30

Horizon’s net interest margin was 3.80% during the first quarter of 2017, up from 2.92% for the prior quarter and 3.45% for same period of 2016. The increase in the net interest margin compared to the prior quarter was primarily due to prepayment penalties incurred on high fixed-rate borrowings as part of Horizon’s balance sheet restructuring transaction in the fourth quarter of 2016 in addition to a decrease in average outstanding borrowings. Average outstanding borrowings during the first quarter of 2017 were $132.3 million and $156.8 million lower when compared to the prior quarter and the same prior-year period.

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Pg. 5 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

The increase in the net interest margin compared to the same period of 2016 was primarily due to an increase in the yield earned on loans and a decrease in the cost of borrowings. Excluding prepayment penalties on borrowings and acquisition-related purchase accounting adjustments, the margin would have been 3.66% for the first quarter of 2017 compared to 3.45% for the prior quarter and 3.36% for the same period of 2016. Interest expense from the prepayment penalties on borrowings was $4.8 million for the fourth quarter of 2016. Interest income from acquisition-related purchase accounting adjustments was $1.0 million, $900,000 and $547,000 for the three months ended March 31, 2017, December 31, 2016, and March 31, 2016, respectively.

Non-GAAP Reconciliation of Net Interest Margin

(Dollars in Thousands, Unaudited)

	Three Months Ended
	March 31			December 31			March 31
Net Interest Margin As Reported	2017			2016			2016
Net interest income	$	25,568		$	20,939		$	19,774
Average interest-earning assets		2,797,429			2,932,145			2,367,250
Net interest income as a percent of average interest-earning assets (“Net Interest Margin”)		3.80	%		2.92	%		3.45	%

Impact of Prepayment Penalties on Borrowings
Interest expense from prepayment penalties on borrowings	$	-		$	4,839		$	-

Impact of Acquisitions
Interest income from acquisition-related purchase accounting adjustments	$	(1,016	)	$	(900	)	$	(547	)

Excluding Impact of Prepayment Penalties and Acquisitions
Net interest income	$	24,552		$	24,878		$	19,227
Average interest-earning assets		2,797,429			2,932,145			2,367,250
Core Net Interest Margin		3.66	%		3.45	%		3.36	%

Lending Activity

Total loans increased $4.7 million from $2.144 billion as of December 31, 2016 to $2.149 billion as of March 31, 2017 as commercial loans increased by $36.5 million, residential mortgage loans increased by $1.8 million and consumer loans increased by $19.0 million. Offsetting these increases was a decrease in mortgage warehouse loans of $46.4 million as of March 31, 2017. Total loans, excluding acquired loans, mortgage warehouse loans and loans held for sale, increased 2.7% for the three months ended March 31, 2017. Commercial and consumer loans, excluding acquired loans, increased $33.8 million, or an annualized growth rate of 12.8%, and $18.5 million, or an annualized growth rate of 18.8%, respectively.

Loan balances in the Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo totaled $436.8 million as of March 31, 2017. Combined, these markets contributed $39.7 million, or 10.0%, in loan growth during the three months ended March 31, 2017.

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Pg. 6 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Loan Growth by Type, Excluding Acquired Loans
Three Months Ended March 31, 2017
(Dollars in Thousands)
											Excluding Acquired Loans

	March 31		December 31		Amount			Acquired			Amount			Percent
	2017		2016		Change			FFBT Loans			Change			Change
	(Unaudited)		(Unaudited)
Commercial loans	$	1,106,471	$	1,069,956	$	36,515		$	(2,742	)	$	33,773			3.2	%
Residential mortgage loans		533,646		531,874		1,772			(59	)		1,713			0.3	%
Consumer loans		417,476		398,429		19,047			(562	)		18,485			4.6	%
Subtotal		2,057,593		2,000,259		57,334			(3,363	)		53,971			2.7	%
Held for sale loans		1,789		8,087		(6,298	)		-			(6,298	)		-77.9	%
Mortgage warehouse loans		89,360		135,727		(46,367	)		-			(46,367	)		-34.2	%
Total loans	$	2,148,742	$	2,144,073	$	4,669		$	(3,363	)	$	1,306			0.1	%

Residential mortgage lending activity during the three months ended March 31, 2017 generated $1.9 million in income from the gain on sale of mortgage loans, a decrease of $137,000 from the same period of 2016. Total origination volume for the three months ended March 31, 2017, including loans placed into portfolio, totaled $65.9 million, representing a decrease of 17.0% from the same period of 2016. The decrease in mortgage loan origination volume is primarily due to an increase in mortgage loan interest rates when comparing the first quarter of 2017 to the same period of 2016. Purchase money mortgage originations during the first quarter of 2017 represented 69.8% of total originations compared to 68.0% of originations during the previous quarter and 65.3% during the first quarter of 2016.

The provision for loan losses was $330,000 for the first quarter of 2017 compared to $532,000 for the same period of 2016. The decrease in the provision for loan losses during the first quarter of 2017 was due to lower charge-offs, stable delinquency trends and a decrease in non-performing loans.

The ratio of the allowance for loan losses to total loans increased to 0.70% as of March 31, 2017 from 0.69% as of December 31, 2016 due to an increase in allowance for loan losses. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.89% as of March 31, 2017 compared to 0.91% as of December 31, 2016. Loan loss reserves and credit-related loan discounts on acquired loans as a percentage of total loans was 1.31% as of March 31, 2017 compared to 1.39% as of December 31, 2016.

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Pg. 7 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Non- GAAP Allowance for Loan and Lease Loss Detail
As of March 31, 2017
(Dollars in Thousands, Unaudited)

	Horizon
	Legacy			Heartland			Summit			Peoples			Kosciusko			LaPorte			CNB			Total
Pre-discount loan balance	$	1,681,167		$	14,698		$	51,026		$	139,602		$	75,151		$	189,149		$	9,485		$	2,160,278

Allowance for loan losses (ALLL)		14,983			71			-			-			-			-			-			15,054
Loan discount		N/A			867			2,431			3,260			994			5,466			307			13,325
ALLL+loan discount		14,983			938			2,431			3,260			994			5,466			307			28,379

Loans, net	$	1,666,184		$	13,760		$	48,595		$	136,342		$	74,157		$	183,683		$	9,178		$	2,131,899

ALLL/ pre-discount loan balance		0.89	%		0.48	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.70	%
Loan discount/ pre-discount loan balance		N/A			5.90	%		4.76	%		2.34	%		1.32	%		2.89	%		3.24	%		0.62	%
ALLL+loan discount/ pre-discount loan balance		0.89	%		6.38	%		4.76	%		2.34	%		1.32	%		2.89	%		3.24	%		1.31	%

Non-performing loans to total loans decreased 4 basis points to 0.46% at March 31, 2017 from 0.50% at December 31, 2016. Non-performing loans totaled $9.8 million as of March 31, 2017, a decrease of $849,000 from $10.7 million as of December 31, 2016. Compared to December 31, 2016, non-performing commercial loans decreased by $902,000, non-performing real estate loans increased by $35,000 and non-performing consumer loans increased $18,000.

Expense Management

Total non-interest expense was $2.3 million higher in the first quarter of 2017 compared to the same period of 2016. The increase was primarily due to an increase in salaries and employee benefits of $1.6 million, net occupancy expenses of $516,000, data processing expenses of $202,000, and other expenses of $431,000 reflecting overall company growth, market expansion and recent acquisitions. Professional fee expense decreased $218,000 in the first quarter of 2017 when compared to the same period of 2016 primarily due to one-time expenses related to the Kosciusko Financial, Inc. and LaPorte Bancorp, Inc. acquisitions in 2016. Other losses decreased $217,000 in the first quarter of 2017 when compared to the same period of 2016 due to a decrease in debit card fraud-related expense. FDIC insurance expense decreased $142,000 in the first quarter of 2017 when compared to the same period of 2016 as the assessment rate schedule was reduced effective for assessment payments due in the fourth quarter of 2016 and 2017.

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Pg. 8 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures of the net interest margin and the allowance for loan and lease losses excluding the impact of acquisition-related purchase accounting adjustments, total loans and loan growth, 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. See the tables and other information contained elsewhere in this press release for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.

Non-GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands Except per Share Data)

	March 31		December 31		March 31
	2017		2016		2016
	(Unaudited)				(Unaudited)
Total stockholders’ equity	$	348,575	$	340,855	$	261,417
Less: Preferred stock		-		-		-
Less: Intangible assets		87,094		86,307		56,695
Total tangible stockholder’s equity	$	261,481	$	254,548	$	204,722

Common shares outstanding		22,176,465		22,171,596		17,974,970

Tangible book value per common share	$	11.79	$	11.48	$	11.39

About Horizon

Horizon Bancorp is an 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.

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Pg. 9 cont. Horizon Bancorp Announces 2017 First Quarter Earnings

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon. For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time

in Horizon’s reports filed with the Securities and Exchange Commission, including those described in its Form 10-K. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

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

# # #

HORIZON BANCORP

Financial Highlights

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

	March 31			December 31			September 30			June 30			March 31
	2017			2016			2016			2016			2016
Balance sheet:
Total assets	$	3,169,643		$	3,141,156		$	3,325,650		$	2,918,080		$	2,627,918
Investment securities		673,090			633,025			744,240			628,935			642,767
Commercial loans		1,106,471			1,069,956			1,047,450			874,580			797,754
Mortgage warehouse loans		89,360			135,727			226,876			205,699			119,876
Residential mortgage loans		533,646			531,874			530,162			493,626			442,806
Consumer loans		417,476			398,429			386,031			363,920			359,636
Earning assets		2,845,922			2,801,030			2,963,005			2,591,208			2,379,830
Non-interest bearing deposit accounts		502,400			496,248			479,771			397,412			343,025
Interest bearing transaction accounts		1,432,228			1,499,120			1,367,285			1,213,659			1,118,617
Time deposits		509,071			475,842			489,106			471,190			416,837
Borrowings		319,993			267,489			569,908			492,883			430,507
Subordinated debentures		37,516			37,456			37,418			32,874			32,836
Total stockholders’ equity		348,575			340,855			345,736			281,002			261,417

Income statement:	Three months ended
Net interest income	$	25,568		$	20,939		$	24,410		$	20,869		$	19,774
Provision for loan losses		330			623			455			232			532
Non-interest income		7,559			9,484			9,318			9,266			7,387
Non-interest expenses		21,521			22,588			24,082			20,952			19,270
Income tax expense		3,052			1,609			2,589			2,625			1,978
Net income		8,224			5,603			6,602			6,326			5,381
Preferred stock dividend		-			-			-			-			(42	)
Net income available to common shareholders	$	8,224		$	5,603		$	6,602		$	6,326		$	5,339

Per share data:
Basic earnings per share (1)	$	0.37		$	0.25		$	0.31		$	0.35		$	0.30
Diluted earnings per share (1)		0.37			0.25			0.30			0.34			0.30
Cash dividends declared per common share (1)		0.11			0.11			0.10			0.10			0.10
Book value per common share (1)		15.72			15.37			15.61			14.90			14.54
Tangible book value per common share		11.79			11.48			11.83			11.45			11.39
Market value - high		28.09			28.41			20.01			16.76			18.59
Market value - low	$	24.91		$	17.84		$	16.61		$	15.87		$	15.41
Weighted average shares outstanding - Basic		22,175,526			22,155,549			21,538,752			18,268,880			17,924,124
Weighted average shares outstanding - Diluted		22,326,071			22,283,722			21,651,953			18,364,167			18,012,726

Key ratios:
Return on average assets		1.07	%		0.69	%		0.80	%		0.94	%		0.83	%
Return on average common stockholders’ equity		9.66			6.49			7.88			9.43			8.26
Net interest margin		3.80			2.92			3.37			3.48			3.45
Loan loss reserve to total loans		0.70			0.69			0.66			0.73			0.83
Non-performing loans to loans		0.46			0.50			0.58			0.68			0.87
Average equity to average assets		11.12			10.59			10.18			9.94			10.16
Bank only capital ratios:
Tier 1 capital to average assets		10.26			9.93			9.65			9.39			8.98
Tier 1 capital to risk weighted assets		13.40			13.33			12.73			12.51			12.33
Total capital to risk weighted assets		14.05			13.98			13.34			13.23			13.10

Loan data:
Substandard loans	$	30,865		$	30,361		$	33,914		$	28,629		$	23,600
30 to 89 days delinquent		5,476			6,315			3,821			2,887			2,149

90 days and greater delinquent - accruing interest	$	245		$	241		$	59		$	24		$	1
Trouble debt restructures - accruing interest		1,647			1,492			1,523			1,256			1,231
Trouble debt restructures - non-accrual		998			1,014			1,164			1,466			2,857
Non-accrual loans		6,944			7,936			10,091			10,426			10,895
Total non-performing loans	$	9,834		$	10,683		$	12,837		$	13,172		$	14,984

(1) Adjusted for 3:2 stock split on November 14, 2016.

HORIZON BANCORP

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands, Unaudited)

	March 31		December 31		September 30		June 30		March 31
	2017		2016		2016		2016		2016
Commercial	$	7,600	$	6,579	$	6,222	$	6,051	$	6,460
Real estate		1,697		2,090		1,947		2,102		1,794
Mortgage warehousing		1,042		1,254		1,337		1,080		1,014
Consumer		4,715		4,914		5,018		4,993		4,968
Total	$	15,054	$	14,837	$	14,524	$	14,226	$	14,236

Net Charge-offs (Recoveries)

(Dollars in Thousands, Unaudited)

	Three months ended
	March 31			December 31		September 30			June 30			March 31
	2017			2016		2016			2016			2016
Commercial	$	(134	)	$	49	$	(5	)	$	101		$	403
Real estate		38			64		-			(31	)		83
Mortgage warehousing		-			-		-			-			-
Consumer		209			197		162			172			344
Total	$	113		$	310	$	157		$	242		$	830

Total Non-performing Loans

(Dollars in Thousands, Unaudited)

	March 31		December 31		September 30		June 30		March 31
	2017		2016		2016		2016		2016
Commercial	$	1,530	$	2,432	$	5,419	$	4,330	$	5,774
Real estate		5,057		5,022		4,251		5,659		5,974
Mortgage warehousing		-		-		-		-		-
Consumer		3,247		3,229		3,108		3,183		3,236
Total	$	9,834	$	10,683	$	12,778	$	13,172	$	14,984

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands, Unaudited)

	March 31		December 31		September 30		June 30		March 31
	2017		2016		2016		2016		2016
Commercial	$	542	$	542	$	542	$	542	$	424
Real estate		2,413		2,648		3,182		2,925		3,393
Mortgage warehousing		-		-		-		-		-
Consumer		20		26		67		69		-
Total	$	2,975	$	3,216	$	3,791	$	3,536	$	3,817

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands, Unaudited)

	Three Months Ended								Three Months Ended
	March 31, 2017								March 31, 2016
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate

ASSETS
Interest-earning assets
Federal funds sold	$	3,034		$	5		0.67	%	$	2,424		$	1		0.17	%
Interest-earning deposits		24,748			69		1.13	%		20,810			49		0.95	%
Investment securities - taxable		398,871			2,332		2.37	%		463,544			2,494		2.16	%
Investment securities - non-taxable (1)		270,522			1,637		3.41	%		182,275			1,237		3.79	%
Loans receivable (2)(3)		2,100,254			24,791		4.79	%		1,698,197			19,747		4.69	%
Total interest-earning assets (1)		2,797,429			28,834		4.28	%		2,367,250			23,528		4.09	%

Non-interest-earning assets
Cash and due from banks		40,994								32,925
Allowance for loan losses		(14,937	)							(14,508	)
Other assets		279,982								214,604

	$	3,103,468							$	2,600,271

LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities
Interest-bearing deposits	$	1,960,337		$	1,753		0.36	%	$	1,534,833		$	1,491		0.39	%
Borrowings		249,923			937		1.52	%		406,679			1,759		1.74	%
Subordinated debentures		36,290			576		6.44	%		32,813			504		6.18	%
Total interest-bearing liabilities		2,246,550			3,266		0.59	%		1,974,325			3,754		0.76	%

Non-interest-bearing liabilities
Demand deposits		491,154								339,141
Accrued interest payable and other liabilities		20,672								22,521
Stockholders’ equity		345,092								264,284

	$	3,103,468							$	2,600,271

Net interest income/spread				$	25,568		3.69	%				$	19,774		3.32	%

Net interest income as a percent of average interest earning assets (1)							3.80	%							3.45	%

(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)

	March 31			December 31
	2017			2016
	(Unaudited)
Assets
Cash and due from banks	$	60,280		$	70,832
Investment securities, available for sale		474,222			439,831
Investment securities, held to maturity (fair value of $200,482 and $194,086)		198,868			193,194
Loans held for sale		1,789			8,087
Loans, net of allowance for loan losses of $15,054 and $14,837		2,131,899			2,121,149
Premises and equipment, net		66,314			66,357
Federal Reserve and Federal Home Loan Bank stock		24,090			23,932
Goodwill		77,644			76,941
Other intangible assets		9,450			9,366
Interest receivable		12,581			12,713
Cash value of life insurance		74,598			74,134
Other assets		37,908			44,620
Total assets	$	3,169,643		$	3,141,156
Liabilities
Deposits
Non-interest bearing	$	502,400		$	496,248
Interest bearing		1,941,299			1,974,962
Total deposits		2,443,699			2,471,210
Borrowings		319,993			267,489
Subordinated debentures		37,516			37,456
Interest payable		523			472
Other liabilities		19,337			23,674
Total liabilities		2,821,068			2,800,301
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, Authorized, 1,000,000 shares
Issued 0 and 0 shares		-			-
Common stock, no par value
Authorized 66,000,000 shares⁽¹⁾
Issued, 22,195,715 and 22,192,530 shares⁽¹⁾
Outstanding, 22,176,465 and 22,171,596 shares⁽¹⁾		-			-
Additional paid-in capital		182,402			182,326
Retained earnings		169,950			164,173
Accumulated other comprehensive loss		(3,777	)		(5,644	)
Total stockholders’ equity		348,575			340,855
Total liabilities and stockholders’ equity	$	3,169,643		$	3,141,156

⁽¹⁾ Adjusted for 3:2 stock split on November 14, 2016

HORIZON BANCORP AND SUBSIDIARIES

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

	Three Months Ended
	March 31
	2017		2016
	(Unaudited)		(Unaudited)
Interest Income
Loans receivable	$	24,791	$	19,747
Investment securities
Taxable		2,406		2,544
Tax exempt		1,637		1,237
Total interest income		28,834		23,528
Interest Expense
Deposits		1,753		1,491
Borrowed funds		937		1,759
Subordinated debentures		576		504
Total interest expense		3,266		3,754
Net Interest Income		25,568		19,774
Provision for loan losses		330		532
Net Interest Income after Provision for Loan Losses		25,238		19,242
Non-interest Income
Service charges on deposit accounts		1,400		1,288
Wire transfer fees		150		121
Interchange fees		1,176		931
Fiduciary activities		1,922		1,635

Gain on sale of investment securities (includes $35 and $108 for the three months ended March 31, 2017 and 2016 related to accumulated other comprehensive earnings reclassifications)		35		108
Gain on sale of mortgage loans		1,914		2,114
Mortgage servicing income net of impairment		447		447
Increase in cash value of bank owned life insurance		471		345
Other income		44		398
Total non-interest income		7,559		7,387
Non-interest Expense
Salaries and employee benefits		11,709		10,065
Net occupancy expenses		2,452		1,936
Data processing		1,307		1,105
Professional fees		613		831
Outside services and consultants		1,222		1,099
Loan expense		1,107		1,195
FDIC insurance expense		263		405
Other losses		50		267
Other expense		2,798		2,367
Total non-interest expense		21,521		19,270
Income Before Income Tax		11,276		7,359
Income tax expense (includes $12 and $38 for the three months ended March 31, 2017 and 2016, respectively, related to income tax expense from reclassification items)		3,052		1,978
Net Income		8,224		5,381
Preferred stock dividend		-		(42	)
Net Income Available to Common Shareholders	$	8,224	$	5,339
Basic Earnings Per Share	$	0.37	$	0.30
Diluted Earnings Per Share		0.37		0.30