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, 2014

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: 9,201,786 shares of Common Stock, no par value, at May 9, 2014.

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	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	46
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	48
Signatures
Index To Exhibits

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
	2014		2013
	(Unaudited)
Assets
Cash and due from banks	$	35,820	$	31,721
Investment securities, available for sale		519,430		508,591
Investment securities, held to maturity (fair value of $9,910 and $9,910)		9,910		9,910
Loans held for sale		5,335		3,281
Loans, net of allowance for loan losses of $16,102 and $15,992		1,084,692		1,052,836
Premises and equipment, net		47,013		46,194
Federal Reserve and Federal Home Loan Bank stock		14,184		14,184
Goodwill		20,483		19,748
Other intangible assets		3,100		3,288
Interest receivable		7,536		7,501
Cash value life insurance		36,423		36,190
Other assets		22,657		24,832
Total assets	$	1,806,583	$	1,758,276
Liabilities
Deposits
Non-interest bearing	$	238,499	$	231,096
Interest bearing		1,117,072		1,060,424
Total deposits		1,355,571		1,291,520
Borrowings		236,043		256,296
Subordinated debentures		32,525		32,486
Interest payable		498		506
Other liabilities		12,163		12,948
Total liabilities		1,636,800		1,593,756
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, 8,703,596 and 8,706,971 shares Outstanding, 8,630,966 and 8,630,966 shares		—		—
Additional paid-in capital		32,604		32,496
Retained earnings		123,678		121,253
Accumulated other comprehensive income (loss)		1,001		(1,729	)
Total stockholders’ equity		169,783		164,520
Total liabilities and stockholders’ equity	$	1,806,583	$	1,758,276

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
	2014			2013
	(Unaudited)			(Unaudited)
Interest Income
Loans receivable	$	12,954		$	16,440
Investment securities
Taxable		2,390			2,022
Tax exempt		1,123			967
Total interest income		16,467			19,429
Interest Expense
Deposits		1,277			1,480
Borrowed funds		1,422			1,448
Subordinated debentures		496			491
Total interest expense		3,195			3,419
Net Interest Income		13,272			16,010
Provision for loan losses		—			2,084
Net Interest Income after Provision for Loan Losses		13,272			13,926
Non-interest Income
Service charges on deposit accounts		923			913
Wire transfer fees		112			190
Interchange fees		959			866
Fiduciary activities		1,048			1,140
Gain on sale of investment securities (includes $0 and $368 for the three months ended March 31, 2014 and 2013, respectively, related to accumulated other other comprehensive earnings reclassifications)		—			368
Gain on sale of mortgage loans		1,411			3,106
Mortgage servicing income net of impairment		207			163
Increase in cash value of bank owned life insurance		233			252
Other income		629			462
Total non-interest income		5,522			7,460
Non-interest Expense
Salaries and employee benefits		7,483			7,504
Net occupancy expenses		1,424			1,311
Data processing		870			600
Professional fees		608			499
Outside services and consultants		661			712
Loan expense		1,015			1,114
FDIC insurance expense		256			283
Other losses		38			(72	)
Other expense		2,159			2,028
Total non-interest expense		14,514			13,979
Income Before Income Tax		4,280			7,407
Income tax expense (includes $0 and $129 for the three months ended March 31, 2014 and 2013, respectively, related to income tax expense from reclassification items)		863			2,096
Net Income		3,417			5,311
Preferred stock dividend and discount accretion		(31	)		(146	)
Net Income Available to Common Shareholders	$	3,386		$	5,165
Basic Earnings Per Share	$	0.39		$	0.60
Diluted Earnings Per Share		0.38			0.58

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
	2014			2013
	(Unaudited)			(Unaudited)
Net Income	$	3,417		$	5,311
Other Comprehensive Income (Loss)
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period		(225	)		439
Income tax effect		79			(154	)
Changes from derivative instruments		(146	)		285
Change in securities available-for-sale:
Unrealized appreciation (depreciation) for the period		4,426			(1,704	)
Reclassification adjustment for securities gains realized in income		—			(368	)
Income tax effect		(1,550	)		726
Unrealized gains (losses) on available-for-sale securities		2,876			(1,346	)
Other Comprehensive Income (Loss), Net of Tax		2,730			(1,061	)
Comprehensive Income	$	6,147		$	4,250

See notes to condensed consolidated financial statements

5

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Table 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, 2014	$	12,500	$	32,496	$	121,253		$	(1,729	)	$	164,520
Net income						3,417						3,417
Other comprehensive loss, net of tax									2,730			2,730
Amortization of unearned compensation				81								81
Stock option expense				27								27
Cash dividends on preferred stock (1.00%)						(31	)					(31	)
Cash dividends on common stock ($.11 per share)						(961	)					(961	)
Balances, March 31, 2014	$	12,500	$	32,604	$	123,678		$	1,001		$	169,783

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
	2014			2013
	(Unaudited)			(Unaudited)
Operating Activities
Net income	$	3,417		$	5,311
Items not requiring (providing) cash
Provision for loan losses		—			2,084
Depreciation and amortization		844			849
Share based compensation		27			8
Mortgage servicing rights recovery		(5	)		(33	)
Premium amortization on securities available for sale, net		549			808
Gain on sale of investment securities		—			(368	)
Gain on sale of mortgage loans		(1,411	)		(3,106	)
Proceeds from sales of loans		35,348			102,762
Loans originated for sale		(35,991	)		(95,017	)
Change in cash value of life insurance		(233	)		(252	)
Gain on sale of other real estate owned		(218	)		(238	)
Net change in
Interest receivable		(35	)		167
Interest payable		(8	)		(8	)
Other assets		675			3,346
Other liabilities		(1,138	)		(676	)
Net cash provided by operating activities		1,821			15,637
Investing Activities
Purchases of securities available for sale		(27,290	)		(51,581	)
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale		20,327			51,894
Purchase of securities held to maturity		—			(2,110	)
Net change in loans		(32,259	)		99,089
Proceeds on the sale of OREO and repossessed assets		784			1,159
Purchases of premises and equipment		(1,394	)		(841	)
Purchase of Mortgage Company		(735	)		—
Net cash provided by (used in) by investing activities		(40,567	)		97,610
Financing Activities
Net change in
Deposits		64,051			20,910
Borrowings		(20,214	)		(136,826	)
Dividends paid on common shares		(961	)		(867	)
Dividends paid on preferred shares		(31	)		(146	)
Net cash provided by (used in) financing activities		42,845			(116,929	)
Net Change in Cash and Cash Equivalents		4,099			(3,682	)
Cash and Cash Equivalents, Beginning of Period		31,721			30,735
Cash and Cash Equivalents, End of Period	$	35,820		$	27,053
Additional Cash Flows Information
Interest paid	$	3,203		$	3,427
Income taxes paid		—			400
Transfer of loans to other real estate owned		610			670

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 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, 2014 and March 31, 2013 are not necessarily indicative of the operating results for the full year of 2014 or 2013. 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 2013 filed with the Securities and Exchange Commission on February 28, 2014. The consolidated condensed balance sheet of Horizon as of December 31, 2013 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
	2014		2013
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	3,417	$	5,311
Less: Preferred stock dividends and accretion of discount		31		146
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Basic earnings per share	$	0.39	$	0.60
Diluted earnings per share
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Effect of dilutive securities:
Warrants		311,278		293,237
Restricted stock		39,519		35,557
Stock options		40,023		34,395
Weighted average shares outstanding		9,021,786		8,980,655
Diluted earnings per share	$	0.38	$	0.58

At March 31, 2014 and 2013, there were no shares 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, 2013 Annual Report on Form 10-K.

Reclassifications

Certain reclassifications have been made to the 2013 condensed consolidated financial statements to be comparable to 2014. These reclassifications had no effect on net income.

Note 2—Securities

The fair value of securities is as follows:

March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,098	$	121	$	(578	)	$	42,641
State and municipal		174,538		5,623		(1,828	)		178,333
Federal agency collateralized mortgage obligations		115,584		1,126		(1,874	)		114,836
Federal agency mortgage-backed pools		179,625		3,553		(1,605	)		181,573
Private labeled mortgage-backed pools		1,024		32		—			1,056
Corporate notes		970		21		—			991
Total available for sale investment securities	$	514,839	$	10,476	$	(5,885	)	$	519,430
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,808	$	133	$	(807	)	$	43,134
State and municipal		176,670		4,405		(3,177	)		177,898
Federal agency collateralized mortgage obligations		116,047		1,242		(2,583	)		114,706
Federal agency mortgage-backed pools		170,006		3,172		(2,284	)		170,894
Private labeled mortgage-backed pools		1,188		38		—			1,226
Corporate notes		708		25		—			733
Total available for sale investment securities	$	508,427	$	9,015	$	(8,851	)	$	508,591
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

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, 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, 2014, 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, 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, 2014.

9

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, 2014 and December 31, 2013, 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, 2014				December 31, 2013
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	4,449	$	4,486	$	3,643	$	3,663
One to five years		43,451		43,959		49,198		49,627
Five to ten years		111,942		114,654		106,225		107,424
After ten years		58,764		58,866		62,120		61,051
		218,606		221,965		221,186		221,765
Federal agency collateralized mortgage obligations		115,584		114,836		116,047		114,706
Federal agency mortgage-backed pools		179,625		181,573		170,006		170,894
Private labeled mortgage-backed pools		1,024		1,056		1,188		1,226
Total available for sale investment securities	$	514,839	$	519,430	$	508,427	$	508,591
Held to maturity
Within one year	$	9,910	$	9,910	$	9,910	$	9,910
One to five years		—		—		—		—
Total held to maturity investment securities	$	9,910	$	9,910	$	9,910	$	9,910

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, 2014	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	31,303	$	(578	)	$	—	$	—		$	31,303	$	(578	)
State and municipal		47,875		(1,578	)		5,040		(250	)		52,915		(1,828	)
Federal agency collateralized mortgage obligations		42,858		(675	)		26,382		(1,199	)		69,240		(1,874	)
Federal agency mortgage-backed pools		69,597		(1,605	)		—		—			69,597		(1,605	)
Total temporarily impaired securities	$	191,633	$	(4,436	)	$	31,422	$	(1,449	)	$	223,055	$	(5,885	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2013	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	32,099	$	(807	)	$	—	$	—		$	32,099	$	(807	)
State and municipal		57,078		(2,993	)		3,206		(184	)		60,284		(3,177	)
Federal agency collateralized mortgage obligations		64,445		(2,121	)		8,601		(462	)		73,046		(2,583	)
Federal agency mortgage-backed pools		87,919		(2,284	)		—		—			87,919		(2,284	)
Total temporarily impaired securities	$	241,541	$	(8,205	)	$	11,807	$	(646	)	$	253,348	$	(8,851	)

	Three months ended March 31
	2014		2013
Sales of securities available for sale (Unaudited)
Proceeds	$	—	$	23,485
Gross gains		—		376
Gross losses		—		(8	)

10

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 3—Loans

	March 31			December 31
	2014			2013
Commercial
Working capital and equipment	$	253,939		$	241,569
Real estate, including agriculture		254,734			245,313
Tax exempt		2,483			2,898
Other		17,479			15,409
Total		528,635			505,189
Real estate
1–4 family		185,428			181,393
Other		4,465			4,565
Total		189,893			185,958
Consumer
Auto		140,147			139,915
Recreation		5,107			4,839
Real estate/home improvement		31,139			30,729
Home equity		96,682			96,924
Unsecured		3,780			3,825
Other		3,265			3,293
Total		280,120			279,525
Mortgage warehouse		102,146			98,156
Total loans		1,100,794			1,068,828
Allowance for loan losses		(16,102	)		(15,992	)
Loans, net	$	1,084,692		$	1,052,836

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 or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. The Company 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.

11

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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 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 repurchases the loan under its option within the agreement. Due to the repurchase 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 repurchase from Horizon their 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 repurchase 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 repurchase its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

12

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, 2014	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	173,514		$	268	$	245		$	174,027
Non owner occupied real estate		230,225			201		266			230,692
Residential spec homes		833			1		—			834
Development & spec land loans		21,347			61		43			21,451
Commercial and industrial		102,112			715		50			102,877
Total commercial		528,031			1,246		604			529,881
Residential mortgage		180,849			579		352			181,780
Residential construction		8,692			14		—			8,706
Mortgage warehouse		102,146			480		—			102,626
Total real estate		291,687			1,073		352			293,112
Direct installment		30,556			104		(278	)		30,382
Direct installment purchased		270			—		—			270
Indirect installment		131,394			301		—			131,695
Home equity		118,132			517		46			118,695
Total consumer		280,352			922		(232	)		281,042
Total loans		1,100,070			3,241		724			1,104,035
Allowance for loan losses		(16,102	)		—		—			(16,102	)
Net loans	$	1,083,968		$	3,241	$	724		$	1,087,933
December 31, 2013	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	156,262		$	257	$	207		$	156,726
Non owner occupied real estate		224,713			105		299			225,117
Residential spec homes		400			—		—			400
Development & spec land loans		21,289			62		42			21,393
Commercial and industrial		101,920			737		57			102,714
Total commercial		504,584			1,161		605			506,350
Residential mortgage		176,068			578		382			177,028
Residential construction		9,508			14		—			9,522
Mortgage warehouse		98,156			480		—			98,636
Total real estate		283,732			1,072		382			285,186
Direct installment		29,983			104		(281	)		29,806
Direct installment purchased		294			—		—			294
Indirect installment		131,384			320		—			131,704
Home equity		117,958			529		187			118,674
Total consumer		279,619			953		(94	)		280,478
Total loans		1,067,935			3,186		893			1,072,014
Allowance for loan losses		(15,992	)		—		—			(15,992	)
Net loans	$	1,051,943		$	3,186	$	893		$	1,056,022

13

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 4—Accounting for Certain Loans Acquired in a Transfer

The Company acquired 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.

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 nonaccrual 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 amount of those loans is included in the balance sheet amounts of loans receivable are as follows:

	March 31		December 31
	2014		2013
Commercial	$	22,223	$	37,048
Real estate		11,033		11,761
Consumer		10,272		11,485
Outstanding balance	$	43,528	$	60,294
Carrying amount, net of allowance of $367 and $389	$	43,161	$	59,905

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

	2014			2013
Balance at January 1	$	3,185		$	6,111
Additions		—			—
Accretion		(138	)		(451	)
Reclassification from nonaccreatable difference		—			—
Disposals		(18	)		(696	)
Balance at March 31	$	3,029		$	4,964

During the three months ended March 31, 2014 and 2013, the Company increased the allowance for loan losses by a charge to the income statement by $0 and $1.4 million, respectively. No allowances for loan losses were reversed for the three months ended March 31, 2014 or 2013.

Note 5—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.

14

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

	Three Months Ended
	March 31
	2014			2013
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	15,992		$	18,270
Loans charged-off:
Commercial
Owner occupied real estate		—			132
Non owner occupied real estate		22			146
Residential development		—			—
Development & Spec Land Loans		7			—
Commercial and industrial		—			139
Total commercial		29			417
Real estate
Residential mortgage		22			143
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		22			143
Consumer
Direct Installment		33			107
Direct Installment Purchased		—			—
Indirect Installment		227			353
Home Equity		184			438
Total consumer		444			898
Total loans charged-off		495			1,458
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		4			32
Non owner occupied real estate		1			2
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		385			36
Total commercial		390			70
Real estate
Residential mortgage		4			3
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		4			3
Consumer
Direct Installment		18			394
Direct Installment Purchased		—			—
Indirect Installment		119			170
Home Equity		74			32
Total consumer		211			596
Total loan recoveries		605			669
Net loans charged-off (recovered)		(110	)		789
Provision charged to operating expense
Commercial		212			1,738
Real estate		(604	)		312
Consumer		392			34
Total provision charged to operating expense		—			2,084
Balance at the end of the period	$	16,102		$	19,565

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value 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.

15

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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, 2014	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,290	$	—	$	—	$	—	$	1,290
Collectively evaluated for impairment		5,580		2,812		1,665		4,388		14,445
Loans acquired with deteriorated credit quality		367		—		—		—		367
Total ending allowance balance	$	7,237	$	2,812	$	1,665	$	4,388	$	16,102
Loans:
Individually evaluated for impairment	$	7,335	$	—	$	—	$	—	$	7,335
Collectively evaluated for impairment		522,054		190,486		102,626		281,042		1,096,208
Loans acquired with deteriorated credit quality		492		—		—		—		492
Total ending loans balance	$	529,881	$	190,486	$	102,626	$	281,042	$	1,104,035
December 31, 2013	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,312	$	—	$	—	$	—	$	1,312
Collectively evaluated for impairment		4,963		3,462		1,638		4,228		14,291
Loans acquired with deteriorated credit quality		389		—		—		—		389
Total ending allowance balance	$	6,664	$	3,462	$	1,638	$	4,228	$	15,992
Loans:
Individually evaluated for impairment	$	7,448	$	—	$	—	$	—	$	7,448
Collectively evaluated for impairment		489,547		186,526		98,636		279,448		1,054,157
Loans acquired with deteriorated credit quality		9,355		24		—		1,030		10,409
Total ending loans balance	$	506,350	$	186,550	$	98,636	$	280,478	$	1,072,014

16

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 6—Non-performing Loans and Impaired Loans

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

March 31, 2014	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	294	$	—	$	81	$	769	$	1,144
Non owner occupied real estate		2,192		—		1,084		514		3,790
Residential development		—		—		—		—		—
Development & Spec Land Loans		162		—		—		—		162
Commercial and industrial		1,043		—		1,173		—		2,216
Total commercial		3,691		—		2,338		1,283		7,312
Real estate
Residential mortgage		2,709		3		858		2,510		6,080
Residential construction		—		—		278		—		278
Mortgage warehouse		—		—		—		—		—
Total real estate		2,709		3		1,136		2,510		6,358
Consumer
Direct Installment		289		20		—		—		309
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		536		103		—		—		639
Home Equity		1,548		77		187		1,206		3,018
Total Consumer		2,373		200		187		1,206		3,966
Total	$	8,773	$	203	$	3,661	$	4,999	$	17,636
December 31, 2013	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	293	$	—	$	222	$	778	$	1,293
Non owner occupied real estate		2,289		45		1,117		518		3,969
Residential development		—		—		—		—		—
Development & Spec Land Loans		182		—		—		—		182
Commercial and industrial		1,250		—		777		—		2,027
Total commercial		4,014		45		2,116		1,296		7,471
Real estate
Residential mortgage		2,459		2		719		2,686		5,866
Residential construction		—		—		280		—		280
Mortgage warehouse		—		—		—		—		—
Total real estate		2,459		2		999		2,686		6,146
Consumer
Direct Installment		202		—		—		—		202
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		531		2		—		—		533
Home Equity		2,542		—		311		1,072		3,925
Total Consumer		3,275		2		311		1,072		4,660
Total	$	9,748	$	49	$	3,426	$	5,054	$	18,277

17

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Included in the $8.8 million of non-accrual loans and the $3.7 million of non-performing TDR’s at March 31, 2014 were $2.6 million and $436,000, 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 Credit 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. Nonaccrual 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 nonaccrual 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, 2014, 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 six consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of March 31, 2014, the Company had $8.7 million in TDRs and $5.0 million were performing according to the restructured terms and no TDR’s were returned to accrual status during the first three months of 2014. There was $1.5 million of specific reserves allocated to TDRs at March 31, 2014 based on the discounted cash flows.

18

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Loans transferred and classified as troubled debt restructuring during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		—		—		3		390
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		—		—		3		390
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		2		791
Total Consumer		1		146		2		791
Total		3	$	544		8	$	1,327

Troubled debt restructured loans which had payment defaults during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below. Default occurs when a loan is 90 days or more past due or has been transferred to nonaccrual.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		1		154		1		234
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		1		154		1		234
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		—		—
Total Consumer		1		146		—		—
Total		4	$	698		4	$	380

19

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, 2014	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	$	1,145	$	1,148	$	—	$	1,759		$	12
Non owner occupied real estate		3,443		3,446		—		3,514			5
Residential development		—		—		—		—			—
Development & Spec Land Loans		24		24		—		24			—
Commercial and industrial		333		349		—		608			—
Total commercial		4,945		4,967		—		5,905			17
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		(1	)		—
Non owner occupied real estate		347		347		170		353			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		138		138		40		142			—
Commercial and industrial		1,883		1,883		1,080		1,727			2
Total commercial		2,368		2,368		1,290		2,221			2
Total	$	7,313	$	7,335	$	1,290	$	8,126		$	19
							Three Months Ending
March 31, 2013	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	$	3,310	$	3,317	$	—	$	4,906		$	14
Non owner occupied real estate		2,578		2,579		—		3,793			11
Residential development		—		—		—		—			—
Development & Spec Land Loans		135		135		—		166			—
Commercial and industrial		912		928		—		1,877			—
Total commercial		6,935		6,959		—		10,742			25
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—			—
Non owner occupied real estate		1,763		1,763		1,080		1,774			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		564		564		600		569			—
Commercial and industrial		792		792		265		794			—
Total commercial		3,119		3,119		1,945		3,137			—
Total	$	10,054	$	10,078	$	1,945	$	13,879		$	25

20

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, 2014	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	$	218		$	127		$	—		$	345		$	173,169		$	173,514
Non owner occupied real estate		122			—			—			122			230,103			230,225
Residential development		—			—			—			—			833			833
Development & Spec Land Loans		—			—			—			—			21,347			21,347
Commercial and industrial		110			—			—			110			102,002			102,112
Total commercial		450			127			—			577			527,454			528,031
Real estate
Residential mortgage		313			—			3			316			180,533			180,849
Residential construction		—			—			—			—			8,692			8,692
Mortgage warehouse		—			—			—			—			102,146			102,146
Total real estate		313			—			3			316			291,371			291,687
Consumer
Direct Installment		67			10			20			97			30,459			30,556
Direct Installment Purchased		—			—			—			—			270			270
Indirect Installment		771			41			103			915			130,479			131,394
Home Equity		555			278			77			910			117,222			118,132
Total consumer		1,393			329			200			1,922			278,430			280,352
Total	$	2,156		$	456		$	203		$	2,815		$	1,097,255		$	1,100,070
Percentage of total loans		0.20	%		0.04	%		0.02	%		0.26	%		99.74	%
December 31, 2013	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	$	341		$	—		$	—		$	341		$	155,921		$	156,262
Non owner occupied real estate		424			—			45			469			224,244			224,713
Residential development		—			—			—			—			400			400
Development & Spec Land Loans		—			—			—			—			21,289			21,289
Commercial and industrial		—			—			—			—			101,920			101,920
Total commercial		765			—			45			810			503,774			504,584
Real estate
Residential mortgage		445			87			2			534			175,534			176,068
Residential construction		—			—			—			—			9,508			9,508
Mortgage warehouse		—			—			—			—			98,156			98,156
Total real estate		445			87			2			534			283,198			283,732
Consumer
Direct Installment		120			24			—			144			29,839			29,983
Direct Installment Purchased		—			—			—			—			294			294
Indirect Installment		1,011			175			2			1,188			130,196			131,384
Home Equity		767			58			—			825			117,133			117,958
Total consumer		1,898			257			2			2,157			277,462			279,619
Total	$	3,108		$	344		$	49		$	3,501		$	1,064,434		$	1,067,935
Percentage of total loans		0.29	%		0.03	%		0.00	%		0.33	%		99.67	%

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 of $500,000 or greater are validated by the Loan Committee, which is chaired by the Chief Credit Officer (CCO).

21

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

• 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:

22

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

• 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.

23

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

• 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.

24

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, 2014	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	163,274		$	2,667		$	7,573		$	—		$	173,514
Non owner occupied real estate		213,918			6,211			10,096			—			230,225
Residential development		738			95			—			—			833
Development & Spec Land Loans		19,984			88			1,275			—			21,347
Commercial and industrial		92,357			6,045			3,710			—			102,112
Total commercial		490,271			15,106			22,654			—			528,031
Real estate
Residential mortgage		174,769			—			6,080			—			180,849
Residential construction		8,414			—			278			—			8,692
Mortgage warehouse		102,146			—			—			—			102,146
Total real estate		285,329			—			6,358			—			291,687
Consumer
Direct Installment		30,247			—			309			—			30,556
Direct Installment Purchased		270			—			—			—			270
Indirect Installment		130,755			—			639			—			131,394
Home Equity		115,114			—			3,018			—			118,132
Total Consumer		276,386			—			3,966			—			280,352
Total	$	1,051,985		$	15,106		$	32,978		$	—		$	1,100,070
Percentage of total loans		95.63	%		1.37	%		3.00	%		0.00	%
December 31, 2013	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	146,085		$	2,231		$	7,946		$	—		$	156,262
Non owner occupied real estate		208,625			5,047			11,041			—			224,713
Residential development		400			—			—			—			400
Development & Spec Land Loans		19,858			91			1,340			—			21,289
Commercial and industrial		91,852			6,492			3,576			—			101,920
Total commercial		466,820			13,861			23,903			—			504,584
Real estate
Residential mortgage		170,202			—			5,866			—			176,068
Residential construction		9,228			—			280			—			9,508
Mortgage warehouse		98,156			—			—			—			98,156
Total real estate		277,586			—			6,146			—			283,732
Consumer
Direct Installment		29,781			—			202			—			29,983
Direct Installment Purchased		294			—			—			—			294
Indirect Installment		130,851			—			533			—			131,384
Home Equity		114,033			—			3,925			—			117,958
Total Consumer		274,959			—			4,660			—			279,619
Total	$	1,019,365		$	13,861		$	34,709		$	—		$	1,067,935
Percentage of total loans		95.45	%		1.30	%		3.25	%		0.00	%

25

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 7—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, 2014 and December 31, 2013. 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, 2014 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, 2014 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 $100.1 million at March 31, 2014 and $95.3 million at December 31, 2013.

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, 2014, 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.

26

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

	Asset Derivative March 31, 2014			Liability Derivatives March 31, 2014
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	154
Interest rate contracts	Other Assets		154	Other liabilities		3,051
Total derivatives designated as hedging instruments			154			3,205
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		470	Other liabilities		39
Total derivatives not designated as hedging instruments			470			39
Total derivatives		$	624		$	3,244

	Asset Derivative December 31, 2013				Liability Derivatives December 31, 2013
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	7		Other liabilities	$	(53	)
Interest rate contracts	Other Assets		(60	)	Other liabilities		2,826
Total derivatives designated as hedging instruments			(53	)			2,773
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		212		Other liabilities		22
Total derivatives not designated as hedging instruments			212				22
Total derivatives		$	159			$	2,795

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

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow hedging relationship	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	$	(146	)	$	285

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.

27

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative in fair value hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	Interest income—loans	$	207		$	(401	)
Interest rate contracts	Interest income—loans		(207	)		401
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)		2013 (Unaudited)
Mortgage contracts	Other income—gain on sale of loans	$	240	$	(12	)

Note 8—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, 2014. 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.

28

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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, 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 (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
March 31, 2014
Available-for-sale securities
U.S. Treasury and federal agencies	$	42,641		$	—	$	42,641		$	—
State and municipal		178,333			—		178,333			—
Federal agency collateralized mortgage obligations		114,836			—		114,836			—
Federal agency mortgage-backed pools		181,573			—		181,573			—
Private labeled mortgage-backed pools		1,056			—		1,056			—
Corporate notes		991			—		991			—
Total available-for-sale securities		519,430			—		519,430			—
Hedged loans		100,564			—		100,564			—
Forward sale commitments		470			—		470			—
Interest rate swap agreements		(3,205	)		—		(3,205	)		—
Commitments to originate loans		(39	)		—		(39	)		—
December 31, 2013
Available-for-sale securities
U.S. Treasury and federal agencies	$	43,134		$	—	$	43,134		$	—
State and municipal		177,898			—		177,898			—
Federal agency collateralized mortgage obligations		114,706			—		114,706			—
Federal agency mortgage-backed pools		170,894			—		170,894			—
Private labeled mortgage-backed pools		1,226			—		1,226			—
Corporate notes		733			—		733			—
Total available-for-sale securities		508,591			—		508,591			—
Hedged loans		95,372			—		95,372			—
Forward sale commitments		212			—		212			—
Interest rate swap agreements		(2,773	)		—		(2,773	)		—
Commitments to originate loans		(22	)		—		(22	)		—

29

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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	2014			2013
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	207		$	(401	)
Fair value interest rate swap agreements		(207	)		401
Derivative loan commitments		240			(12	)
	$	240		$	(12	)

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, 2014
Impaired loans	$	6,023	$	—	$	—	$	6,023
Mortgage servicing rights		7,030		—		—		7,030
December 31, 2013
Impaired loans	$	6,114	$	—	$	—	$	6,114
Mortgage servicing rights		7,039		—		—		7,039

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 MSR’s fair value increased by $5,000 during the first three months of 2014 and increased by $33,000 during the first three months of 2013.

30

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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, 2014		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,023	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,030	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,114	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,039	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

Note 9—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, 2014 and December 31, 2013. 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.

31

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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 Letter 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).

32

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

	March 31, 2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	35,820	$	35,820	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		5,335		—		—		5,335
Loans excluding loan level hedges, net		984,128		—		—		1,009,380
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,536		—		7,536		—
Liabilities
Non-interest bearing deposits	$	238,499	$	238,499	$	—	$	—
Interest-bearing deposits		1,117,072		—		1,051,391		—
Borrowings		236,043		—		237,997		—
Subordinated debentures		32,525		—		32,587		—
Interest payable		498		—		498		—

	December 31, 2013
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	31,721	$	31,721	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		3,281		—		—		3,281
Loans excluding loan level hedges, net		957,464		—		—		975,910
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,501		—		7,501		—
Liabilities
Non-interest bearing deposits	$	231,096	$	231,096	$	—	$	—
Interest-bearing deposits		1,060,424		—		1,002,980		—
Borrowings		256,296		—		257,093		—
Subordinated debentures		32,486		—		32,528		—
Interest payable		506		—		506		—

33

HORIZON BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 10—Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) included in capital are as follows:

	March 31			December 31
	2014			2013
Unrealized gain on securities available for sale	$	4,590		$	164
Unrealized loss on derivative instruments		(3,051	)		(2,826	)
Tax effect		(538	)		933
Total accumulated other comprehensive income (loss)	$	1,001		$	(1,729	)

Note 11—Business Combination

On November 12, 2013, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of SCB Bancorp, Inc., a Michigan corporation (“SCB”). Pursuant to the Merger Agreement, SCB would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and Summit Community Bank, a Michigan-chartered commercial bank and wholly owned subsidiary of SCB, would merge with and into a wholly owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

On April 3, 2014 Horizon completed the acquisition of SCB and Horizon Bank N.A.’s acquisition of Summit Community Bank, through mergers effective April 3, 2014. Under the terms of the acquisition, the exchange ratio was 0.4904 shares of Horizon common stock (the “Exchange Ratio”) and $5.15 in cash for each outstanding share of SCB common stock. SCB shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to SCB 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.

As of March 31, 2013, Summit Community Bank reported total assets of approximately $154.1 million, total deposits of approximately $119.3 million and total net loans of approximately $130.9 million.

Note 12—Future accounting matters

Accounting Standards Update No. 2014-01- Accounting for Investments in Qualified Affordable Housing Projects – In January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects, to permit entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The ASU modifies the conditions that an entity must meet to be eligible to use a method other than the equity or cost methods to account for qualified affordable housing project investments. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

Accounting Standards Update No. 2014-04- Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure – In January 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, to reduce diversity by clarifying when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

34

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

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:

• Changes in general economic conditions and their impact on Horizon and its customers, including the slowing or failure of economic recovery

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

• 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;

• unavailability of 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 Basel III capital rules as adopted by the federal banking agencies;

• 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;

• Inability to contain costs and expenses;

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

35

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

• 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 2013 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 Northwestern and Central Indiana and Southwestern and South 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 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 November 12, 2013, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of SCB Bancorp, Inc., a Michigan corporation (“SCB”). Pursuant to the Merger Agreement, SCB would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and Summit Community Bank, an Michigan-chartered commercial bank and wholly owned subsidiary of SCB, would merge with and into a wholly owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

On April 3, 2014 Horizon completed the acquisition of SCB and Horizon Bank N.A.’s acquisition of Summit Community Bank, 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 SCB common stock. SCB shares outstanding at the closing were 1,164,442, and the shares of Horizon’s common stock issued to SCB 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.

Following are some highlights of Horizon’s financial performance through the first three months of 2014:

• First quarter 2014 net income was $3.4 million or $.38 diluted earnings per share.

• Excluding fees related to the acquisition of SCB Bancorp, Inc., net income for the first quarter of 2014 was $3.6 million or $.40 diluted earnings per share.

• Net interest income, after provisions for loan losses, for the first three months of 2014 was $13.3 million compared with $13.9 million for the same period in the prior year.

• Horizon’s previously announced acquisition of SCB Bancorp, Inc. and its wholly-owned subsidiary, Summit Community Bank, headquartered in East Lansing, Michigan closed as scheduled on April 3, 2014.

• Horizon did not record a provision for the three months ended March 31, 2014 compared with a provision of $2.1 million for same period of 2013.

36

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

• Non-interest income was $5.5 million in first quarter 2014 compared with $7.5 million in the same period of 2013, reflecting a decrease of $1.7 million in gain on sale of loans and a decrease of $368,000 in gain on sale of investment securities.

• Total loans increased $34.0 million during the quarter to $1.1 billion at March 31, 2014.

• Commercial loans increased $23.4 million during the quarter or 4.6% to $528.6 million at March 31, 2014.

• Core deposits increased $67.7 million during the quarter or 6.7% to $1.1 billion at March 31, 2014.

• Horizon’s tangible book value per share rose to $15.52 at March 31, 2014, compared to $14.97 at December 31, 2013 and $14.64 at March 31, 2013.

• Horizon Bank’s capital ratios, including Tier 1 Capital to Average Assets of 9.51% and Total Capital to Risk Weighted Assets of 14.12% as of March 31, 2014, 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 2013 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.

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, 2014, Horizon had core deposit intangibles of $3.1 million subject to amortization and $20.5 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, 2014 was $22.28 per share compared to a book value of $18.22 per common share. Horizon reported record earnings for the fourteenth consecutive year in 2013.

37

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

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.

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.

38

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

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.

39

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

Financial Condition

On March 31, 2014, Horizon’s total assets were $1.8 billion, an increase of approximately $48.3 million compared to December 31, 2013. The increase was primarily due to the growth in net loans and investment securities of $33.9 million and $10.8 million, respectively.

Investment securities were comprised of the following as of:

	March 31, 2014				December 31, 2013
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
U.S. Treasury and federal agencies	$	43,098	$	42,641	$	43,808	$	43,134
State and municipal		174,538		178,333		176,670		177,898
Federal agency collateralized mortgage obligations		115,584		114,836		116,047		114,706
Federal agency mortgage-backed pools		179,625		181,573		170,006		170,894
Private labeled mortgage-backed pools		1,024		1,056		1,188		1,226
Corporate notes		970		991		708		733
Total available for sale investment securities	$	514,839	$	519,430	$	508,427	$	508,591
Held to maturity, State and Municipal	$	9,910	$	9,910	$	9,910	$	9,910

Total investment securities increased by approximately $10.8 million at March 31, 2014 compared to December 31, 2013 due to excess liquidity from the growth in deposits.

Net loans increased $33.9 million since December 31, 2013 to $1.1 billion as of March 31, 2014. This increase was the result of an increase in commercial loans of $23.4 million, mortgage warehouse loans of $4.0 million, residential mortgage loans of $3.9 million and consumer loans of $595,000. The growth in commercial loans is the direct result of increased calling efforts to increase Horizon’s market share within the Company’s footprint and market expansion.

Total deposits increased $64.1 million during the first three months of 2014. This increase was the result of non-interest bearing deposit accounts increasing by $7.4 million due to increased calling and marketing efforts and interest bearing transaction accounts increasing by $60.3 million, primarily due to increased municipal deposits, partially offset by a decrease in time deposits of $3.6 million during the first three months of 2014.

The Company’s borrowings decreased $20.3 million from December 31, 2013 as deposit growth of $64.1 million outpaced loan growth of $34.0 million during first three months of 2014, thereby reducing the Company’s reliance on borrowings to fund loan growth during the quarter. At March 31, 2014, the Company had $20.0 million in short-term funds borrowed compared to $41.0 million at December 31, 2013. 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 mortgage warehouse lending.

Stockholders’ equity totaled $169.8 million at March 31, 2014 compared to $164.5 million at December 31, 2013. The increase in stockholders’ equity during the period was the result of the generation of net income and an increase in accumulated other comprehensive income, partially offset by dividends declared. At March 31, 2014, the ratio of average stockholders’ equity to average assets was 9.65% compared to 9.46% for December 31, 2013. Book value per common share at March 31, 2014 increased to $18.22 compared to $17.64 at December 31, 2013.

40

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

Results of Operations

Overview

Consolidated net income for the three-month period ended March 31, 2014 was $3.4 million, a decrease of 35.7% from the $5.3 million for the same period in 2013. Earnings per common share for the three months ended March 31, 2014 were $0.39 basic and $0.38 diluted, compared to $0.60 basic and $0.58 diluted for the same three-month period in 2013. Diluted earnings per share decreased by $.20 compared with the same three-month period in 2013 due primarily to the decline in mortgage warehouse activity, lower gain on sale of loans from mortgage origination volume, lower yields on loans and a reduction in interest income from Heartland loan valuation discounts recognized at the time of acquisition being accreted and discounts recognized from loans paying off. Excluding transaction expenses related to the acquisition of SCB Bancorp, Inc. of $311,000, net income would have been $3.6 million or $.40 diluted earnings per share for the first quarter of 2014.

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 months ended March 31, 2014 was $13.3 million, a decrease of $2.7 million from the $16.0 million earned during the same period in 2013. Yields on the Company’s interest-earning assets decreased by 66 basis points to 4.29% for the three months ending March 31, 2014 from 4.95% for the three months ended March 31, 2013. Interest income decreased $3.0 million from $19.4 million for the three months ended March 31, 2013 to $16.5 million for the same period in 2014. This decrease was primarily due to a decrease in mortgage warehouse balances, lower yields on loans and a reduction in interest income from Heartland loan valuation discounts recognized at the time of acquisition being accreted and discounts recognized from loans paying off of $389,000 for the first quarter of 2014 compared to $2.0 million for the same period in 2013.

Rates paid on interest-bearing liabilities decreased by 4 basis points for the three months ended March 31, 2014 compared to the same period in 2013 due to the continued low interest rate environment. Interest expense decreased $224,000 from $3.4 million for the three months ended March 31, 2013 to $3.2 million for the same period in 2014. This decrease was due to a lower amount of average interest-bearing liabilities and lower rates being paid on the Company’s interest bearing liabilities. The net interest margin decreased 62 basis points from 4.10% for the three months ended March 31, 2013 to 3.48% for the same period in 2014. The decrease in the margin for the three-months ended March 31, 2014 compared to the same period in 2013 was due to the decrease of approximately $1.6 million of interest income from Heartland loan discounts being accreted and loans paying off before their scheduled maturity as well as a reduction in the yield on interest-earning assets. Excluding the interest income recognized from the loan discounts, the margin would have been 3.38% for the three-month period ending March 31, 2014 compared to 3.62% for the same period in 2013.

41

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

The following are the average balance sheets for the three months ending:

	Three Months Ended								Three Months Ended
	March 31, 2014								March 31, 2013
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Interest-earning assets
Federal funds sold	$	7,439		$	4		0.22	%	$	12,639		$	8		0.26	%
Interest-earning deposits		5,722			3		0.21	%		7,423			2		0.11	%
Investment securities—taxable		386,793			2,383		2.50	%		371,311			2,012		2.20	%
Investment securities—non-taxable (1)		147,840			1,123		4.28	%		120,652			967		4.33	%
Loans receivable (2)(3)		1,050,491			12,954		5.00	%		1,105,843			16,440		6.03	%
Total interest-earning assets (1)		1,598,285			16,467		4.29	%		1,617,868			19,429		4.95	%
Noninterest-earning assets
Cash and due from banks		24,890								23,745
Allowance for loan losses		(16,166	)							(18,425	)
Other assets		138,322								134,623
	$	1,745,331							$	1,757,811
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing liabilities
Interest-bearing deposits	$	1,079,514		$	1,277		0.48	%	$	1,102,599		$	1,480		0.54	%
Borrowings		228,138			1,422		2.53	%		241,383			1,448		2.43	%
Subordinated debentures		32,502			496		6.19	%		32,370			491		6.15	%
Total interest-bearing liabilities		1,340,154			3,195		0.97	%		1,376,352			3,419		1.01	%
Noninterest-bearing liabilities
Demand deposits		223,974								202,403
Accrued interest payable and other liabilities		12,807								18,082
Shareholders’ equity		168,396								160,974
	$	1,745,331							$	1,757,811
Net interest income/spread				$	13,272		3.32	%				$	16,010		3.95	%
Net interest income as a percent of average interest earning assets (1)							3.48	%							4.10	%

(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 portfolios. During the three-months ended March 31, 2014, no provision was required to adequately fund the ALLL compared to a provision of $2.1 million for the same period of 2013. Commercial loan net recoveries during the first quarter of 2014 were $361,000, residential mortgage loan net charge-offs were $18,000, and consumer loan net charge-offs were $233,000. The lower provision for loan losses in the first quarter of 2014 compared to the same period of 2013 was due to the continued improvement of nonperforming and substandard loans. The ALLL balance at March 31, 2014 was $16.1 million or 1.46% of total loans. This compares to an ALLL balance of $16.0 million at December 31, 2013 or

42

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

1.49% of total loans and $19.6 million at March 31, 2013 or 1.78% of total loans. The decrease in the ratio at March 31, 2014 compared to December 31, 2013 was due an increase in total loans of $34.0 million. The decrease in the ratio at March 31, 2014 compared to March 31, 2013 was due to a decrease in the allowance for loan and lease losses of $3.5 million due to the continued improvement of nonperforming and substandard loans, partially offset by an increase in total loans of $7.3 million.

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, 2014.

Non-performing loans totaled $17.6 million on March 31, 2014, down from $18.3 million and $23.7 million on December 31, 2013 and March 31, 2013, respectively. Compared to December 31, 2013, non-performing commercial loans and consumer loans decreased by $158,000 and $695,000, respectively, partially offset by an increase of $212,000 in non-performing real estate loans.

At March 31, 2014, loans acquired in the Heartland acquisition represented $4.2 million in non-performing, $9.0 million in substandard and $150,000 in delinquent loans, which compares to $4.5 million in non-performing, $10.3 million in substandard and $323,000 in delinquent loans at December 31, 2013 and $6.4 million in non-performing, $17.7 million in substandard and $3.4 million in delinquent loans at March 31, 2013.

Other Real Estate Owned (OREO) totaled $1.7 million on March 31, 2014, down from $2.1 million and $1.8 million on December 31, 2013 and March 31, 2013, respectively.

Non-interest Income

The following is a summary of changes in non-interest income:

	Three Months Ended
	March 31		March 31		Amount			Percent
	2014		2013		Change			Change
Non-interest Income
Service charges on deposit accounts	$	923	$	913	$	10			1.1	%
Wire transfer fees		112		190		(78	)		-41.1	%
Interchange fees		959		866		93			10.7	%
Fiduciary activities		1,048		1,140		(92	)		-8.1	%
Gain on sale of securities		—		368		(368	)		-100.0	%
Gain on sale of mortgage loans		1,411		3,106		(1,695	)		-54.6	%
Mortgage servicing net of impairment		207		163		44			27.0	%
Increase in cash surrender value of bank owned life insurance		233		252		(19	)		-7.5	%
Other income		629		462		167			36.1	%
Total non-interest income	$	5,522	$	7,460	$	(1,938	)		-26.0	%

Total non-interest income was $1.9 million lower in the first quarter of 2014 compared to the first quarter of 2013. Gain on sale of securities decreased $368,000 for the three months ended March 31, 2014 compared to the same period in 2013. Residential mortgage loan activity during the first quarter of 2014 generated $1.4 million of income from the gain on sale of mortgage loans, down $1.7 million from the same period in 2013. The reduction in the gain on sale of mortgages loans was due to the decrease in total origination volume of $36.9 million for the first quarter of 2014 compared to the same period in 2013, partially offset by an increase in the percentage earned on the sale of these loans. Loans originated for sale during the first quarter of 2014 totaled $52.6 million compared to $89.5 million for the same period in 2013.

43

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

Non-interest Expense

The following is a summary of changes in non-interest expense:

	Three Months Ended
	March 31		March 31			Amount			Percent
	2014		2013			Change			Change
Non-interest expense
Salaries	$	5,356	$	5,179		$	177			3.4	%
Commission and bonuses		480		1,039			(559	)		-53.8	%
Employee benefits		1,647		1,286			361			28.1	%
Net occupancy expenses		1,424		1,311			113			8.6	%
Data processing		870		600			270			45.0	%
Professional fees		608		499			109			21.8	%
Outside services and consultants		661		712			(51	)		-7.2	%
Loan expense		1,015		1,114			(99	)		-8.9	%
FDIC deposit insurance		256		283			(27	)		-9.5	%
Other losses		38		(72	)		110			-152.8	%
Other expense		2,159		2,028			131			6.5	%
Total non-interest expense	$	14,514	$	13,979		$	535			3.8	%

Total non-interest expenses were $535,000 higher in the first quarter of 2014 compared to the first quarter of 2013. Salaries and employee benefits increased $538,000 compared to the same quarter in 2013 primarily due to changes in annual merit pay, a larger employee base and increased employee benefits costs. Commission and bonuses decreased $559,000 compared to the same quarter in 2013 primarily due to lower mortgage loan origination volume and the resulting commissions paid on these loans and lower bonus accruals. Net occupancy expenses increased by $113,000 compared to the same quarter in 2013 as primarily as a result of higher maintenance costs from snow removal. Data processing expense increased during the quarter by $270,000 compared to the same period in 2013 due to growth and additional services and $96,000 in fees one-time fees associated with the SCB acquisition. Professional fees increased by $109,000 compared to the same period of 2013 due to $169,000 in fees associated with the SCB acquisition which occurred during the quarter. Other losses improved $110,000 year over year due to the reversal of a previously required reserve for potential repurchases of sold loans that were resolved without a loss during the first quarter of 2013. Other expenses increased $131,000 in the first quarter of 2014 compared to the same period in 2013 primarily due to the Company’s growth and expansion efforts.

Income Taxes

Income tax expense for the first quarter of 2014 was $863,000 compared to $2.1 million for same period of 2013. The effective tax rate for the first quarter of 2014 was 20.2% compared to 28.3% in the same period of 2013. The decrease in the effective tax rate is primarily due to lower net income during the first quarter of 2014.

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

44

HORIZON BANCORP AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three Months Ended March 31, 2014

the FHLB. During the three months ended March 31, 2014, cash and cash equivalents increased by approximately $4.1 million. At March 31, 2014, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $317.1 million in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $311.8 million at December 31, 2013 and $435.5 million at March 31, 2013.

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2014. Stockholders’ equity totaled $169.8 million as of March 31, 2014, compared to $164.5 million as of December 31, 2013. For the three months ended March 31, 2014, the ratio of average stockholders’ equity to average assets was 9.65% compared to 9.46% for the three months ended December 31, 2013. The increase in stockholders’ equity during the period was the result of the generation of net income and an increase in accumulated other comprehensive income, net of dividends declared.

The Company currently intends to continue its participation in the Small Business Lending Fund, pursuant to which it issued preferred stock to the US Treasury, since the growth in the Company’s small business lending has reduced the dividend cost. For the three months ending March 31, 2014, the dividend cost was approximately $31,000, or 1.0% annualized. For the remaining three quarters during of 2014, the dividend cost will be approximately $31,000 or 1.0% annualized. The Company plans to reserve cash for the ability to redeem this preferred stock if and when the cost of this capital exceeds other forms of capital, subject to regulatory approval.

Horizon declared common stock dividends in the amount of $0.11 per share during the first three months of 2014 compared to $0.10 for the same period of 2013. The dividend payout ratio (dividends as a percent of basic earnings per share) was 28.0% and 16.7% for the first three months of 2014 and 2013, respectively. For additional information regarding dividends, see Horizon’s Annual Report on Form 10-K for 2013.

Basel III

On July 2, 2013, the Board of Governors of the Federal Reserve System announced its approval of the final rule to implement the Basel III regulatory capital reforms, among other changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Office of the Comptroller of the Currency, as well as the Federal Deposit Insurance Corporation, adopted the new rule on July 9, 2013. The final approved rule includes a new minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5% as well as a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets. The rule also raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4% to 6% and includes a minimum leverage ratio of 4% for all banking institutions

The phase-in for banking organizations such as Horizon and the Bank will not begin until January 2015, while the phase-in period for larger banks starts in January 2014. Horizon and the Bank are currently evaluating the impact of the implementation of the new capital and liquidity standards.

45

HORIZON BANCORP AND SUBSIDIARIES

Quantitative and Qualitative Disclosures About Market Risk

For the Three Months Ended March 31, 2014

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We refer you to Horizon’s 2013 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 2013 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, 2014, 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, 2014, 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.

46

HORIZON BANCORP AND SUBSIDIARIES

Part II — Other Information

For the Three Months Ended March 31, 2014

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 2012.

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

47

HORIZON BANCORP AND SUBSIDIARIES

Part II — Other Information

For the Three Months Ended March 31, 2014

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

48

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 9, 2014	/s/ Craig M. Dwight
	Craig M. Dwight
	Chief Executive Officer
Dated: May 9, 2014	/s/ Mark E. Secor
	Mark E. Secor
	Chief Financial Officer

49

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

50

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 principals;

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 9, 2014	/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 principals;

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 9, 2014	/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, 2014 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 9, 2014	/s/ Craig M. Dwight
	Craig M. Dwight
	Chief Executive Officer
Dated: May 9, 2014	/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

Securities - Sales of Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Investments Debt And Equity Securities [Abstract]
Proceeds		$ 23,485
Gross gains		376
Gross losses		$ (8)

XML

Non-performing Assets and Impaired Loans - Commercial Loans Individually Evaluated for Impairment by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance total	$ 7,313	$ 10,054
Total ending loans balance	7,335	10,078
Allowance For Loan Loss Allocated	1,290	1,945
Average Balance in Impaired Loans total	8,126	13,879
Cash/Accrual Interest Income Recognized, Total	19	25
Commercial [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance	4,945	6,935
Recorded Investment With no recorded allowance	4,967	6,959
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance	5,905	10,742
Cash/Accrual Interest Income Recognized, With no recorded allowance	17	25
Unpaid Principal Balance With an allowance recorded	2,368	3,119
Recorded Investment With an allowance recorded	2,368	3,119
Allowance For Loan Loss Allocated	1,290	1,945
Average Balance in Impaired Loans With an allowance recorded	2,221	3,137
Cash/Accrual Interest Income Recognized, With an allowance recorded	2
Commercial [Member] | Owner Occupied Real Estate [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance	1,145	3,310
Recorded Investment With no recorded allowance	1,148	3,317
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance	1,759	4,906
Cash/Accrual Interest Income Recognized, With no recorded allowance	12	14
Unpaid Principal Balance With an allowance recorded
Recorded Investment With an allowance recorded
Allowance For Loan Loss Allocated
Average Balance in Impaired Loans With an allowance recorded	(1)
Cash/Accrual Interest Income Recognized, With an allowance recorded
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance	3,443	2,578
Recorded Investment With no recorded allowance	3,446	2,579
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance	3,514	3,793
Cash/Accrual Interest Income Recognized, With no recorded allowance	5	11
Unpaid Principal Balance With an allowance recorded	347	1,763
Recorded Investment With an allowance recorded	347	1,763
Allowance For Loan Loss Allocated	170	1,080
Average Balance in Impaired Loans With an allowance recorded	353	1,774
Cash/Accrual Interest Income Recognized, With an allowance recorded
Commercial [Member] | Residential Development [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance
Recorded Investment With no recorded allowance
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance
Cash/Accrual Interest Income Recognized, With no recorded allowance
Unpaid Principal Balance With an allowance recorded
Recorded Investment With an allowance recorded
Allowance For Loan Loss Allocated
Average Balance in Impaired Loans With an allowance recorded
Cash/Accrual Interest Income Recognized, With an allowance recorded
Commercial [Member] | Development & Spec Land Loans [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance	24	135
Recorded Investment With no recorded allowance	24	135
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance	24	166
Cash/Accrual Interest Income Recognized, With no recorded allowance
Unpaid Principal Balance With an allowance recorded	138	564
Recorded Investment With an allowance recorded	138	564
Allowance For Loan Loss Allocated	40	600
Average Balance in Impaired Loans With an allowance recorded	142	569
Cash/Accrual Interest Income Recognized, With an allowance recorded
Commercial [Member] | Commercial and Industrial [Member]
Schedule Of Financial Receivables [Line Items]
Unpaid Principal Balance With no recorded allowance	333	912
Recorded Investment With no recorded allowance	349	928
Allowance For Loan Loss Allocated With no recorded allowance
Average Balance in Impaired Loans With no recorded allowance	608	1,877
Cash/Accrual Interest Income Recognized, With no recorded allowance
Unpaid Principal Balance With an allowance recorded	1,883	792
Recorded Investment With an allowance recorded	1,883	792
Allowance For Loan Loss Allocated	1,080	265
Average Balance in Impaired Loans With an allowance recorded	1,727	794
Cash/Accrual Interest Income Recognized, With an allowance recorded	$ 2

XML

Allowance for Loan Losses - Allowance for Loan Losses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of the period	$ 15,992	$ 18,270
Total loans charged-off	495	1,458
Total loan recoveries	605	669
Net loans charged-off (recovered)	(110)	789
Total provision charged to operating expense		2,084
Balance at the end of the period	16,102	19,565
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	29	417
Total loan recoveries	390	70
Total provision charged to operating expense	212	1,738
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off		132
Total loan recoveries	4	32
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	22	146
Total loan recoveries	1	2
Commercial [Member] | Residential Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off
Total loan recoveries
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	7
Total loan recoveries
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off		139
Total loan recoveries	385	36
Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	22	143
Total loan recoveries	4	3
Total provision charged to operating expense	(604)	312
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	22	143
Total loan recoveries	4	3
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off
Total loan recoveries
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off
Total loan recoveries
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	444	898
Total loan recoveries	211	596
Total provision charged to operating expense	392	34
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	33	107
Total loan recoveries	18	394
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off
Total loan recoveries
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	227	353
Total loan recoveries	119	170
Consumer [Member] | Home Equity [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans charged-off	184	438
Total loan recoveries	$ 74	$ 32

XML

Non-performing Assets and Impaired Loans - Payment Status by Class of Loan (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	$ 2,156	$ 3,108
60 - 89 Days Past Due	456	344
Greater than 90 Days Past Due	203	49
Total Past Due	2,815	3,501
Loans Not Past Due	1,097,255	1,064,434
Total	1,100,070	1,067,935
30 - 59 Days Past Due, Percentage of Total Loans	0.20%	0.29%
60 - 89 Days Past Due, Percentage of Total Loans	0.04%	0.03%
Greater than 90 Days Past Due, Percentage of Total Loans	0.02%	0.00%
Total Past Due, Percentage of Total Loans	0.26%	0.33%
Loans Not Past Due, Percentage of Total Loans	99.74%	99.67%
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	450	765
60 - 89 Days Past Due	127
Greater than 90 Days Past Due		45
Total Past Due	577	810
Loans Not Past Due	527,454	503,774
Total	528,031	504,584
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	218	341
60 - 89 Days Past Due	127
Total Past Due	345	341
Loans Not Past Due	173,169	155,921
Total	173,514	156,262
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	122	424
Greater than 90 Days Past Due		45
Total Past Due	122	469
Loans Not Past Due	230,103	224,244
Total	230,225	224,713
Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	833	400
Total	833	400
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	21,347	21,289
Total	21,347	21,289
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	110
Total Past Due	110
Loans Not Past Due	102,002	101,920
Total	102,112	101,920
Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	313	445
60 - 89 Days Past Due		87
Greater than 90 Days Past Due	3	2
Total Past Due	316	534
Loans Not Past Due	291,371	283,198
Total	291,687	283,732
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	313	445
60 - 89 Days Past Due		87
Greater than 90 Days Past Due	3	2
Total Past Due	316	534
Loans Not Past Due	180,533	175,534
Total	180,849	176,068
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	8,692	9,508
Total	8,692	9,508
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	102,146	98,156
Total	102,146	98,156
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	1,393	1,898
60 - 89 Days Past Due	329	257
Greater than 90 Days Past Due	200	2
Total Past Due	1,922	2,157
Loans Not Past Due	278,430	277,462
Total	280,352	279,619
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	67	120
60 - 89 Days Past Due	10	24
Greater than 90 Days Past Due	20
Total Past Due	97	144
Loans Not Past Due	30,459	29,839
Total	30,556	29,983
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Not Past Due	270	294
Total	270	294
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	771	1,011
60 - 89 Days Past Due	41	175
Greater than 90 Days Past Due	103	2
Total Past Due	915	1,188
Loans Not Past Due	130,479	130,196
Total	131,394	131,384
Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 - 59 Days Past Due	555	767
60 - 89 Days Past Due	278	58
Greater than 90 Days Past Due	77
Total Past Due	910	825
Loans Not Past Due	117,222	117,133
Total	$ 118,132	$ 117,958

XML

Accounting for Certain Loans Acquired in a Transfer - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Business Acquisition [Line Items]
Total provision charged to operating expense		$ 2,084
Loans Purchased With Evidence Of Credit Deterioration [Member]
Business Acquisition [Line Items]
Total provision charged to operating expense	0	1,400
Allowances for loan losses	$ 0	$ 0

XML

Accounting Policies - Summary of Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic earnings per share
Net income	$ 3,417	$ 5,311
Less: Preferred stock dividends and accretion of discount	31	146
Net income available to common shareholders	3,386	5,165
Weighted average common shares outstanding	8,630,966	8,617,466
Basic Earnings Per Share	$ 0.39	$ 0.60
Diluted earnings per share
Net income available to common shareholders	$ 3,386	$ 5,165
Weighted average common shares outstanding	8,630,966	8,617,466
Effect of dilutive securities:
Warrants	311,278	293,237
Weighted average shares outstanding	9,021,786	8,980,655
Diluted Earnings Per Share	$ 0.38	$ 0.58
Restricted Stock [Member]
Effect of dilutive securities:
Effect of dilutive securities	39,519	35,557
Stock Options [Member]
Effect of dilutive securities:
Effect of dilutive securities	40,023	34,395

XML

Derivative Financial Instruments - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2014 Cash Flow Hedging [Member]	Dec. 31, 2013 Cash Flow Hedging [Member]	Mar. 31, 2014 Derivative in Fair Value Hedging Relationship [Member]	Dec. 31, 2013 Derivative in Fair Value Hedging Relationship [Member]
Derivative [Line Items]
LIBOR period	3 months
Weighted average fixed rate	6.14%
Notional amount of interest		$ 30.5	$ 30.5	$ 100.1	$ 95.3
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

XML

Accounting for Certain Loans Acquired in a Transfer (Tables)

3 Months Ended

Mar. 31, 2014

Amounts of Loans

	March 31			December 31
	2014			2013
Commercial
Working capital and equipment	$	253,939		$	241,569
Real estate, including agriculture		254,734			245,313
Tax exempt		2,483			2,898
Other		17,479			15,409
Total		528,635			505,189
Real estate
1–4 family		185,428			181,393
Other		4,465			4,565
Total		189,893			185,958
Consumer
Auto		140,147			139,915
Recreation		5,107			4,839
Real estate/home improvement		31,139			30,729
Home equity		96,682			96,924
Unsecured		3,780			3,825
Other		3,265			3,293
Total		280,120			279,525
Mortgage warehouse		102,146			98,156
Total loans		1,100,794			1,068,828
Allowance for loan losses		(16,102	)		(15,992	)
Loans, net	$	1,084,692		$	1,052,836

Loans Purchased With Evidence Of Credit Deterioration [Member]

Amounts of Loans

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

	March 31		December 31
	2014		2013
Commercial	$	22,223	$	37,048
Real estate		11,033		11,761
Consumer		10,272		11,485
Outstanding balance	$	43,528	$	60,294
Carrying amount, net of allowance of $367 and $389	$	43,161	$	59,905

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:

	2014			2013
Balance at January 1	$	3,185		$	6,111
Additions		—			—
Accretion		(138	)		(451	)
Reclassification from nonaccreatable difference		—			—
Disposals		(18	)		(696	)
Balance at March 31	$	3,029		$	4,964

XML

Non-performing Assets and Impaired Loans - Nonaccrual, Loans Past Due Over 90 Days Still on Accrual, and Troubled Debt Restructured ("TDRs") by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 8,773	$ 9,748
Loans Past Due Over 90 Days Still Accruing	203	49
Non Performing TDR's	3,661	3,426
Performing TDR's	4,999	5,054
Total Non-Performing Loans	17,636	18,277
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	3,691	4,014
Loans Past Due Over 90 Days Still Accruing		45
Non Performing TDR's	2,338	2,116
Performing TDR's	1,283	1,296
Total Non-Performing Loans	7,312	7,471
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	294	293
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's	81	222
Performing TDR's	769	778
Total Non-Performing Loans	1,144	1,293
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,192	2,289
Loans Past Due Over 90 Days Still Accruing		45
Non Performing TDR's	1,084	1,117
Performing TDR's	514	518
Total Non-Performing Loans	3,790	3,969
Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	162	182
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans	162	182
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,043	1,250
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's	1,173	777
Performing TDR's
Total Non-Performing Loans	2,216	2,027
Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,709	2,459
Loans Past Due Over 90 Days Still Accruing	3	2
Non Performing TDR's	1,136	999
Performing TDR's	2,510	2,686
Total Non-Performing Loans	6,358	6,146
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,709	2,459
Loans Past Due Over 90 Days Still Accruing	3	2
Non Performing TDR's	858	719
Performing TDR's	2,510	2,686
Total Non-Performing Loans	6,080	5,866
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's	278	280
Performing TDR's
Total Non-Performing Loans	278	280
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,373	3,275
Loans Past Due Over 90 Days Still Accruing	200	2
Non Performing TDR's	187	311
Performing TDR's	1,206	1,072
Total Non-Performing Loans	3,966	4,660
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	289	202
Loans Past Due Over 90 Days Still Accruing	20
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans	309	202
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due Over 90 Days Still Accruing
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	536	531
Loans Past Due Over 90 Days Still Accruing	103	2
Non Performing TDR's
Performing TDR's
Total Non-Performing Loans	639	533
Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,548	2,542
Loans Past Due Over 90 Days Still Accruing	77
Non Performing TDR's	187	311
Performing TDR's	1,206	1,072
Total Non-Performing Loans	$ 3,018	$ 3,925

XML

Loans - Recorded Investment of Individual Loan Categories (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	$ 1,100,070	$ 1,067,935
Net loans	1,083,968	1,051,943
Interest Due	3,241	3,186
Deferred Fees / (Costs)	724	893
Recorded Investment	1,087,933	1,056,022
Allowance for loan losses	(16,102)	(15,992)	(19,565)	(18,270)
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	528,031	504,584
Interest Due	1,246	1,161
Deferred Fees / (Costs)	604	605
Recorded Investment	529,881	506,350
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	291,687	283,732
Interest Due	1,073	1,072
Deferred Fees / (Costs)	352	382
Recorded Investment	293,112	285,186
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	280,352	279,619
Interest Due	922	953
Deferred Fees / (Costs)	(232)	(94)
Recorded Investment	281,042	280,478
Loan Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	1,100,070	1,067,935
Interest Due	3,241	3,186
Deferred Fees / (Costs)	724	893
Recorded Investment	1,104,035	1,072,014
Owner Occupied Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	173,514	156,262
Interest Due	268	257
Deferred Fees / (Costs)	245	207
Recorded Investment	174,027	156,726
Non-owner Occupied Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	230,225	224,713
Interest Due	201	105
Deferred Fees / (Costs)	266	299
Recorded Investment	230,692	225,117
Residential Spec Homes [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	833	400
Interest Due	1
Deferred Fees / (Costs)
Recorded Investment	834	400
Development & Spec Land Loans [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	21,347	21,289
Interest Due	61	62
Deferred Fees / (Costs)	43	42
Recorded Investment	21,451	21,393
Commercial and Industrial [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	102,112	101,920
Interest Due	715	737
Deferred Fees / (Costs)	50	57
Recorded Investment	102,877	102,714
Residential Mortgage [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	180,849	176,068
Interest Due	579	578
Deferred Fees / (Costs)	352	382
Recorded Investment	181,780	177,028
Residential Construction [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	8,692	9,508
Interest Due	14	14
Deferred Fees / (Costs)
Recorded Investment	8,706	9,522
Mortgage Warehousing [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	102,146	98,156
Interest Due	480	480
Deferred Fees / (Costs)
Recorded Investment	102,626	98,636
Direct Installment [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	30,556	29,983
Interest Due	104	104
Deferred Fees / (Costs)	(278)	(281)
Recorded Investment	30,382	29,806
Direct Installment Purchased [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	270	294
Interest Due
Deferred Fees / (Costs)
Recorded Investment	270	294
Indirect Installment [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	131,394	131,384
Interest Due	301	320
Deferred Fees / (Costs)
Recorded Investment	131,695	131,704
Home Equity [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan Balance	118,132	117,958
Interest Due	517	529
Deferred Fees / (Costs)	46	187
Recorded Investment	$ 118,695	$ 118,674

XML

Securities - Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized cost within one year	$ 4,449	$ 3,643
Amortized cost one to five years	43,451	49,198
Amortized cost for five to ten years	111,942	106,225
Amortized cost for after ten years	58,764	62,120
Total amortized cost	218,606	221,186
Total available for sale investment securities, Amortized Cost	514,839	508,427
Within one year, amortized cost	9,910	9,910
One to five years, amortized cost
Total held to maturity investment securities, amortized cost	9,910	9,910
Fair value within one year	4,486	3,663
Fair value for one to five years	43,959	49,627
Fair value for five to ten years	114,654	107,424
Fair value for after ten years	58,866	61,051
Total fair value	221,965	221,765
Investment securities, available for sale	519,430	508,591
Within one year, fair value	9,910	9,910
One to five years, fair value
Held-to-maturity, fair value	9,910	9,910
Federal agency collateralized mortgage obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	115,584	116,047
Investment securities, available for sale	114,836	114,706
Federal agency mortgage-backed pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	179,625	170,006
Investment securities, available for sale	181,573	170,894
Private labeled mortgage-backed pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	1,024	1,188
Investment securities, available for sale	$ 1,056	$ 1,226

XML

Non-performing Assets and Impaired Loans - Loans Transferred and Classified as Troubled Debt Restructured Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Defaults	Mar. 31, 2013 Defaults
Financing Receivable, Modifications [Line Items]
Number of Defaults	3	8
Unpaid Principal Balance	$ 544	$ 1,327
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	2	3
Unpaid Principal Balance	398	146
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		2
Unpaid Principal Balance		76
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		1
Unpaid Principal Balance		70
Commercial [Member] | Residential Development [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	2
Unpaid Principal Balance	398
Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		3
Unpaid Principal Balance		390
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		3
Unpaid Principal Balance		390
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1	2
Unpaid Principal Balance	146	791
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Home Equity [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1	2
Unpaid Principal Balance	$ 146	$ 791

XML

Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Unrealized gain on securities available for sale	$ 4,590	$ 164
Unrealized loss on derivative instruments	(3,051)	(2,826)
Tax effect	(538)	933
Total accumulated other comprehensive income (loss)	$ 1,001	$ (1,729)

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, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	$ 519,430	$ 508,591
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	42,641	43,134
State and municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	178,333	177,898
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	114,836	114,706
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	181,573	170,894
Private labeled mortgage-backed pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	1,056	1,226
Corporate notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	991	733
Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	519,430	508,591
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	42,641	43,134
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	178,333	177,898
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	114,836	114,706
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	181,573	170,894
Recurring Basis [Member] | Private labeled mortgage-backed pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	1,056	1,226
Recurring Basis [Member] | Hedged Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	100,564	95,372
Recurring Basis [Member] | Forward Sale Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	470	212
Recurring Basis [Member] | Interest Rate Swap Agreements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	(3,205)	(2,773)
Recurring Basis [Member] | Commitments to Originate Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	(39)	(22)
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [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
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [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
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [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
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [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
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Private labeled mortgage-backed pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Hedged Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Forward Sale Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Interest Rate Swap Agreements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Commitments to Originate Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
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	519,430	508,591
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	42,641	43,134
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	178,333	177,898
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	114,836	114,706
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	181,573	170,894
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Private labeled mortgage-backed pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value	1,056	1,226
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]
Available-for-sale securities	100,564	95,372
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]
Available-for-sale securities	470	212
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Agreements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	(3,205)	(2,773)
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Commitments to Originate Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	(39)	(22)
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [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
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [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
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [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
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [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
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Private labeled mortgage-backed pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Hedged Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Forward Sale Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Swap Agreements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Commitments to Originate Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities
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	991	733
Recurring Basis [Member] | Corporate notes [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value
Recurring Basis [Member] | Corporate notes [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	991	733
Recurring Basis [Member] | Corporate notes [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total available-for-sale securities, Fair Value

XML

Allowance for Loan Losses - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014
Scenario, Actual [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Actual loss history experienced by the Company	5 years
Minimum [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Actual loss history experienced by the Company	1 year
Maximum [Member]
Financing Receivable, Recorded Investment, Past Due [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

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Operating Activities
Net income	$ 3,417	$ 5,311
Items not requiring (providing) cash
Provision for loan losses		2,084
Depreciation and amortization	844	849
Share based compensation	27	8
Mortgage servicing rights recovery	(5)	(33)
Premium amortization on securities available for sale, net	549	808
Gain on sale of investment securities		(368)
Gain on sale of mortgage loans	(1,411)	(3,106)
Proceeds from sales of loans	35,348	102,762
Loans originated for sale	(35,991)	(95,017)
Change in cash value of life insurance	(233)	(252)
Gain on sale of other real estate owned	(218)	(238)
Net change in
Interest receivable	(35)	167
Interest payable	(8)	(8)
Other assets	675	3,346
Other liabilities	(1,138)	(676)
Net cash provided by operating activities	1,821	15,637
Investing Activities
Purchases of securities available for sale	(27,290)	(51,581)
Proceeds from sales, maturities, calls, and principal repayments of securities available for sale	20,327	51,894
Purchase of securities held to maturity		(2,110)
Net change in loans	(32,259)	99,089
Proceeds on the sale of OREO and repossessed assets	784	1,159
Purchases of premises and equipment	(1,394)	(841)
Purchase of Mortgage Company	(735)
Net cash provided by (used in) by investing activities	(40,567)	97,610
Net change in
Deposits	64,051	20,910
Borrowings	(20,214)	(136,826)
Dividends paid on common shares	(961)	(867)
Dividends paid on preferred shares	(31)	(146)
Net cash provided by (used in) financing activities	42,845	(116,929)
Net Change in Cash and Cash Equivalents	4,099	(3,682)
Cash and Cash Equivalents, Beginning of Period	31,721	30,735
Cash and Cash Equivalents, End of Period	35,820	27,053
Additional Cash Flows Information
Interest paid	3,203	3,427
Income taxes paid		400
Transfer of loans to other real estate owned	$ 610	$ 670

XML

Disclosures about Fair Value of Assets and Liabilities - Realized Gains and Losses included in Net Income for Periods in Condensed Consolidated Statements of Income (Detail) (Non Interest Income [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Included in net income	$ 240	$ (12)
Hedged Loans [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Included in net income	207	(401)
Fair value interest rate swap agreements [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Included in net income	(207)	401
Derivative loan commitments [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Included in net income	$ 240	$ (12)

XML

Accounting for Certain Loans Acquired in a Transfer - Amounts of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 1,100,794	$ 1,068,828
Carrying amount, net of allowance of $367 and $389	1,083,968	1,051,943
Loans Purchased With Evidence Of Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	43,528	60,294
Carrying amount, net of allowance of $367 and $389	43,161	59,905
Loans Purchased With Evidence Of Credit Deterioration [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	22,223	37,048
Loans Purchased With Evidence Of Credit Deterioration [Member] | Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	11,033	11,761
Loans Purchased With Evidence Of Credit Deterioration [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	$ 10,272	$ 11,485

XML

Derivative financial instruments (Tables)

3 Months Ended

Mar. 31, 2014

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 Bancorp:

	Asset Derivative March 31, 2014			Liability Derivatives March 31, 2014
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	154
Interest rate contracts	Other Assets		154	Other liabilities		3,051
Total derivatives designated as hedging instruments			154			3,205
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		470	Other liabilities		39
Total derivatives not designated as hedging instruments			470			39
Total derivatives		$	624		$	3,244

	Asset Derivative December 31, 2013				Liability Derivatives December 31, 2013
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	7		Other liabilities	$	(53	)
Interest rate contracts	Other Assets		(60	)	Other liabilities		2,826
Total derivatives designated as hedging instruments			(53	)			2,773
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		212		Other liabilities		22
Total derivatives not designated as hedging instruments			212				22
Total derivatives		$	159			$	2,795

Effect of Derivative Instruments on 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 is as follows:

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow hedging relationship	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	$	(146	)	$	285

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 hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	Interest income—loans	$	207		$	(401	)
Interest rate contracts	Interest income—loans		(207	)		401
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)		2013 (Unaudited)
Mortgage contracts	Other income—gain on sale of loans	$	240	$	(12	)

XML

Non-performing Loans and Impaired Loans (Tables)

3 Months Ended

Mar. 31, 2014

Text Block [Abstract]

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

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

March 31, 2014	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	294	$	—	$	81	$	769	$	1,144
Non owner occupied real estate		2,192		—		1,084		514		3,790
Residential development		—		—		—		—		—
Development & Spec Land Loans		162		—		—		—		162
Commercial and industrial		1,043		—		1,173		—		2,216
Total commercial		3,691		—		2,338		1,283		7,312
Real estate
Residential mortgage		2,709		3		858		2,510		6,080
Residential construction		—		—		278		—		278
Mortgage warehouse		—		—		—		—		—
Total real estate		2,709		3		1,136		2,510		6,358
Consumer
Direct Installment		289		20		—		—		309
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		536		103		—		—		639
Home Equity		1,548		77		187		1,206		3,018
Total Consumer		2,373		200		187		1,206		3,966
Total	$	8,773	$	203	$	3,661	$	4,999	$	17,636
December 31, 2013	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	293	$	—	$	222	$	778	$	1,293
Non owner occupied real estate		2,289		45		1,117		518		3,969
Residential development		—		—		—		—		—
Development & Spec Land Loans		182		—		—		—		182
Commercial and industrial		1,250		—		777		—		2,027
Total commercial		4,014		45		2,116		1,296		7,471
Real estate
Residential mortgage		2,459		2		719		2,686		5,866
Residential construction		—		—		280		—		280
Mortgage warehouse		—		—		—		—		—
Total real estate		2,459		2		999		2,686		6,146
Consumer
Direct Installment		202		—		—		—		202
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		531		2		—		—		533
Home Equity		2,542		—		311		1,072		3,925
Total Consumer		3,275		2		311		1,072		4,660
Total	$	9,748	$	49	$	3,426	$	5,054	$	18,277

Loans Transferred and Classified as Troubled Debt Restructured Loans

Loans transferred and classified as troubled debt restructuring during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		—		—		3		390
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		—		—		3		390
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		2		791
Total Consumer		1		146		2		791
Total		3	$	544		8	$	1,327

Troubled debt restructured loans which had payment defaults during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below. Default occurs when a loan is 90 days or more past due or has been transferred to nonaccrual.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		1		154		1		234
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		1		154		1		234
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		—		—
Total Consumer		1		146		—		—
Total		4	$	698		4	$	380

Commercial Loans Individually Evaluated for Impairment by Class of Loans

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

							Three Months Ending
March 31, 2014	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	$	1,145	$	1,148	$	—	$	1,759		$	12
Non owner occupied real estate		3,443		3,446		—		3,514			5
Residential development		—		—		—		—			—
Development & Spec Land Loans		24		24		—		24			—
Commercial and industrial		333		349		—		608			—
Total commercial		4,945		4,967		—		5,905			17
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		(1	)		—
Non owner occupied real estate		347		347		170		353			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		138		138		40		142			—
Commercial and industrial		1,883		1,883		1,080		1,727			2
Total commercial		2,368		2,368		1,290		2,221			2
Total	$	7,313	$	7,335	$	1,290	$	8,126		$	19
							Three Months Ending
March 31, 2013	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	$	3,310	$	3,317	$	—	$	4,906		$	14
Non owner occupied real estate		2,578		2,579		—		3,793			11
Residential development		—		—		—		—			—
Development & Spec Land Loans		135		135		—		166			—
Commercial and industrial		912		928		—		1,877			—
Total commercial		6,935		6,959		—		10,742			25
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—			—
Non owner occupied real estate		1,763		1,763		1,080		1,774			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		564		564		600		569			—
Commercial and industrial		792		792		265		794			—
Total commercial		3,119		3,119		1,945		3,137			—
Total	$	10,054	$	10,078	$	1,945	$	13,879		$	25

Payment Status by Class of Loan

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

March 31, 2014	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	$	218		$	127		$	—		$	345		$	173,169		$	173,514
Non owner occupied real estate		122			—			—			122			230,103			230,225
Residential development		—			—			—			—			833			833
Development & Spec Land Loans		—			—			—			—			21,347			21,347
Commercial and industrial		110			—			—			110			102,002			102,112
Total commercial		450			127			—			577			527,454			528,031
Real estate
Residential mortgage		313			—			3			316			180,533			180,849
Residential construction		—			—			—			—			8,692			8,692
Mortgage warehouse		—			—			—			—			102,146			102,146
Total real estate		313			—			3			316			291,371			291,687
Consumer
Direct Installment		67			10			20			97			30,459			30,556
Direct Installment Purchased		—			—			—			—			270			270
Indirect Installment		771			41			103			915			130,479			131,394
Home Equity		555			278			77			910			117,222			118,132
Total consumer		1,393			329			200			1,922			278,430			280,352
Total	$	2,156		$	456		$	203		$	2,815		$	1,097,255		$	1,100,070
Percentage of total loans		0.20	%		0.04	%		0.02	%		0.26	%		99.74	%
December 31, 2013	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	$	341		$	—		$	—		$	341		$	155,921		$	156,262
Non owner occupied real estate		424			—			45			469			224,244			224,713
Residential development		—			—			—			—			400			400
Development & Spec Land Loans		—			—			—			—			21,289			21,289
Commercial and industrial		—			—			—			—			101,920			101,920
Total commercial		765			—			45			810			503,774			504,584
Real estate
Residential mortgage		445			87			2			534			175,534			176,068
Residential construction		—			—			—			—			9,508			9,508
Mortgage warehouse		—			—			—			—			98,156			98,156
Total real estate		445			87			2			534			283,198			283,732
Consumer
Direct Installment		120			24			—			144			29,839			29,983
Direct Installment Purchased		—			—			—			—			294			294
Indirect Installment		1,011			175			2			1,188			130,196			131,384
Home Equity		767			58			—			825			117,133			117,958
Total consumer		1,898			257			2			2,157			277,462			279,619
Total	$	3,108		$	344		$	49		$	3,501		$	1,064,434		$	1,067,935
Percentage of total loans		0.29	%		0.03	%		0.00	%		0.33	%		99.67	%

Loans by Credit Grades

The following table presents loans by credit grades.

March 31, 2014	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	163,274		$	2,667		$	7,573		$	—		$	173,514
Non owner occupied real estate		213,918			6,211			10,096			—			230,225
Residential development		738			95			—			—			833
Development & Spec Land Loans		19,984			88			1,275			—			21,347
Commercial and industrial		92,357			6,045			3,710			—			102,112
Total commercial		490,271			15,106			22,654			—			528,031
Real estate
Residential mortgage		174,769			—			6,080			—			180,849
Residential construction		8,414			—			278			—			8,692
Mortgage warehouse		102,146			—			—			—			102,146
Total real estate		285,329			—			6,358			—			291,687
Consumer
Direct Installment		30,247			—			309			—			30,556
Direct Installment Purchased		270			—			—			—			270
Indirect Installment		130,755			—			639			—			131,394
Home Equity		115,114			—			3,018			—			118,132
Total Consumer		276,386			—			3,966			—			280,352
Total	$	1,051,985		$	15,106		$	32,978		$	—		$	1,100,070
Percentage of total loans		95.63	%		1.37	%		3.00	%		0.00	%
December 31, 2013	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	146,085		$	2,231		$	7,946		$	—		$	156,262
Non owner occupied real estate		208,625			5,047			11,041			—			224,713
Residential development		400			—			—			—			400
Development & Spec Land Loans		19,858			91			1,340			—			21,289
Commercial and industrial		91,852			6,492			3,576			—			101,920
Total commercial		466,820			13,861			23,903			—			504,584
Real estate
Residential mortgage		170,202			—			5,866			—			176,068
Residential construction		9,228			—			280			—			9,508
Mortgage warehouse		98,156			—			—			—			98,156
Total real estate		277,586			—			6,146			—			283,732
Consumer
Direct Installment		29,781			—			202			—			29,983
Direct Installment Purchased		294			—			—			—			294
Indirect Installment		130,851			—			533			—			131,384
Home Equity		114,033			—			3,925			—			117,958
Total Consumer		274,959			—			4,660			—			279,619
Total	$	1,019,365		$	13,861		$	34,709		$	—		$	1,067,935
Percentage of total loans		95.45	%		1.30	%		3.25	%		0.00	%

XML

Non-performing Assets and Impaired Loans - Loans by Credit Grades (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,100,070	$ 1,067,935
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	528,031	504,584
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	173,514	156,262
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	230,225	224,713
Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	833	400
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	21,347	21,289
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	102,112	101,920
Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	291,687	283,732
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	180,849	176,068
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	8,692	9,508
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	102,146	98,156
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	280,352	279,619
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	30,556	29,983
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	270	294
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	131,394	131,384
Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	118,132	117,958
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,051,985	1,019,365
Percentage of total loans	95.63%	95.45%
Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	490,271	466,820
Pass [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	163,274	146,085
Pass [Member] | Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	213,918	208,625
Pass [Member] | Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	738	400
Pass [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,984	19,858
Pass [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	92,357	91,852
Pass [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	285,329	277,586
Pass [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	174,769	170,202
Pass [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	8,414	9,228
Pass [Member] | Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	102,146	98,156
Pass [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	276,386	274,959
Pass [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	30,247	29,781
Pass [Member] | Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	270	294
Pass [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	130,755	130,851
Pass [Member] | Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	115,114	114,033
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,106	13,861
Percentage of total loans	1.37%	1.30%
Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,106	13,861
Special Mention [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,667	2,231
Special Mention [Member] | Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,211	5,047
Special Mention [Member] | Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	95
Special Mention [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	88	91
Special Mention [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,045	6,492
Special Mention [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Special Mention [Member] | Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	32,978	34,709
Percentage of total loans	3.00%	3.25%
Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	22,654	23,903
Substandard [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	7,573	7,946
Substandard [Member] | Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	10,096	11,041
Substandard [Member] | Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Substandard [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,275	1,340
Substandard [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,710	3,576
Substandard [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,358	6,146
Substandard [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,080	5,866
Substandard [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	278	280
Substandard [Member] | Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Substandard [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,966	4,660
Substandard [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	309	202
Substandard [Member] | Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Substandard [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	639	533
Substandard [Member] | Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,018	3,925
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Percentage of total loans	0.00%	0.00%
Doubtful [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Commercial [Member] | Residential Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Consumer [Member] | Direct Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
Doubtful [Member] | Consumer [Member] | Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Total

XML

Accounting for Certain Loans Acquired in a Transfer - Amounts of Loans (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net of allowance	$ 16,102	$ 15,992	$ 19,565	$ 18,270
Loans Purchased With Evidence Of Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net of allowance	$ 367	$ 389

XML

Disclosures about fair value of assets and liabilities (Tables)

3 Months Ended

Mar. 31, 2014

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 (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
March 31, 2014
Available-for-sale securities
U.S. Treasury and federal agencies	$	42,641		$	—	$	42,641		$	—
State and municipal		178,333			—		178,333			—
Federal agency collateralized mortgage obligations		114,836			—		114,836			—
Federal agency mortgage-backed pools		181,573			—		181,573			—
Private labeled mortgage-backed pools		1,056			—		1,056			—
Corporate notes		991			—		991			—
Total available-for-sale securities		519,430			—		519,430			—
Hedged loans		100,564			—		100,564			—
Forward sale commitments		470			—		470			—
Interest rate swap agreements		(3,205	)		—		(3,205	)		—
Commitments to originate loans		(39	)		—		(39	)		—
December 31, 2013
Available-for-sale securities
U.S. Treasury and federal agencies	$	43,134		$	—	$	43,134		$	—
State and municipal		177,898			—		177,898			—
Federal agency collateralized mortgage obligations		114,706			—		114,706			—
Federal agency mortgage-backed pools		170,894			—		170,894			—
Private labeled mortgage-backed pools		1,226			—		1,226			—
Corporate notes		733			—		733			—
Total available-for-sale securities		508,591			—		508,591			—
Hedged loans		95,372			—		95,372			—
Forward sale commitments		212			—		212			—
Interest rate swap agreements		(2,773	)		—		(2,773	)		—
Commitments to originate loans		(22	)		—		(22	)		—

Realized Gains and Losses Included in Net Income for Periods in Condensed 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	2014			2013
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	207		$	(401	)
Fair value interest rate swap agreements		(207	)		401
Derivative loan commitments		240			(12	)
	$	240		$	(12	)

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, 2014
Impaired loans	$	6,023	$	—	$	—	$	6,023
Mortgage servicing rights		7,030		—		—		7,030
December 31, 2013
Impaired loans	$	6,114	$	—	$	—	$	6,114
Mortgage servicing rights		7,039		—		—		7,039

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, 2014		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,023	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,030	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,114	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,039	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

XML

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

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, 2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	35,820	$	35,820	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		5,335		—		—		5,335
Loans excluding loan level hedges, net		984,128		—		—		1,009,380
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,536		—		7,536		—
Liabilities
Non-interest bearing deposits	$	238,499	$	238,499	$	—	$	—
Interest-bearing deposits		1,117,072		—		1,051,391		—
Borrowings		236,043		—		237,997		—
Subordinated debentures		32,525		—		32,587		—
Interest payable		498		—		498		—

	December 31, 2013
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	31,721	$	31,721	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		3,281		—		—		3,281
Loans excluding loan level hedges, net		957,464		—		—		975,910
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,501		—		7,501		—
Liabilities
Non-interest bearing deposits	$	231,096	$	231,096	$	—	$	—
Interest-bearing deposits		1,060,424		—		1,002,980		—
Borrowings		256,296		—		257,093		—
Subordinated debentures		32,486		—		32,528		—
Interest payable		506		—		506		—

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Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2014
Cash dividends on preferred stock, rate	1.00%
Cash dividends on common stock, per share	$ 0.11
Retained Earnings [Member]
Cash dividends on preferred stock, rate	1.00%
Cash dividends on common stock, per share	$ 0.11

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) included in capital are as follows:

	March 31			December 31
	2014			2013
Unrealized gain on securities available for sale	$	4,590		$	164
Unrealized loss on derivative instruments		(3,051	)		(2,826	)
Tax effect		(538	)		933
Total accumulated other comprehensive income (loss)	$	1,001		$	(1,729	)

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Loans - Amounts of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	$ 528,635	$ 505,189
Real Estate, Total	189,893	185,958
Consumer, Total	280,120	279,525
Mortgage warehouse	102,146	98,156
Total loans	1,100,794	1,068,828
Allowance for loan losses	(16,102)	(15,992)	(19,565)	(18,270)
Loans, net	1,084,692	1,052,836
Working Capital and Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	253,939	241,569
Real Estate Including Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	254,734	245,313
Tax Exempt Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	2,483	2,898
Other Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial, Total	17,479	15,409
1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total	185,428	181,393
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate, Total	4,465	4,565
Recreation Consumer Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	5,107	4,839
Real Estate Home Improvement Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	31,139	30,729
Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	96,682	96,924
Other Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	3,265	3,293
Consumer Loans Auto Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	140,147	139,915
Unsecured Debt [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer, Total	$ 3,780	$ 3,825

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Non-performing Assets and Impaired Loans - Loans Transferred and Classified as Troubled Debt Restructured Loans Nonaccrual (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Defaults	Mar. 31, 2013 Defaults
Financing Receivable, Modifications [Line Items]
Number of Defaults	4	4
Unpaid Principal Balance	$ 698	$ 380
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	2	3
Unpaid Principal Balance	398	146
Commercial [Member] | Owner Occupied Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		2
Unpaid Principal Balance		76
Commercial [Member] | Non-owner Occupied Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults		1
Unpaid Principal Balance		70
Commercial [Member] | Residential Development [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Commercial [Member] | Development & Spec Land Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Commercial [Member] | Commercial and Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	2
Unpaid Principal Balance	398
Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1	1
Unpaid Principal Balance	154	234
Real Estate [Member] | Residential Mortgage [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1	1
Unpaid Principal Balance	154	234
Real Estate [Member] | Residential Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Real Estate [Member] | Mortgage Warehousing [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1
Unpaid Principal Balance	146
Consumer [Member] | Direct Installment [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Direct Installment Purchased [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Indirect Installment [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults
Unpaid Principal Balance
Consumer [Member] | Home Equity [Member]
Financing Receivable, Modifications [Line Items]
Number of Defaults	1
Unpaid Principal Balance	$ 146

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 35,820	$ 31,721
Investment securities, available for sale	519,430	508,591
Investment securities, held to maturity (fair value of $9,910 and $9,910)	9,910	9,910
Loans held for sale	5,335	3,281
Loans, net of allowance for loan losses of $16,102 and $15,992	1,084,692	1,052,836
Premises and equipment, net	47,013	46,194
Federal Reserve and Federal Home Loan Bank stock	14,184	14,184
Goodwill	20,483	19,748
Other intangible assets	3,100	3,288
Interest receivable	7,536	7,501
Cash value life insurance	36,423	36,190
Other assets	22,657	24,832
Total assets	1,806,583	1,758,276
Liabilities
Non-interest bearing	238,499	231,096
Interest bearing	1,117,072	1,060,424
Total deposits	1,355,571	1,291,520
Borrowings	236,043	256,296
Subordinated debentures	32,525	32,486
Interest payable	498	506
Other liabilities	12,163	12,948
Total liabilities	1,636,800	1,593,756
Commitments and contingent liabilities
Stockholders' Equity
Common stock, no par value Authorized, 22,500,000 shares Issued, 8,703,596 and 8,706,971 shares Outstanding, 8,630,966 and 8,630,966 shares
Additional paid-in capital	32,604	32,496
Retained earnings	123,678	121,253
Accumulated other comprehensive income (loss)	1,001	(1,729)
Total stockholders' equity	169,783	164,520
Total liabilities and stockholders' equity	1,806,583	1,758,276
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 12,500 shares	$ 12,500	$ 12,500

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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, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Loans Purchased With Evidence Of Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at January 1	$ 3,185	$ 6,111
Additions
Accretion	(138)	(451)
Reclassification from nonaccreatable difference
Disposals	(18)	(696)
Balance at March 31	$ 3,029	$ 4,964

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 3,417	$ 5,311
Change in fair value of derivative instruments:
Change in fair value of derivative instruments for the period	(225)	439
Income tax effect	79	(154)
Changes from derivative instruments	(146)	285
Change in securities available-for-sale:
Unrealized appreciation (depreciation) for the period	4,426	(1,704)
Reclassification adjustment for securities gains realized in income		(368)
Income tax effect	(1,550)	726
Unrealized gains (losses) on available-for-sale securities	2,876	(1,346)
Other Comprehensive Income (Loss), Net of Tax	2,730	(1,061)
Comprehensive Income	$ 6,147	$ 4,250

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Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statement of Income Derivative in Cash Flow Hedging Relationship (Detail) (Cash Flow Hedging [Member], Interest Rate Contracts One [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flow Hedging [Member] | Interest Rate Contracts One [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)	$ (146)	$ 285

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Securities - Fair Value of Securities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	$ 514,839	$ 508,427
Gross Unrealized Gains	10,476	9,015
Held-to-maturity, Amortized Cost	9,910	9,910
Gross Unrealized Losses	(5,885)	(8,851)
Available-for-sale Securities, Fair Value	519,430	508,591
Held-to-maturity, Fair Value	9,910	9,910
U.S. Treasury and federal agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	43,098	43,808
Gross Unrealized Gains	121	133
Gross Unrealized Losses	(578)	(807)
Available-for-sale Securities, Fair Value	42,641	43,134
State and municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	174,538	176,670
Gross Unrealized Gains	5,623	4,405
Held-to-maturity, Amortized Cost	9,910	9,910
Gross Unrealized Losses	(1,828)	(3,177)
Held-to-maturity, Gross Unrealized Gains
Available-for-sale Securities, Fair Value	178,333	177,898
Held-to-maturity, Gross Unrealized Losses
Held-to-maturity, Fair Value	9,910	9,910
Federal agency collateralized mortgage obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	115,584	116,047
Gross Unrealized Gains	1,126	1,242
Gross Unrealized Losses	(1,874)	(2,583)
Available-for-sale Securities, Fair Value	114,836	114,706
Federal agency mortgage-backed pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	179,625	170,006
Gross Unrealized Gains	3,553	3,172
Gross Unrealized Losses	(1,605)	(2,284)
Available-for-sale Securities, Fair Value	181,573	170,894
Private labeled mortgage-backed pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	1,024	1,188
Gross Unrealized Gains	32	38
Gross Unrealized Losses
Available-for-sale Securities, Fair Value	1,056	1,226
Corporate notes [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale investment securities, Amortized Cost	970	708
Gross Unrealized Gains	21	25
Gross Unrealized Losses
Available-for-sale Securities, Fair Value	$ 991	$ 733

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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, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Impaired loans [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value	$ 6,023	$ 6,114
Valuation Technique	Collateral based measurement	Collateral based measurement
Unobservable Inputs	Discount to reflect current market conditions and ultimate collectability	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	$ 7,030	$ 7,039
Valuation Technique	Discounted cashflows	Discounted cashflows
Unobservable Inputs	Discount rate, Constant prepayment rate, Probably of default	Discount rate, Constant prepayment rate, Probably 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%
Constant prepayment rate	4.00%	4.00%
Minimum [Member] | Mortgage servicing rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	10.00%	10.00%
Probably 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%
Constant prepayment rate	7.00%	7.00%
Maximum [Member] | Mortgage servicing rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	15.00%	15.00%
Probably 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%
Constant prepayment rate	4.60%	4.60%
Weighted Average [Member] | Mortgage servicing rights [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount rate	12.00%	12.00%
Probably of default	4.50%	4.50%

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Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

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
	2014		2013
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	3,417	$	5,311
Less: Preferred stock dividends and accretion of discount		31		146
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Basic earnings per share	$	0.39	$	0.60
Diluted earnings per share
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Effect of dilutive securities:
Warrants		311,278		293,237
Restricted stock		39,519		35,557
Stock options		40,023		34,395
Weighted average shares outstanding		9,021,786		8,980,655
Diluted earnings per share	$	0.38	$	0.58

At March 31, 2014 and 2013, there were no shares which were not included in the computation of diluted earnings per share because they were non-dilutive.

Reclassifications

Reclassifications

Certain reclassifications have been made to the 2013 condensed consolidated financial statements to be comparable to 2014. These reclassifications had no effect on net income.

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Securities - Additional Information (Detail) (USD $)	Mar. 31, 2014
Amortized Cost And Fair Value Debt Securities [Abstract]
Unrealized loss, other than temporary securities	$ 0

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Securities (Tables)

3 Months Ended

Mar. 31, 2014

Investments Debt And Equity Securities [Abstract]

Fair Value of Securities

The fair value of securities is as follows:

March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,098	$	121	$	(578	)	$	42,641
State and municipal		174,538		5,623		(1,828	)		178,333
Federal agency collateralized mortgage obligations		115,584		1,126		(1,874	)		114,836
Federal agency mortgage-backed pools		179,625		3,553		(1,605	)		181,573
Private labeled mortgage-backed pools		1,024		32		—			1,056
Corporate notes		970		21		—			991
Total available for sale investment securities	$	514,839	$	10,476	$	(5,885	)	$	519,430
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,808	$	133	$	(807	)	$	43,134
State and municipal		176,670		4,405		(3,177	)		177,898
Federal agency collateralized mortgage obligations		116,047		1,242		(2,583	)		114,706
Federal agency mortgage-backed pools		170,006		3,172		(2,284	)		170,894
Private labeled mortgage-backed pools		1,188		38		—			1,226
Corporate notes		708		25		—			733
Total available for sale investment securities	$	508,427	$	9,015	$	(8,851	)	$	508,591
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

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, 2014 and December 31, 2013, 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, 2014				December 31, 2013
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	4,449	$	4,486	$	3,643	$	3,663
One to five years		43,451		43,959		49,198		49,627
Five to ten years		111,942		114,654		106,225		107,424
After ten years		58,764		58,866		62,120		61,051
		218,606		221,965		221,186		221,765
Federal agency collateralized mortgage obligations		115,584		114,836		116,047		114,706
Federal agency mortgage-backed pools		179,625		181,573		170,006		170,894
Private labeled mortgage-backed pools		1,024		1,056		1,188		1,226
Total available for sale investment securities	$	514,839	$	519,430	$	508,427	$	508,591
Held to maturity
Within one year	$	9,910	$	9,910	$	9,910	$	9,910
One to five years		—		—		—		—
Total held to maturity investment securities	$	9,910	$	9,910	$	9,910	$	9,910

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, 2014	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	31,303	$	(578	)	$	—	$	—		$	31,303	$	(578	)
State and municipal		47,875		(1,578	)		5,040		(250	)		52,915		(1,828	)
Federal agency collateralized mortgage obligations		42,858		(675	)		26,382		(1,199	)		69,240		(1,874	)
Federal agency mortgage-backed pools		69,597		(1,605	)		—		—			69,597		(1,605	)
Total temporarily impaired securities	$	191,633	$	(4,436	)	$	31,422	$	(1,449	)	$	223,055	$	(5,885	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2013	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	32,099	$	(807	)	$	—	$	—		$	32,099	$	(807	)
State and municipal		57,078		(2,993	)		3,206		(184	)		60,284		(3,177	)
Federal agency collateralized mortgage obligations		64,445		(2,121	)		8,601		(462	)		73,046		(2,583	)
Federal agency mortgage-backed pools		87,919		(2,284	)		—		—			87,919		(2,284	)
Total temporarily impaired securities	$	241,541	$	(8,205	)	$	11,807	$	(646	)	$	253,348	$	(8,851	)

Sales of Securities Available for Sale

	Three months ended March 31
	2014		2013
Sales of securities available for sale (Unaudited)
Proceeds	$	—	$	23,485
Gross gains		—		376
Gross losses		—		(8	)

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Business Combination - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified				0 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013 SCB Bancorp [Member]	Apr. 03, 2014 SCB Bancorp [Member] Subsequent Event [Member]
Business Combination Transactions [Line Items]
Exchange ratio per share to SCB shareholder				$ 0.4904
Cash paid for each share to SCB shareholder				$ 5.15
Market closing price per share				$ 22.23
Estimated transaction value				$ 18.9
Common stock outstanding	8,630,966	8,630,966		1,164,442
Common stock issued				570,820
Reported total assets of acquiree			154.1
Total deposits held by acquiree			119.3
Total loans of acquiree			$ 130.9

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Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2013	$ 164,520	$ 12,500	$ 32,496	$ 121,253	$ (1,729)
Net income	3,417			3,417
Other comprehensive loss, net of tax	2,730				2,730
Amortization of unearned compensation	81		81
Stock option expense	27		27
Cash dividends on preferred stock	(31)			(31)
Cash dividends on common stock	(961)			(961)
Ending Balance at Mar. 31, 2014	$ 169,783	$ 12,500	$ 32,604	$ 123,678	$ 1,001

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Investment securities, held to maturity fair value	$ 9,910	$ 9,910
Allowance for loan losses	$ 16,102	$ 15,992
Common stock, par value
Common stock, shares authorized	22,500,000	22,500,000
Common stock, shares issued	8,703,596	8,706,971
Common stock, shares outstanding	8,630,966	8,630,966
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	12,500	12,500

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Disclosures about fair value of assets and liabilities

3 Months Ended

Mar. 31, 2014

Text Block [Abstract]

Disclosures about fair value of assets and liabilities

Note 8—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, 2014. 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, 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 (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
March 31, 2014
Available-for-sale securities
U.S. Treasury and federal agencies	$	42,641		$	—	$	42,641		$	—
State and municipal		178,333			—		178,333			—
Federal agency collateralized mortgage obligations		114,836			—		114,836			—
Federal agency mortgage-backed pools		181,573			—		181,573			—
Private labeled mortgage-backed pools		1,056			—		1,056			—
Corporate notes		991			—		991			—
Total available-for-sale securities		519,430			—		519,430			—
Hedged loans		100,564			—		100,564			—
Forward sale commitments		470			—		470			—
Interest rate swap agreements		(3,205	)		—		(3,205	)		—
Commitments to originate loans		(39	)		—		(39	)		—
December 31, 2013
Available-for-sale securities
U.S. Treasury and federal agencies	$	43,134		$	—	$	43,134		$	—
State and municipal		177,898			—		177,898			—
Federal agency collateralized mortgage obligations		114,706			—		114,706			—
Federal agency mortgage-backed pools		170,894			—		170,894			—
Private labeled mortgage-backed pools		1,226			—		1,226			—
Corporate notes		733			—		733			—
Total available-for-sale securities		508,591			—		508,591			—
Hedged loans		95,372			—		95,372			—
Forward sale commitments		212			—		212			—
Interest rate swap agreements		(2,773	)		—		(2,773	)		—
Commitments to originate loans		(22	)		—		(22	)		—

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	2014			2013
Total gains and losses from:	(Unaudited)			(Unaudited)
Hedged loans	$	207		$	(401	)
Fair value interest rate swap agreements		(207	)		401
Derivative loan commitments		240			(12	)
	$	240		$	(12	)

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, 2014
Impaired loans	$	6,023	$	—	$	—	$	6,023
Mortgage servicing rights		7,030		—		—		7,030
December 31, 2013
Impaired loans	$	6,114	$	—	$	—	$	6,114
Mortgage servicing rights		7,039		—		—		7,039

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 MSR’s fair value increased by $5,000 during the first three months of 2014 and increased by $33,000 during the first three months of 2013.

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, 2014		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,023	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,030	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)
	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans	$	6,114	Collateral based measurement	Discount to reflect current market conditions and ultimate collectability	10% - 15% (12%)
Mortgage servicing rights	$	7,039	Discounted cashflows	Discount rate, Constant prepayment rate, Probably of default	10% - 15% (12%), 4% - 7% (4.6%), 1% - 10% (4.5%)

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 09, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
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		9,201,786

XML

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 9—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, 2014 and December 31, 2013. 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 Letter 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, 2014
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	35,820	$	35,820	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		5,335		—		—		5,335
Loans excluding loan level hedges, net		984,128		—		—		1,009,380
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,536		—		7,536		—
Liabilities
Non-interest bearing deposits	$	238,499	$	238,499	$	—	$	—
Interest-bearing deposits		1,117,072		—		1,051,391		—
Borrowings		236,043		—		237,997		—
Subordinated debentures		32,525		—		32,587		—
Interest payable		498		—		498		—

	December 31, 2013
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and due from banks	$	31,721	$	31,721	$	—	$	—
Investment securities, held to maturity		9,910		—		—		9,910
Loans held for sale		3,281		—		—		3,281
Loans excluding loan level hedges, net		957,464		—		—		975,910
Stock in FHLB and FRB		14,184		—		14,184		—
Interest receivable		7,501		—		7,501		—
Liabilities
Non-interest bearing deposits	$	231,096	$	231,096	$	—	$	—
Interest-bearing deposits		1,060,424		—		1,002,980		—
Borrowings		256,296		—		257,093		—
Subordinated debentures		32,486		—		32,528		—
Interest payable		506		—		506		—

XML

Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Interest Income
Loans receivable	$ 12,954	$ 16,440
Investment securities
Taxable	2,390	2,022
Tax exempt	1,123	967
Total interest income	16,467	19,429
Interest Expense
Deposits	1,277	1,480
Borrowed funds	1,422	1,448
Subordinated debentures	496	491
Total interest expense	3,195	3,419
Net Interest Income	13,272	16,010
Provision for loan losses		2,084
Net Interest Income after Provision for Loan Losses	13,272	13,926
Non-interest Income
Service charges on deposit accounts	923	913
Wire transfer fees	112	190
Interchange fees	959	866
Fiduciary activities	1,048	1,140
Gain on sale of investment securities (includes $0 and $368 for the three months ended March 31, 2014 and 2013, respectively, related to accumulated other other comprehensive earnings reclassifications)		368
Gain on sale of mortgage loans	1,411	3,106
Mortgage servicing income net of impairment	207	163
Increase in cash value of bank owned life insurance	233	252
Other income	629	462
Total non-interest income	5,522	7,460
Non-interest Expense
Salaries and employee benefits	7,483	7,504
Net occupancy expenses	1,424	1,311
Data processing	870	600
Professional fees	608	499
Outside services and consultants	661	712
Loan expense	1,015	1,114
FDIC insurance expense	256	283
Other losses	38	(72)
Other expense	2,159	2,028
Total non-interest expense	14,514	13,979
Income Before Income Tax	4,280	7,407
Income tax expense (includes $0 and $129 for the three months ended March 31, 2014 and 2013, respectively, related to income tax expense from reclassification items)	863	2,096
Net Income	3,417	5,311
Preferred stock dividend and discount accretion	(31)	(146)
Net Income Available to Common Shareholders	$ 3,386	$ 5,165
Basic Earnings Per Share	$ 0.39	$ 0.60
Diluted Earnings Per Share	$ 0.38	$ 0.58

XML

Loans

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Loans

Note 3—Loans

	March 31			December 31
	2014			2013
Commercial
Working capital and equipment	$	253,939		$	241,569
Real estate, including agriculture		254,734			245,313
Tax exempt		2,483			2,898
Other		17,479			15,409
Total		528,635			505,189
Real estate
1–4 family		185,428			181,393
Other		4,465			4,565
Total		189,893			185,958
Consumer
Auto		140,147			139,915
Recreation		5,107			4,839
Real estate/home improvement		31,139			30,729
Home equity		96,682			96,924
Unsecured		3,780			3,825
Other		3,265			3,293
Total		280,120			279,525
Mortgage warehouse		102,146			98,156
Total loans		1,100,794			1,068,828
Allowance for loan losses		(16,102	)		(15,992	)
Loans, net	$	1,084,692		$	1,052,836

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 or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. The Company 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 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 repurchases the loan under its option within the agreement. Due to the repurchase 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 repurchase from Horizon their 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 repurchase 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 repurchase 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, 2014	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	173,514		$	268	$	245		$	174,027
Non owner occupied real estate		230,225			201		266			230,692
Residential spec homes		833			1		—			834
Development & spec land loans		21,347			61		43			21,451
Commercial and industrial		102,112			715		50			102,877
Total commercial		528,031			1,246		604			529,881
Residential mortgage		180,849			579		352			181,780
Residential construction		8,692			14		—			8,706
Mortgage warehouse		102,146			480		—			102,626
Total real estate		291,687			1,073		352			293,112
Direct installment		30,556			104		(278	)		30,382
Direct installment purchased		270			—		—			270
Indirect installment		131,394			301		—			131,695
Home equity		118,132			517		46			118,695
Total consumer		280,352			922		(232	)		281,042
Total loans		1,100,070			3,241		724			1,104,035
Allowance for loan losses		(16,102	)		—		—			(16,102	)
Net loans	$	1,083,968		$	3,241	$	724		$	1,087,933
December 31, 2013	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	156,262		$	257	$	207		$	156,726
Non owner occupied real estate		224,713			105		299			225,117
Residential spec homes		400			—		—			400
Development & spec land loans		21,289			62		42			21,393
Commercial and industrial		101,920			737		57			102,714
Total commercial		504,584			1,161		605			506,350
Residential mortgage		176,068			578		382			177,028
Residential construction		9,508			14		—			9,522
Mortgage warehouse		98,156			480		—			98,636
Total real estate		283,732			1,072		382			285,186
Direct installment		29,983			104		(281	)		29,806
Direct installment purchased		294			—		—			294
Indirect installment		131,384			320		—			131,704
Home equity		117,958			529		187			118,674
Total consumer		279,619			953		(94	)		280,478
Total loans		1,067,935			3,186		893			1,072,014
Allowance for loan losses		(15,992	)		—		—			(15,992	)
Net loans	$	1,051,943		$	3,186	$	893		$	1,056,022

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Securities

3 Months Ended

Mar. 31, 2014

Investments Debt And Equity Securities [Abstract]

Securities

Note 2—Securities

The fair value of securities is as follows:

March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,098	$	121	$	(578	)	$	42,641
State and municipal		174,538		5,623		(1,828	)		178,333
Federal agency collateralized mortgage obligations		115,584		1,126		(1,874	)		114,836
Federal agency mortgage-backed pools		179,625		3,553		(1,605	)		181,573
Private labeled mortgage-backed pools		1,024		32		—			1,056
Corporate notes		970		21		—			991
Total available for sale investment securities	$	514,839	$	10,476	$	(5,885	)	$	519,430
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,808	$	133	$	(807	)	$	43,134
State and municipal		176,670		4,405		(3,177	)		177,898
Federal agency collateralized mortgage obligations		116,047		1,242		(2,583	)		114,706
Federal agency mortgage-backed pools		170,006		3,172		(2,284	)		170,894
Private labeled mortgage-backed pools		1,188		38		—			1,226
Corporate notes		708		25		—			733
Total available for sale investment securities	$	508,427	$	9,015	$	(8,851	)	$	508,591
Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910

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, 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, 2014, 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, 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, 2014.

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2014 and December 31, 2013, 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, 2014				December 31, 2013
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	4,449	$	4,486	$	3,643	$	3,663
One to five years		43,451		43,959		49,198		49,627
Five to ten years		111,942		114,654		106,225		107,424
After ten years		58,764		58,866		62,120		61,051
		218,606		221,965		221,186		221,765
Federal agency collateralized mortgage obligations		115,584		114,836		116,047		114,706
Federal agency mortgage-backed pools		179,625		181,573		170,006		170,894
Private labeled mortgage-backed pools		1,024		1,056		1,188		1,226
Total available for sale investment securities	$	514,839	$	519,430	$	508,427	$	508,591
Held to maturity
Within one year	$	9,910	$	9,910	$	9,910	$	9,910
One to five years		—		—		—		—
Total held to maturity investment securities	$	9,910	$	9,910	$	9,910	$	9,910

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, 2014	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	31,303	$	(578	)	$	—	$	—		$	31,303	$	(578	)
State and municipal		47,875		(1,578	)		5,040		(250	)		52,915		(1,828	)
Federal agency collateralized mortgage obligations		42,858		(675	)		26,382		(1,199	)		69,240		(1,874	)
Federal agency mortgage-backed pools		69,597		(1,605	)		—		—			69,597		(1,605	)
Total temporarily impaired securities	$	191,633	$	(4,436	)	$	31,422	$	(1,449	)	$	223,055	$	(5,885	)
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2013	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury and federal agencies	$	32,099	$	(807	)	$	—	$	—		$	32,099	$	(807	)
State and municipal		57,078		(2,993	)		3,206		(184	)		60,284		(3,177	)
Federal agency collateralized mortgage obligations		64,445		(2,121	)		8,601		(462	)		73,046		(2,583	)
Federal agency mortgage-backed pools		87,919		(2,284	)		—		—			87,919		(2,284	)
Total temporarily impaired securities	$	241,541	$	(8,205	)	$	11,807	$	(646	)	$	253,348	$	(8,851	)

	Three months ended March 31
	2014		2013
Sales of securities available for sale (Unaudited)
Proceeds	$	—	$	23,485
Gross gains		—		376
Gross losses		—		(8	)

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Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Summary of Computation of Basic and Diluted Earnings Per Share

The following table shows computation of basic and diluted earnings per share.

	Three months ended March 31
	2014		2013
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	3,417	$	5,311
Less: Preferred stock dividends and accretion of discount		31		146
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Basic earnings per share	$	0.39	$	0.60
Diluted earnings per share
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Effect of dilutive securities:
Warrants		311,278		293,237
Restricted stock		39,519		35,557
Stock options		40,023		34,395
Weighted average shares outstanding		9,021,786		8,980,655
Diluted earnings per share	$	0.38	$	0.58

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 10—Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) included in capital are as follows:

	March 31			December 31
	2014			2013
Unrealized gain on securities available for sale	$	4,590		$	164
Unrealized loss on derivative instruments		(3,051	)		(2,826	)
Tax effect		(538	)		933
Total accumulated other comprehensive income (loss)	$	1,001		$	(1,729	)

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Non-performing Loans and Impaired Loans

3 Months Ended

Mar. 31, 2014

Text Block [Abstract]

Non-performing Loans and Impaired Loans

Note 6—Non-performing Loans and Impaired Loans

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

March 31, 2014	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	294	$	—	$	81	$	769	$	1,144
Non owner occupied real estate		2,192		—		1,084		514		3,790
Residential development		—		—		—		—		—
Development & Spec Land Loans		162		—		—		—		162
Commercial and industrial		1,043		—		1,173		—		2,216
Total commercial		3,691		—		2,338		1,283		7,312
Real estate
Residential mortgage		2,709		3		858		2,510		6,080
Residential construction		—		—		278		—		278
Mortgage warehouse		—		—		—		—		—
Total real estate		2,709		3		1,136		2,510		6,358
Consumer
Direct Installment		289		20		—		—		309
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		536		103		—		—		639
Home Equity		1,548		77		187		1,206		3,018
Total Consumer		2,373		200		187		1,206		3,966
Total	$	8,773	$	203	$	3,661	$	4,999	$	17,636
December 31, 2013	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Non Performing TDR’s		Performing TDR’s		Total Non- Performing Loans
Commercial
Owner occupied real estate	$	293	$	—	$	222	$	778	$	1,293
Non owner occupied real estate		2,289		45		1,117		518		3,969
Residential development		—		—		—		—		—
Development & Spec Land Loans		182		—		—		—		182
Commercial and industrial		1,250		—		777		—		2,027
Total commercial		4,014		45		2,116		1,296		7,471
Real estate
Residential mortgage		2,459		2		719		2,686		5,866
Residential construction		—		—		280		—		280
Mortgage warehouse		—		—		—		—		—
Total real estate		2,459		2		999		2,686		6,146
Consumer
Direct Installment		202		—		—		—		202
Direct Installment Purchased		—		—		—		—		—
Indirect Installment		531		2		—		—		533
Home Equity		2,542		—		311		1,072		3,925
Total Consumer		3,275		2		311		1,072		4,660
Total	$	9,748	$	49	$	3,426	$	5,054	$	18,277

Included in the $8.8 million of non-accrual loans and the $3.7 million of non-performing TDR’s at March 31, 2014 were $2.6 million and $436,000, 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 Credit 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. Nonaccrual 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 nonaccrual 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, 2014, 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 six consecutive payments but is still reported as TDR unless the loan bears interest at a market rate. As of March 31, 2014, the Company had $8.7 million in TDRs and $5.0 million were performing according to the restructured terms and no TDR’s were returned to accrual status during the first three months of 2014. There was $1.5 million of specific reserves allocated to TDRs at March 31, 2014 based on the discounted cash flows.

Loans transferred and classified as troubled debt restructuring during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		—		—		3		390
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		—		—		3		390
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		2		791
Total Consumer		1		146		2		791
Total		3	$	544		8	$	1,327

Troubled debt restructured loans which had payment defaults during the three months ended March 31, 2014 and 2013, segregated by class, are shown in the table below. Default occurs when a loan is 90 days or more past due or has been transferred to nonaccrual.

	March 31, 2014				March 31, 2013
	Number of Defaults		Unpaid Principal Balance		Number of Defaults		Unpaid Principal Balance
Commercial
Owner occupied real estate		—	$	—		2	$	76
Non owner occupied real estate		—		—		1		70
Residential development		—		—		—		—
Development & Spec Land Loans		—		—		—		—
Commercial and industrial		2		398		—		—
Total commercial		2		398		3		146
Real estate
Residential mortgage		1		154		1		234
Residential construction		—		—		—		—
Mortgage warehouse		—		—		—		—
Total real estate		1		154		1		234
Consumer
Direct Installment		—		—		—		—
Direct Installment Purchased		—		—		—		—
Indirect Installment		—		—		—		—
Home Equity		1		146		—		—
Total Consumer		1		146		—		—
Total		4	$	698		4	$	380

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

							Three Months Ending
March 31, 2014	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	$	1,145	$	1,148	$	—	$	1,759		$	12
Non owner occupied real estate		3,443		3,446		—		3,514			5
Residential development		—		—		—		—			—
Development & Spec Land Loans		24		24		—		24			—
Commercial and industrial		333		349		—		608			—
Total commercial		4,945		4,967		—		5,905			17
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		(1	)		—
Non owner occupied real estate		347		347		170		353			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		138		138		40		142			—
Commercial and industrial		1,883		1,883		1,080		1,727			2
Total commercial		2,368		2,368		1,290		2,221			2
Total	$	7,313	$	7,335	$	1,290	$	8,126		$	19
							Three Months Ending
March 31, 2013	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	$	3,310	$	3,317	$	—	$	4,906		$	14
Non owner occupied real estate		2,578		2,579		—		3,793			11
Residential development		—		—		—		—			—
Development & Spec Land Loans		135		135		—		166			—
Commercial and industrial		912		928		—		1,877			—
Total commercial		6,935		6,959		—		10,742			25
With an allowance recorded
Commercial
Owner occupied real estate		—		—		—		—			—
Non owner occupied real estate		1,763		1,763		1,080		1,774			—
Residential development		—		—		—		—			—
Development & Spec Land Loans		564		564		600		569			—
Commercial and industrial		792		792		265		794			—
Total commercial		3,119		3,119		1,945		3,137			—
Total	$	10,054	$	10,078	$	1,945	$	13,879		$	25

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

March 31, 2014	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	$	218		$	127		$	—		$	345		$	173,169		$	173,514
Non owner occupied real estate		122			—			—			122			230,103			230,225
Residential development		—			—			—			—			833			833
Development & Spec Land Loans		—			—			—			—			21,347			21,347
Commercial and industrial		110			—			—			110			102,002			102,112
Total commercial		450			127			—			577			527,454			528,031
Real estate
Residential mortgage		313			—			3			316			180,533			180,849
Residential construction		—			—			—			—			8,692			8,692
Mortgage warehouse		—			—			—			—			102,146			102,146
Total real estate		313			—			3			316			291,371			291,687
Consumer
Direct Installment		67			10			20			97			30,459			30,556
Direct Installment Purchased		—			—			—			—			270			270
Indirect Installment		771			41			103			915			130,479			131,394
Home Equity		555			278			77			910			117,222			118,132
Total consumer		1,393			329			200			1,922			278,430			280,352
Total	$	2,156		$	456		$	203		$	2,815		$	1,097,255		$	1,100,070
Percentage of total loans		0.20	%		0.04	%		0.02	%		0.26	%		99.74	%
December 31, 2013	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	$	341		$	—		$	—		$	341		$	155,921		$	156,262
Non owner occupied real estate		424			—			45			469			224,244			224,713
Residential development		—			—			—			—			400			400
Development & Spec Land Loans		—			—			—			—			21,289			21,289
Commercial and industrial		—			—			—			—			101,920			101,920
Total commercial		765			—			45			810			503,774			504,584
Real estate
Residential mortgage		445			87			2			534			175,534			176,068
Residential construction		—			—			—			—			9,508			9,508
Mortgage warehouse		—			—			—			—			98,156			98,156
Total real estate		445			87			2			534			283,198			283,732
Consumer
Direct Installment		120			24			—			144			29,839			29,983
Direct Installment Purchased		—			—			—			—			294			294
Indirect Installment		1,011			175			2			1,188			130,196			131,384
Home Equity		767			58			—			825			117,133			117,958
Total consumer		1,898			257			2			2,157			277,462			279,619
Total	$	3,108		$	344		$	49		$	3,501		$	1,064,434		$	1,067,935
Percentage of total loans		0.29	%		0.03	%		0.00	%		0.33	%		99.67	%

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 of $500,000 or greater 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, 2014	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	163,274		$	2,667		$	7,573		$	—		$	173,514
Non owner occupied real estate		213,918			6,211			10,096			—			230,225
Residential development		738			95			—			—			833
Development & Spec Land Loans		19,984			88			1,275			—			21,347
Commercial and industrial		92,357			6,045			3,710			—			102,112
Total commercial		490,271			15,106			22,654			—			528,031
Real estate
Residential mortgage		174,769			—			6,080			—			180,849
Residential construction		8,414			—			278			—			8,692
Mortgage warehouse		102,146			—			—			—			102,146
Total real estate		285,329			—			6,358			—			291,687
Consumer
Direct Installment		30,247			—			309			—			30,556
Direct Installment Purchased		270			—			—			—			270
Indirect Installment		130,755			—			639			—			131,394
Home Equity		115,114			—			3,018			—			118,132
Total Consumer		276,386			—			3,966			—			280,352
Total	$	1,051,985		$	15,106		$	32,978		$	—		$	1,100,070
Percentage of total loans		95.63	%		1.37	%		3.00	%		0.00	%
December 31, 2013	Pass			Special Mention			Substandard			Doubtful			Total
Commercial
Owner occupied real estate	$	146,085		$	2,231		$	7,946		$	—		$	156,262
Non owner occupied real estate		208,625			5,047			11,041			—			224,713
Residential development		400			—			—			—			400
Development & Spec Land Loans		19,858			91			1,340			—			21,289
Commercial and industrial		91,852			6,492			3,576			—			101,920
Total commercial		466,820			13,861			23,903			—			504,584
Real estate
Residential mortgage		170,202			—			5,866			—			176,068
Residential construction		9,228			—			280			—			9,508
Mortgage warehouse		98,156			—			—			—			98,156
Total real estate		277,586			—			6,146			—			283,732
Consumer
Direct Installment		29,781			—			202			—			29,983
Direct Installment Purchased		294			—			—			—			294
Indirect Installment		130,851			—			533			—			131,384
Home Equity		114,033			—			3,925			—			117,958
Total Consumer		274,959			—			4,660			—			279,619
Total	$	1,019,365		$	13,861		$	34,709		$	—		$	1,067,935
Percentage of total loans		95.45	%		1.30	%		3.25	%		0.00	%

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Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statement of Income Derivative in Fair Value Hedging Relationship (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Derivative in Fair Value Hedging Relationship [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized on Derivative
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	207	(401)
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	(207)	401
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	$ 240	$ (12)

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Accounting for Certain Loans Acquired in a Transfer

3 Months Ended

Mar. 31, 2014

Transfers And Servicing [Abstract]

Accounting for Certain Loans Acquired in a Transfer

Note 4—Accounting for Certain Loans Acquired in a Transfer

The Company acquired 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.

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 nonaccrual 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 amount of those loans is included in the balance sheet amounts of loans receivable are as follows:

	March 31		December 31
	2014		2013
Commercial	$	22,223	$	37,048
Real estate		11,033		11,761
Consumer		10,272		11,485
Outstanding balance	$	43,528	$	60,294
Carrying amount, net of allowance of $367 and $389	$	43,161	$	59,905

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

	2014			2013
Balance at January 1	$	3,185		$	6,111
Additions		—			—
Accretion		(138	)		(451	)
Reclassification from nonaccreatable difference		—			—
Disposals		(18	)		(696	)
Balance at March 31	$	3,029		$	4,964

During the three months ended March 31, 2014 and 2013, the Company increased the allowance for loan losses by a charge to the income statement by $0 and $1.4 million, respectively. No allowances for loan losses were reversed for the three months ended March 31, 2014 or 2013.

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Allowance for Loan Losses

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Allowance for Loan Losses

Note 5—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
	2014			2013
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	15,992		$	18,270
Loans charged-off:
Commercial
Owner occupied real estate		—			132
Non owner occupied real estate		22			146
Residential development		—			—
Development & Spec Land Loans		7			—
Commercial and industrial		—			139
Total commercial		29			417
Real estate
Residential mortgage		22			143
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		22			143
Consumer
Direct Installment		33			107
Direct Installment Purchased		—			—
Indirect Installment		227			353
Home Equity		184			438
Total consumer		444			898
Total loans charged-off		495			1,458
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		4			32
Non owner occupied real estate		1			2
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		385			36
Total commercial		390			70
Real estate
Residential mortgage		4			3
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		4			3
Consumer
Direct Installment		18			394
Direct Installment Purchased		—			—
Indirect Installment		119			170
Home Equity		74			32
Total consumer		211			596
Total loan recoveries		605			669
Net loans charged-off (recovered)		(110	)		789
Provision charged to operating expense
Commercial		212			1,738
Real estate		(604	)		312
Consumer		392			34
Total provision charged to operating expense		—			2,084
Balance at the end of the period	$	16,102		$	19,565

Certain loans are individually evaluated for impairment, and the Company’s general practice is to proactively charge down impaired loans to the fair value 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, 2014	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,290	$	—	$	—	$	—	$	1,290
Collectively evaluated for impairment		5,580		2,812		1,665		4,388		14,445
Loans acquired with deteriorated credit quality		367		—		—		—		367
Total ending allowance balance	$	7,237	$	2,812	$	1,665	$	4,388	$	16,102
Loans:
Individually evaluated for impairment	$	7,335	$	—	$	—	$	—	$	7,335
Collectively evaluated for impairment		522,054		190,486		102,626		281,042		1,096,208
Loans acquired with deteriorated credit quality		492		—		—		—		492
Total ending loans balance	$	529,881	$	190,486	$	102,626	$	281,042	$	1,104,035
December 31, 2013	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,312	$	—	$	—	$	—	$	1,312
Collectively evaluated for impairment		4,963		3,462		1,638		4,228		14,291
Loans acquired with deteriorated credit quality		389		—		—		—		389
Total ending allowance balance	$	6,664	$	3,462	$	1,638	$	4,228	$	15,992
Loans:
Individually evaluated for impairment	$	7,448	$	—	$	—	$	—	$	7,448
Collectively evaluated for impairment		489,547		186,526		98,636		279,448		1,054,157
Loans acquired with deteriorated credit quality		9,355		24		—		1,030		10,409
Total ending loans balance	$	506,350	$	186,550	$	98,636	$	280,478	$	1,072,014

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Derivative financial instruments

3 Months Ended

Mar. 31, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative financial instruments

Note 7—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, 2014 and December 31, 2013. 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, 2014 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, 2014 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 $100.1 million at March 31, 2014 and $95.3 million at December 31, 2013.

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, 2014, 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 Bancorp:

	Asset Derivative March 31, 2014			Liability Derivatives March 31, 2014
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	—	Other liabilities	$	154
Interest rate contracts	Other Assets		154	Other liabilities		3,051
Total derivatives designated as hedging instruments			154			3,205
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		470	Other liabilities		39
Total derivatives not designated as hedging instruments			470			39
Total derivatives		$	624		$	3,244

	Asset Derivative December 31, 2013				Liability Derivatives December 31, 2013
Derivatives designated as hedging instruments (Unaudited)	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Interest rate contracts	Loans	$	7		Other liabilities	$	(53	)
Interest rate contracts	Other Assets		(60	)	Other liabilities		2,826
Total derivatives designated as hedging instruments			(53	)			2,773
Derivatives not designated as hedging instruments
Mortgage loan contracts	Other assets		212		Other liabilities		22
Total derivatives not designated as hedging instruments			212				22
Total derivatives		$	159			$	2,795

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

	Amount of Loss Recognized in Other Comprehensive Income on Derivative (Effective Portion)
	Three Months Ended March 31
Derivative in cash flow hedging relationship	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	$	(146	)	$	285

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 hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)			2013 (Unaudited)
Interest rate contracts	Interest income—loans	$	207		$	(401	)
Interest rate contracts	Interest income—loans		(207	)		401
Total		$	—		$	—

		Amount of Gain (Loss) Recognized on Derivative
		Three Months Ended March 31
Derivative not designated as hedging relationship	Location of gain (loss) recognized on derivative	2014 (Unaudited)		2013 (Unaudited)
Mortgage contracts	Other income—gain on sale of loans	$	240	$	(12	)

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Disclosures about Fair Value of Assets and Liabilities - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Fair Value Disclosures [Abstract]
Increase in carrying amount of mortgage servicing rights	$ 5	$ 33

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Fair Value of Financial Instruments - Summary of Estimated Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 35,820	$ 31,721
Investment securities, held to maturity	9,910	9,910
Loans held for sale	5,335	3,281
Stock in FHLB and FRB	14,184	14,184
Interest receivable	7,536	7,501
Liabilities
Non-interest bearing deposits	238,499	231,096
Interest payable	498	506
Carrying Amount [Member]
Assets
Cash and due from banks	35,820	31,721
Investment securities, held to maturity	9,910	9,910
Loans held for sale	5,335	3,281
Loans excluding loan level hedges, net	984,128	957,464
Stock in FHLB and FRB	14,184	14,184
Interest receivable	7,536	7,501
Liabilities
Non-interest bearing deposits	238,499	231,096
Interest-bearing deposits	1,117,072	1,060,424
Borrowings	236,043	256,296
Subordinated debentures	32,525	32,486
Interest payable	498	506
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets
Cash and due from banks	35,820	31,721
Investment securities, held to maturity
Loans held for sale
Loans excluding loan level hedges, net
Stock in FHLB and FRB
Interest receivable
Liabilities
Non-interest bearing deposits	238,499	231,096
Interest-bearing deposits
Borrowings
Subordinated debentures
Interest payable
Significant Other Observable Inputs (Level 2) [Member]
Assets
Cash and due from banks
Investment securities, held to maturity
Loans held for sale
Loans excluding loan level hedges, net
Stock in FHLB and FRB	14,184	14,184
Interest receivable	7,536	7,501
Liabilities
Non-interest bearing deposits
Interest-bearing deposits	1,051,391	1,002,980
Borrowings	237,997	257,093
Subordinated debentures	32,587	32,528
Interest payable	498	506
Significant Unobservable Inputs (Level 3) [Member]
Assets
Cash and due from banks
Investment securities, held to maturity	9,910	9,910
Loans held for sale	5,335	3,281
Loans excluding loan level hedges, net	1,009,380	975,910
Stock in FHLB and FRB
Interest receivable
Liabilities
Non-interest bearing deposits
Interest-bearing deposits
Borrowings
Subordinated debentures
Interest payable

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Disclosures about Fair Value of Assets and Liabilities - Other Assets Measured at Fair Value on Nonrecurring Basis (Detail) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	$ 6,023	$ 6,114
Mortgage servicing rights	7,030	7,039
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans
Mortgage servicing rights
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans
Mortgage servicing rights
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items]
Impaired loans	6,023	6,114
Mortgage servicing rights	$ 7,030	$ 7,039

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Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Accounting Policies [Abstract]
Shares, non-dilutive	0	0
Reclassifications effect on net income	$ 0

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Non-performing Assets and Impaired Loans - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2014 Contract ConsecutivePayment	Dec. 31, 2013
Financing Receivable, Modifications [Line Items]
Non-accrual loans	$ 8,773,000	$ 9,748,000
Non-performing TDR's	3,700,000
Loans acquired included in non-accrual loans	2,600,000
Loans acquired included in non-performing TDR's	436,000
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	6
Restructured loan reported in TDRs	8,700,000
Specific reserves allocated to troubled debt restructuring	1,500,000
Number TDR's returned to accrual status	0
Loans with an aggregate credit exposure	500,000
Loans classified as TDR after a period	90 days
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
Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
Restructured loan	$ 5,000,000
Minimum [Member]
Financing Receivable, Modifications [Line Items]
Delay or shortfall in payments of loan	30 days
Period for loans moved to non-accrual status	90 days
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

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Future accounting matters

3 Months Ended

Mar. 31, 2014

Accounting Changes And Error Corrections [Abstract]

Future accounting matters

Note 12—Future accounting matters

Accounting Standards Update No. 2014-01- Accounting for Investments in Qualified Affordable Housing Projects – In January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects, to permit entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The ASU modifies the conditions that an entity must meet to be eligible to use a method other than the equity or cost methods to account for qualified affordable housing project investments. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

Accounting Standards Update No. 2014-04- Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure – In January 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, to reduce diversity by clarifying when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Adoption of the ASU is not expected to have a significant effect on the Company’s consolidated financial statements.

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Loans (Tables)

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Recorded Investment of Individual Loan Categories

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

March 31, 2014	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	173,514		$	268	$	245		$	174,027
Non owner occupied real estate		230,225			201		266			230,692
Residential spec homes		833			1		—			834
Development & spec land loans		21,347			61		43			21,451
Commercial and industrial		102,112			715		50			102,877
Total commercial		528,031			1,246		604			529,881
Residential mortgage		180,849			579		352			181,780
Residential construction		8,692			14		—			8,706
Mortgage warehouse		102,146			480		—			102,626
Total real estate		291,687			1,073		352			293,112
Direct installment		30,556			104		(278	)		30,382
Direct installment purchased		270			—		—			270
Indirect installment		131,394			301		—			131,695
Home equity		118,132			517		46			118,695
Total consumer		280,352			922		(232	)		281,042
Total loans		1,100,070			3,241		724			1,104,035
Allowance for loan losses		(16,102	)		—		—			(16,102	)
Net loans	$	1,083,968		$	3,241	$	724		$	1,087,933
December 31, 2013	Loan Balance			Interest Due		Deferred Fees / (Costs)			Recorded Investment
Owner occupied real estate	$	156,262		$	257	$	207		$	156,726
Non owner occupied real estate		224,713			105		299			225,117
Residential spec homes		400			—		—			400
Development & spec land loans		21,289			62		42			21,393
Commercial and industrial		101,920			737		57			102,714
Total commercial		504,584			1,161		605			506,350
Residential mortgage		176,068			578		382			177,028
Residential construction		9,508			14		—			9,522
Mortgage warehouse		98,156			480		—			98,636
Total real estate		283,732			1,072		382			285,186
Direct installment		29,983			104		(281	)		29,806
Direct installment purchased		294			—		—			294
Indirect installment		131,384			320		—			131,704
Home equity		117,958			529		187			118,674
Total consumer		279,619			953		(94	)		280,478
Total loans		1,067,935			3,186		893			1,072,014
Allowance for loan losses		(15,992	)		—		—			(15,992	)
Net loans	$	1,051,943		$	3,186	$	893		$	1,056,022

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Allowance for Loan Losses - Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Total ending allowance balance	$ 16,102	$ 15,992	$ 19,565	$ 18,270
Total ending loans balance	7,335		10,078
Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment	1,290	1,312
Allowance For Loan Losses, Collectively evaluated for impairment	14,445	14,291
Loans acquired with deteriorated credit quality	(367)	(389)
Total ending allowance balance	16,102	15,992
Commercial [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment	1,290	1,312
Allowance For Loan Losses, Collectively evaluated for impairment	5,580	4,963
Loans acquired with deteriorated credit quality	(367)	(389)
Total ending allowance balance	7,237	6,664
Real Estate [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment
Allowance For Loan Losses, Collectively evaluated for impairment	2,812	3,462
Loans acquired with deteriorated credit quality
Total ending allowance balance	2,812	3,462
Consumer [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment
Allowance For Loan Losses, Collectively evaluated for impairment	4,388	4,228
Loans acquired with deteriorated credit quality
Total ending allowance balance	4,388	4,228
Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment	7,335	7,448
Loans: Collectively evaluated for impairment	1,096,208	1,054,157
Loans acquired with deteriorated credit quality	492	10,409
Total ending loans balance	1,104,035	1,072,014
Loans [Member] | Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment	7,335	7,448
Loans: Collectively evaluated for impairment	522,054	489,547
Loans acquired with deteriorated credit quality	492	9,355
Total ending loans balance	529,881	506,350
Loans [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment
Loans: Collectively evaluated for impairment	190,486	186,526
Loans acquired with deteriorated credit quality		24
Total ending loans balance	190,486	186,550
Loans [Member] | Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment
Loans: Collectively evaluated for impairment	281,042	279,448
Loans acquired with deteriorated credit quality		1,030
Total ending loans balance	281,042	280,478
Mortgage Warehousing [Member] | Allowance for Loan Losses [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance For Loan Losses, Individually evaluated for impairment
Allowance For Loan Losses, Collectively evaluated for impairment	1,665	1,638
Loans acquired with deteriorated credit quality
Total ending allowance balance	1,665	1,638
Mortgage Warehousing [Member] | Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans: Individually evaluated for impairment
Loans: Collectively evaluated for impairment	102,626	98,636
Loans acquired with deteriorated credit quality
Total ending loans balance	$ 102,626	$ 98,636

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Loans - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014
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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Condensed Consolidated Statements of Income (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Accumulated other comprehensive earnings reclassifications	$ 0	$ 368
Income tax expense from reclassification	$ 0	$ 129

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Accounting Policies

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Accounting Policies

Note 1—Accounting Policies

The accompanying 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, 2014 and March 31, 2013 are not necessarily indicative of the operating results for the full year of 2014 or 2013. 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 2013 filed with the Securities and Exchange Commission on February 28, 2014. The consolidated condensed balance sheet of Horizon as of December 31, 2013 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
	2014		2013
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	3,417	$	5,311
Less: Preferred stock dividends and accretion of discount		31		146
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Basic earnings per share	$	0.39	$	0.60
Diluted earnings per share
Net income available to common shareholders	$	3,386	$	5,165
Weighted average common shares outstanding		8,630,966		8,617,466
Effect of dilutive securities:
Warrants		311,278		293,237
Restricted stock		39,519		35,557
Stock options		40,023		34,395
Weighted average shares outstanding		9,021,786		8,980,655
Diluted earnings per share	$	0.38	$	0.58

At March 31, 2014 and 2013, there were no shares 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, 2013 Annual Report on Form 10-K.

Reclassifications

Certain reclassifications have been made to the 2013 condensed consolidated financial statements to be comparable to 2014. These reclassifications had no effect on net income.

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Derivative Financial Instruments - Fair Value of Derivative Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivative	$ 624	$ 159
Total Liability Derivative	3,244	2,795
Derivatives Designated as Hedging Instruments [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivative	154	(53)
Total Liability Derivative	3,205	2,773
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Contracts One [Member] | Loans [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivative		7
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 Derivative	154	(53)
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 Derivative	3,051	2,826
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 Derivative	154	(60)
Derivatives Not Designated as Hedging Instruments [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Asset Derivative	470	212
Total Liability Derivative	39	22
Derivatives Not Designated as Hedging Instruments [Member] | Mortgage Loan Contracts [Member] | Other Liabilities [Member]
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]
Total Liability Derivative	39	22
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 Derivative	$ 470	$ 212

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Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2014

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
	2014			2013
	(Unaudited)			(Unaudited)
Balance at beginning of the period	$	15,992		$	18,270
Loans charged-off:
Commercial
Owner occupied real estate		—			132
Non owner occupied real estate		22			146
Residential development		—			—
Development & Spec Land Loans		7			—
Commercial and industrial		—			139
Total commercial		29			417
Real estate
Residential mortgage		22			143
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		22			143
Consumer
Direct Installment		33			107
Direct Installment Purchased		—			—
Indirect Installment		227			353
Home Equity		184			438
Total consumer		444			898
Total loans charged-off		495			1,458
Recoveries of loans previously charged-off:
Commercial
Owner occupied real estate		4			32
Non owner occupied real estate		1			2
Residential development		—			—
Development & Spec Land Loans		—			—
Commercial and industrial		385			36
Total commercial		390			70
Real estate
Residential mortgage		4			3
Residential construction		—			—
Mortgage warehouse		—			—
Total real estate		4			3
Consumer
Direct Installment		18			394
Direct Installment Purchased		—			—
Indirect Installment		119			170
Home Equity		74			32
Total consumer		211			596
Total loan recoveries		605			669
Net loans charged-off (recovered)		(110	)		789
Provision charged to operating expense
Commercial		212			1,738
Real estate		(604	)		312
Consumer		392			34
Total provision charged to operating expense		—			2,084
Balance at the end of the period	$	16,102		$	19,565

Allowance for Loan Losses and the 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, 2014	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,290	$	—	$	—	$	—	$	1,290
Collectively evaluated for impairment		5,580		2,812		1,665		4,388		14,445
Loans acquired with deteriorated credit quality		367		—		—		—		367
Total ending allowance balance	$	7,237	$	2,812	$	1,665	$	4,388	$	16,102
Loans:
Individually evaluated for impairment	$	7,335	$	—	$	—	$	—	$	7,335
Collectively evaluated for impairment		522,054		190,486		102,626		281,042		1,096,208
Loans acquired with deteriorated credit quality		492		—		—		—		492
Total ending loans balance	$	529,881	$	190,486	$	102,626	$	281,042	$	1,104,035
December 31, 2013	Commercial		Real Estate		Mortgage Warehousing		Consumer		Total
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,312	$	—	$	—	$	—	$	1,312
Collectively evaluated for impairment		4,963		3,462		1,638		4,228		14,291
Loans acquired with deteriorated credit quality		389		—		—		—		389
Total ending allowance balance	$	6,664	$	3,462	$	1,638	$	4,228	$	15,992
Loans:
Individually evaluated for impairment	$	7,448	$	—	$	—	$	—	$	7,448
Collectively evaluated for impairment		489,547		186,526		98,636		279,448		1,054,157
Loans acquired with deteriorated credit quality		9,355		24		—		1,030		10,409
Total ending loans balance	$	506,350	$	186,550	$	98,636	$	280,478	$	1,072,014

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Securities - Gross Unrealized Losses and Fair Value of Company's Investments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	$ 191,633	$ 241,541
Fair value more than 12 months	31,422	11,807
Total fair value	223,055	253,348
Unrealized losses less than 12 months	(4,436)	(8,205)
Unrealized losses more than 12 months	(1,449)	(646)
Total unrealized losses	(5,885)	(8,851)
U.S. Treasury and federal agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	31,303	32,099
Fair value more than 12 months
Total fair value	31,303	32,099
Unrealized losses less than 12 months	(578)	(807)
Unrealized losses more than 12 months
Total unrealized losses	(578)	(807)
State and municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	47,875	57,078
Fair value more than 12 months	5,040	3,206
Total fair value	52,915	60,284
Unrealized losses less than 12 months	(1,578)	(2,993)
Unrealized losses more than 12 months	(250)	(184)
Total unrealized losses	(1,828)	(3,177)
Federal agency collateralized mortgage obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	42,858	64,445
Fair value more than 12 months	26,382	8,601
Total fair value	69,240	73,046
Unrealized losses less than 12 months	(675)	(2,121)
Unrealized losses more than 12 months	(1,199)	(462)
Total unrealized losses	(1,874)	(2,583)
Federal agency mortgage-backed pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value less than 12 months	69,597	87,919
Fair value more than 12 months
Total fair value	69,597	87,919
Unrealized losses less than 12 months	(1,605)	(2,284)
Unrealized losses more than 12 months
Total unrealized losses	$ (1,605)	$ (2,284)

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Business Combination (SCB Bancorp [Member])

3 Months Ended

Mar. 31, 2014

SCB Bancorp [Member]

Business Combination

Note 11—Business Combination

On November 12, 2013, Horizon entered into an Agreement and Plan of Merger (the “Merger Agreement”) providing for Horizon’s acquisition of SCB Bancorp, Inc., a Michigan corporation (“SCB”). Pursuant to the Merger Agreement, SCB would merge with and into Horizon, with Horizon surviving the merger (the “Merger”), and Summit Community Bank, a Michigan-chartered commercial bank and wholly owned subsidiary of SCB, would merge with and into a wholly owned subsidiary of Horizon, Horizon Bank, N.A. (“Horizon Bank”), with Horizon Bank as the surviving bank.

On April 3, 2014 Horizon completed the acquisition of SCB and Horizon Bank N.A.’s acquisition of Summit Community Bank, through mergers effective April 3, 2014. Under the terms of the acquisition, the exchange ratio was 0.4904 shares of Horizon common stock (the “Exchange Ratio”) and $5.15 in cash for each outstanding share of SCB common stock. SCB shares outstanding at the closing were 1,164,442, and the shares of Horizon common stock issued to SCB 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.

As of March 31, 2013, Summit Community Bank reported total assets of approximately $154.1 million, total deposits of approximately $119.3 million and total net loans of approximately $130.9 million.