Note 1 - Accounting Policies

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

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

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


	Three Months Ended
	March 31
	2016		2015
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	5,381	$	5,358
Less: Preferred stock dividends		42		31

Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Basic earnings per share	$	0.45	$	0.58

Diluted earnings per share
Net income available to common shareholders	$	5,339	$	5,327
Weighted average common shares outstanding		11,949,416		9,216,011
Effect of dilutive securities:
Warrants		—		321,652
Restricted stock		21,033		30,510
Stock options		38,035		41,333

Weighted average shares outstanding		12,008,484		9,609,506
Diluted earnings per share	$	0.44	$	0.55

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

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

Reclassifications

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