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. (“Horizon Bank” or the “Bank”). All inter-company balances and transactions have been eliminated. The results of operations for the periods ended March 31, 2017 and March 31, 2016 are not necessarily indicative of the operating results for the full year of 2017 or 2016. 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 2016 filed with the Securities and Exchange Commission on February 28, 2017. The condensed consolidated balance sheet of Horizon as of December 31, 2016 has been derived from the audited balance sheet as of that date.

On October 18, 2016, the Board of Directors of the Company approved a three-for-two stock split of the Company’s authorized common stock, no par value. All share and per share amounts in the condensed consolidated financial statements and notes thereto have been retroactively adjusted, where necessary, to reflect this three-for-two stock split. The effect of the three-for-two stock split on the outstanding common shares is that shareholders of record as of the close of business on October 31, 2016, the record date, received an additional half share of common stock held, with shareholders receiving cash in lieu of any fractional shares. The additional shares issued in the stock split were issued on November 14, 2016, and the common shares began trading on a split-adjusted basis on or about November 15, 2016.

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
	2017		2016
	(Unaudited)		(Unaudited)
Basic earnings per share
Net income	$	8,224	$	5,381
Less: Preferred stock dividends		—		42

Net income available to common shareholders	$	8,224	$	5,339

Weighted average common shares outstanding⁽¹⁾		22,175,526		17,924,124

Basic earnings per share	$	0.37	$	0.30


Diluted earnings per share
Net income available to common shareholders	$	8,224	$	5,339

Weighted average common shares outstanding⁽¹⁾		22,175,526		17,924,124
Effect of dilutive securities:
Restricted stock		36,336		31,550
Stock options		114,209		57,053

Weighted average shares outstanding		22,326,071		18,012,726

Diluted earnings per share	$	0.37	$	0.30

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

There were zero shares for the three months ended March 31, 2017 and 2016 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, 2016 Annual Report on Form 10-K.

Reclassifications

Certain reclassifications have been made to the 2016 condensed consolidated financial statements to be comparable to 2017. These reclassifications had no effect on net income.