EX-99.1 2 a3rdqtr2020earningsrel.htm EX-99.1

Contract: | Mark E. Secor
| Chief Financial Officer
Phone: | (219) 873-2611
Fax: | (219) 874-9280
Date: | October 28, 2020

FOR IMMEDIATE RELEASE
Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Michigan City, Indiana, October 28, 2020 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three and nine months ending September 30, 2020.
“Horizon is successfully navigating through these challenging times, thanks to our team’s unwavering focus on our communities, customers and our culture of accountability and operating discipline,” Chairman and CEO Craig M. Dwight said. “In the third quarter, we saw a healthy recovery in earnings and meaningful growth in pre–tax, pre–provision income, as Horizon maintained sound asset quality metrics and continued to conservatively build reserves, tightly managed operating expenses, stabilized net interest income and margin, and benefited from very strong performance from our mortgage business. In addition, in future periods, we expect to benefit from efforts initiated in the early fourth quarter to deleverage and optimize returns on earning assets.”
Third Quarter 2020 Highlights
•Earned net income of $20.3 million, or $0.46 diluted earnings per share, compared to $14.6 million, or $0.33 diluted earnings per share, for the second quarter of 2020 and $20.5 million, or $0.46 diluted earnings per share, for the third quarter of 2019.
•Grew pre–tax, pre–provision net income to $26.7 million for the quarter, compared to $23.7 million for the second quarter of 2020 and $24.9 million for the third quarter of 2019. This non–GAAP financial measure is utilized by banks to provide a greater understanding of pre–tax profitability before giving effect to credit loss expense. (See the “Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Net Income” table below.)
•Reported return on average assets (“ROAA”) of 1.40% and return on average common equity (“ROACE”) of 12.08% in the quarter, as well as adjusted ROAA of 1.34% and adjusted ROACE of 11.55%, excluding the impact of gains on sale of investment securities, net of tax. (See the “Non–GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” tables below.)
•Increased the allowance for credit losses (“ACL”) 2.2% during the quarter and 218.8% year–to–date to $56.3 million at period end, representing 1.39% of total loans, reflecting implementation of the Current Expected Credit Losses (“CECL”) accounting method and prudent increases in the Company’s general reserves. ACL at period end also represented 1.51% of loans excluding $310.8 million in Federal Paycheck Protection Program (“PPP”) loans, and 192.1% of non–performing loans.
•Maintained solid asset quality metrics, including non–performing and delinquent loans representing 0.72% and 0.15% of total loans, respectively, at September 30, 2020, while net charge–offs were 0.02% of average loans for the period.
•COVID–19 deferral levels improved to 4.1% of total loans at period end, from 14.3% on June 30, 2020.
1

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
•Reported non–interest expense of $33.4 million, representing 2.30% of average assets on an annualized basis compared to 2.18% for the second quarter of 2020 and 2.34% for the third quarter of 2019.
•Improved the efficiency ratio in the period to 55.59% compared to 56.23% for the second quarter of 2020. (See the “Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio” tables below.)
•Generated record gain on mortgage loan sales of $8.8 million, up 33.1% from the linked quarter and 226.2% from the prior year period, and originated $207.1 million in mortgage loans during the quarter, down 18.1% from the record second quarter of 2020 and up 71.0% from the third quarter of 2019.
•Reported net interest margin of 3.39% and adjusted net interest margin of 3.27%, with each declining by 8 basis points from the second quarter of 2020. (See the “Non–GAAP Reconciliation of Net Interest Margin” table for the definition of this non–GAAP calculation). An estimated 1 basis points of compression is attributed to PPP lending and an estimated 10 basis points of compression is attributed to subordinated notes during the quarter, for both net interest margin and adjusted net interest margin.
•Horizon’s tangible book value per share increased from $10.63 at December 31, 2019 to $11.29 at September 30, 2020, which includes the accounting adjustment for CECL as of January 1, 2020. This represents the highest tangible book value per share in the Company’s history. (See the “Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share” tables below.)
•Maintained strong liquidity position including approximately $1.3 billion in cash and investment securities, which is approximately 22.4% of total assets, and approximately $928.0 million in unused availability on lines of credit, at September 30, 2020.
Summary

|  | For the Three Months Ended
|  | September 30, |  | June 30, |  | September 30,
Net Interest Income and Net Interest Margin |  | 2020 |  | 2020 |  | 2019
Net interest income |  | $ | 43,397 |  |  | $ | 42,996 |  |  | $ | 43,463 |
Net interest margin |  | 3.39 | % |  | 3.47 | % |  | 3.82 | %
Adjusted net interest margin |  | 3.27 | % |  | 3.35 | % |  | 3.67 | %

Mr. Dwight commented, “Our team continues to actively manage our net interest margin by focusing on interest spreads for all loan portfolios and lowering deposit rates. As a result, Horizon’s third quarter net interest margin declined only 8 basis points from the second quarter of this year which includes an additional estimated 1 basis points of compression from PPP lending and an additional estimated 10 basis points of compression attributed to subordinated notes.”

|  | For the Three Months Ended
|  | September 30, |  | June 30, |  | September 30,
Asset Yields and Funding Costs |  | 2020 |  | 2020 |  | 2019
Interest earning assets |  | 3.90 | % |  | 4.05 | % |  | 4.87 | %
Interest bearing liabilities |  | 0.67 | % |  | 0.74 | % |  | 1.35 | %

|  | For the Three Months Ended
Non–interest Income and |  | September 30, |  | June 30, |  | September 30,
Mortgage Banking Income |  | 2020 |  | 2020 |  | 2019
Total non–interest income |  | $ | 16,700 |  |  | $ | 11,125 |  |  | $ | 11,514 |
Gain on sale of mortgage loans |  | 8,813 |  |  | 6,620 |  |  | 2,702 |
Mortgage servicing income net of impairment |  | (1,308) |  |  | (2,760) |  |  | 444 |

2

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

|  | For the Three Months Ended
|  | September 30, |  | June 30, |  | September 30,
Non–interest Expense |  | 2020 |  | 2020 |  | 2019
Total non–interest expense |  | $ | 33,407 |  |  | $ | 30,432 |  |  | $ | 30,060 |
Annualized non–interest expense to average assets |  | 2.30 | % |  | 2.18 | % |  | 2.34 | %

|  | For the Three Months Ended
|  | September 30, |  | June 30, |  | September 30,
Credit Quality |  | 2020 |  | 2020 |  | 2019
Allowance for credit losses to total loans |  | 1.39 | % |  | 1.38 | % |  | 0.49 | %
Non–performing loans to total loans |  | 0.72 |  |  | 0.70 |  |  | 0.52 |
Percent of net charge–offs to average loans outstanding for the period |  | 0.02 |  |  | 0.01 |  |  | 0.02 |

|  |  |  | CECL Adoption
Allowance for |  | December 31, |  |  |  | January 1, |  | Net Reserve Build |  | September 30,
Credit Losses |  | 2019 |  | Impact |  | 2020 |  | 1Q20 |  | 2Q20 |  | 3Q20 |  | 2020
Commercial |  | $ | 11,996 |  |  | $ | 13,618 |  |  | $ | 25,614 |  |  | $ | 6,936 |  |  | $ | 6,597 |  |  | $ | 648 |  |  | $ | 39,795 |
Retail Mortgage |  | 923 |  |  | 4,048 |  |  | 4,971 |  |  | 683 |  |  | 178 |  |  | (368) |  |  | 5,464 |
Warehouse |  | 1,077 |  |  | — |  |  | 1,077 |  |  | (22) |  |  | 135 |  |  | 60 |  |  | 1,250 |
Consumer |  | 3,671 |  |  | 4,911 |  |  | 8,582 |  |  | 599 |  |  | (260) |  |  | 889 |  |  | 9,810 |
Allowance for Credit Losses (“ACL”) |  | $ | 17,667 |  |  | $ | 22,577 |  |  | $ | 40,244 |  |  | $ | 8,196 |  |  | $ | 6,650 |  |  | $ | 1,229 |  |  | $ | 56,319 |
ACL / Total Loans |  | 0.49 | % |  |  |  | 1.10 | % |  |  |  |  |  |  |  | 1.39 | %
Acquired Loan Discount (“ALD”) |  | $ | 20,228 |  |  | $ | (2,786) |  |  | $ | 17,442 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 12,933 |

Horizon’s asset quality metrics continued to remain favorable through the third quarter, with low levels of delinquency and other real estate owned and a moderate increase in non–performing loans. Horizon’s reserve build reflects adoption of CECL on January 1, 2020 and the increase in our quarterly allocations to cover potential future loan losses related to economic factors and the nature and characteristics of our loan portfolios, primarily related to the impact on non–essential businesses caused by COVID–19 closures and the slow pace of reopening and economic recovery. Through September 30, 2020, Horizon has not recorded any material specific loan losses attributed to COVID–19 closures.
Income Statement Highlights
Net income for the third quarter of 2020 was $20.3 million, or $0.46 diluted earnings per share, compared to $14.6 million, or $0.33, for the linked quarter and $20.5 million, or $0.46, for the prior year period.
Adjusted net income for the third quarter of 2020 was $19.4 million, or $0.45 diluted earnings per share, compared to $14.4 million, or $0.32, for the linked quarter and $20.3 million, or $0.45, for the prior year period. Adjusted net income, which is not calculated according to generally accepted accounting principles (“GAAP”), is a measure that Horizon uses to provide a greater understanding of operating profitability.
The increase in net income for the third quarter of 2020 when compared to the second quarter of 2020 reflects an increase in non–interest income of $5.6 million, an increase of $401,000 in net interest income and a decrease in credit loss expense of $5.0 million, offset by an increase in non–interest expense of $3.0 million and an increase in tax expense of $2.3 million.
3

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Third quarter 2020 non–interest income was reduced by a non–cash mortgage servicing asset impairment of $1.5 million recorded to reflect the national increase in mortgage prepayment speeds and past due levels and determined based on a third–party valuation of Horizon’s mortgage servicing asset. This was more than offset by record income from the gain on sale of mortgage loans, which grew to a record $8.8 million in the third quarter of 2020, up from $6.6 million in the linked quarter and $2.7 million in the prior year period.
Non–interest expense of $33.4 million in the third quarter of 2020 reflected a $3.2 million increase in salaries and employee benefits expense from the linked quarter. The increase in salaries and employee benefits expense reflected a catch-up in bonus related expense and the deferral of approximately $1.1 million in PPP loan origination costs in the second quarter of 2020, which will be amortized over the life of the PPP loans and would be recognized when the loans are forgiven or paid off.
The decrease in net income for the third quarter of 2020 when compared to the same prior year period reflects an increase in non–interest expense of $3.3 million, an increase in credit loss expense of $1.7 million and an increase in income tax expense of $322,000, offset by an increase in non–interest income of $5.2 million.
Net income for the first nine months of 2020 was $46.6 million, or $1.06 diluted earnings per share, compared to $48.0 million, or $1.11 diluted earnings per share, for the first nine months of 2019. Adjusted net income for the first nine months of 2020 was $45.0 million, or $1.02 diluted earnings per share, compared to $52.1 million, or $1.21 diluted earnings per share for the first nine months of 2019. The decrease in net income for the first nine months of 2020 when compared to the same prior year period reflects an increase in the provision for credit loss expense of $16.1 million and an increase in non–interest expense of $3.6 million, offset by an increase in net interest income of $8.0 million, an increase in non–interest income of $8.8 million and a decrease in tax expense of $1.5 million.

Non–GAAP Reconciliation of Net Income
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Net income as reported |  | $ | 20,312 |  |  | $ | 14,639 |  |  | $ | 11,655 |  |  | $ | 18,543 |  |  | $ | 20,537 |  |  | $ | 46,606 |  |  | $ | 47,995 |
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,650 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (987) |
Net income excluding merger expenses |  | 20,312 |  |  | 14,639 |  |  | 11,655 |  |  | 18,543 |  |  | 20,537 |  |  | 46,606 |  |  | 52,658 |
(Gain) / loss on sale of investment securities |  | (1,088) |  |  | (248) |  |  | (339) |  |  | (10) |  |  | — |  |  | (1,675) |  |  | 85 |
Tax effect |  | 228 |  |  | 52 |  |  | 71 |  |  | 2 |  |  | — |  |  | 352 |  |  | (18) |
Net income excluding (gain) / loss on sale of investment securities |  | 19,452 |  |  | 14,443 |  |  | 11,387 |  |  | 18,535 |  |  | 20,537 |  |  | 45,283 |  |  | 52,725 |
Death benefit on bank owned life insurance (“BOLI”) |  | (31) |  |  | — |  |  | (233) |  |  | — |  |  | (213) |  |  | (264) |  |  | (580) |
Net income excluding death benefit on BOLI |  | 19,421 |  |  | 14,443 |  |  | 11,154 |  |  | 18,535 |  |  | 20,324 |  |  | 45,019 |  |  | 52,145 |
Adjusted net income |  | $ | 19,421 |  |  | $ | 14,443 |  |  | $ | 11,154 |  |  | $ | 18,535 |  |  | $ | 20,324 |  |  | $ | 45,019 |  |  | $ | 52,145 |

4

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Non–GAAP Reconciliation of Diluted Earnings per Share
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Diluted earnings per share (“EPS”) as reported |  | $ | 0.46 |  |  | $ | 0.33 |  |  | $ | 0.26 |  |  | $ | 0.41 |  |  | $ | 0.46 |  |  | $ | 1.06 |  |  | $ | 1.11 |
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.13 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.02) |
Diluted EPS excluding merger expenses |  | 0.46 |  |  | 0.33 |  |  | 0.26 |  |  | 0.41 |  |  | 0.46 |  |  | 1.06 |  |  | 1.22 |
(Gain) / loss on sale of investment securities |  | (0.02) |  |  | (0.01) |  |  | (0.01) |  |  | — |  |  | — |  |  | (0.04) |  |  | — |
Tax effect |  | 0.01 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.01 |  |  | — |
Diluted EPS excluding (gain) / loss on sale of investment securities |  | 0.45 |  |  | 0.32 |  |  | 0.25 |  |  | 0.41 |  |  | 0.46 |  |  | 1.03 |  |  | 1.22 |
Death benefit on bank owned life insurance (“BOLI”) |  | — |  |  | — |  |  | (0.01) |  |  | — |  |  | (0.01) |  |  | (0.01) |  |  | (0.01) |
Diluted EPS excluding death benefit on BOLI |  | 0.45 |  |  | 0.32 |  |  | 0.24 |  |  | 0.41 |  |  | 0.45 |  |  | 1.02 |  |  | 1.21 |
Adjusted diluted EPS |  | $ | 0.45 |  |  | $ | 0.32 |  |  | $ | 0.24 |  |  | $ | 0.41 |  |  | $ | 0.45 |  |  | $ | 1.02 |  |  | $ | 1.21 |

Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Income
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Pre–tax income |  | $ | 24,638 |  |  | $ | 16,632 |  |  | $ | 13,239 |  |  | $ | 22,463 |  |  | $ | 24,541 |  |  | $ | 54,509 |  |  | $ | 57,378 |
Credit loss expense |  | 2,052 |  |  | 7,057 |  |  | 8,600 |  |  | 340 |  |  | 376 |  |  | 17,709 |  |  | 1,636 |
Pre–tax, pre–provision income |  | $ | 26,690 |  |  | $ | 23,689 |  |  | $ | 21,839 |  |  | $ | 22,803 |  |  | $ | 24,917 |  |  | $ | 72,218 |  |  | $ | 59,014 |
Pre–tax, pre–provision income |  | $ | 26,690 |  |  | $ | 23,689 |  |  | $ | 21,839 |  |  | $ | 22,803 |  |  | $ | 24,917 |  |  | $ | 72,218 |  |  | $ | 59,014 |
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,650 |
(Gain) / loss on sale of investment securities |  | (1,088) |  |  | (248) |  |  | (339) |  |  | (10) |  |  | — |  |  | (1,675) |  |  | 85 |
Death benefit on BOLI |  | (31) |  |  | — |  |  | (233) |  |  | — |  |  | (213) |  |  | (264) |  |  | (580) |
Adjusted pre–tax, pre–provision income |  | $ | 25,571 |  |  | $ | 23,441 |  |  | $ | 21,267 |  |  | $ | 22,793 |  |  | $ | 24,704 |  |  | $ | 70,279 |  |  | $ | 64,169 |

5

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Horizon’s net interest margin decreased to 3.39% for the third quarter of 2020 compared to 3.47% for the second quarter of 2020. The decrease in net interest margin reflects a decrease in the yield of interest earning assets of 15 basis points, offset by a decrease in the cost of interest bearing liabilities of 7 basis points. Interest income from acquisition–related purchase accounting adjustments was $65,000 lower during the third quarter of 2020 when compared to the second quarter of 2020.
Horizon’s net interest margin decreased to 3.39% for the third quarter of 2020 when compared to 3.82% for the third quarter of 2019. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 97 basis points offset by a decrease in the cost of interest bearing liabilities of 68 basis points.
Horizon’s net interest margin decreased to 3.48% for the first nine months of 2020 when compared to 3.72% for the same prior year period. The decrease in net interest margin reflects a decrease in the yield on interest earning assets of 68 basis points offset by a decrease in the cost of interest bearing liabilities of 55 basis points.
The net interest margin was impacted during the second and third quarters of 2020 due to the PPP loans that were originated. Horizon estimates that the PPP loans compressed the net interest margin by 3 and 4 basis points for the second and third quarters, respectively. This assumes these PPP loans were not included in average interest earning assets or interest income and were primarily funded by the growth in non–interest bearing deposits. The compression to the net interest margin for the first nine months of 2020 using the same assumptions was estimated to be 3 basis points.
The net interest margin was also impacted during the second and third quarters of 2020 due to the issuance of $60.0 million in subordinated notes in June 2020. Horizon estimates that the subordinated notes compressed the net interest margin by 1 and 10 basis points for the second and third quarters, respectively. This assumes the subordinated notes were not included in average interest bearing liabilities or interest expense and were primarily offset by a reduction in cash. The compression to the net interest margin for the first nine months of 2020 using the same assumptions was estimated to be 4 basis points.

Non–GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Net interest income as reported |  | $ | 43,397 |  |  | $ | 42,996 |  |  | $ | 40,925 |  |  | $ | 41,519 |  |  | $ | 43,463 |  |  | $ | 127,318 |  |  | $ | 119,272 |
Average interest earning assets |  | 5,251,611 |  |  | 5,112,636 |  |  | 4,746,202 |  |  | 4,748,217 |  |  | 4,623,985 |  |  | 5,037,540 |  |  | 4,376,841 |
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”) |  | 3.39 | % |  | 3.47 | % |  | 3.56 | % |  | 3.58 | % |  | 3.82 | % |  | 3.48 | % |  | 3.72 | %
Net interest income as reported |  | $ | 43,397 |  |  | $ | 42,996 |  |  | $ | 40,925 |  |  | $ | 41,519 |  |  | $ | 43,463 |  |  | $ | 127,318 |  |  | $ | 119,272 |
Acquisition–related purchase accounting adjustments (“PAUs”) |  | (1,488) |  |  | (1,553) |  |  | (1,434) |  |  | (1,042) |  |  | (1,739) |  |  | (4,475) |  |  | (4,548) |
Adjusted net interest income |  | $ | 41,909 |  |  | $ | 41,443 |  |  | $ | 39,491 |  |  | $ | 40,477 |  |  | $ | 41,724 |  |  | $ | 122,843 |  |  | $ | 114,724 |
Adjusted net interest margin |  | 3.27 | % |  | 3.35 | % |  | 3.44 | % |  | 3.49 | % |  | 3.67 | % |  | 3.36 | % |  | 3.58 | %

6

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 3.27% for the third quarter of 2020 compared to 3.35% for the prior quarter and 3.67% for the third quarter of 2019. Interest income from acquisition–related purchase accounting adjustments was $1.5 million, $1.6 million and $1.7 million for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
Adjusted net interest margin was 3.36% for the first nine months of 2020 compared to 3.58% for the same prior year period. Interest income from acquisition–related purchase accounting adjustments was $4.5 million for both the nine months ended September 30, 2020 and 2019.
Lending Activity
Total loans were $4.04 billion, or $3.73 billion excluding PPP loans, on September 30, 2020. Total loans were $3.99 billion on June 30, 2020, $3.64 billion on December 31, 2019 and $3.67 billion on September 30, 2019. During the nine months ended September 30, 2020, commercial loans increased $275.0 million, mortgage warehouse loans increased $224.4 million, and loans held for sale increased $9.0 million, offset by a decrease in residential mortgage loans of $95.5 million and a decrease in consumer loans of $10.3 million.

Loan Growth by Type, Excluding Acquired Loans
(Dollars in Thousands, Unaudited)
|  | September 30, |  | December 31, |  | Amount |  | Percent
|  | 2020 |  | 2019 |  | Change |  | Change
Commercial |  | $ | 2,321,608 |  |  | $ | 2,046,651 |  |  | $ | 274,957 |  |  | 13.4%
Residential mortgage |  | 675,220 |  |  | 770,717 |  |  | (95,497) |  |  | (12.4)%
Consumer |  | 658,884 |  |  | 669,180 |  |  | (10,296) |  |  | (1.5)%
Subtotal |  | 3,655,712 |  |  | 3,486,548 |  |  | 169,164 |  |  | 4.9%
Loans held for sale |  | 13,053 |  |  | 4,088 |  |  | 8,965 |  |  | 219.3%
Mortgage warehouse |  | 374,653 |  |  | 150,293 |  |  | 224,360 |  |  | 149.3%
Total loans |  | $ | 4,043,418 |  |  | $ | 3,640,929 |  |  | $ | 402,489 |  |  | 11.1%

Residential mortgage lending activity for the three months ended September 30, 2020 generated a record $8.8 million in income from the gain on sale of mortgage loans, an increase of $2.2 million from the second quarter of 2020 and $6.1 million from the third quarter of 2019. Total origination volume for the third quarter of 2020, including loans placed into the portfolio, totaled $207.1 million, representing a decrease of 18.1% from record second quarter 2020 levels, and an increase of 71.0% from the third quarter of 2019. As a percentage of total originations, 50% of the volume was for refinances and 50% was for new purchases during the third quarter of 2020. Total origination volume of loans sold to the secondary market totaled $166.4 million, representing a decrease of 13.5% from the second quarter of 2020 and an increase of 75.1% from the third quarter of 2019.
7

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Expense Management

|  | Three Months Ended |  |  |  |
|  | September 30, |  | June 30, |  |  |  |
|  | 2020 |  | 2020 |  | Adjusted
Non–interest Expense |  | Actual |  | Merger Expenses |  | Adjusted |  | Actual |  | Merger Expenses |  | Adjusted |  | Amount Change |  | Percent Change
Salaries and employee benefits |  | $ | 18,832 |  |  | $ | — |  |  | $ | 18,832 |  |  | $ | 15,629 |  |  | $ | — |  |  | $ | 15,629 |  |  | $ | 3,203 |  |  | 20.5%
Net occupancy expenses |  | 3,107 |  |  | — |  |  | 3,107 |  |  | 3,190 |  |  | — |  |  | 3,190 |  |  | (83) |  |  | (2.6)%
Data processing |  | 2,237 |  |  | — |  |  | 2,237 |  |  | 2,432 |  |  | — |  |  | 2,432 |  |  | (195) |  |  | (8.0)%
Professional fees |  | 688 |  |  | — |  |  | 688 |  |  | 518 |  |  | — |  |  | 518 |  |  | 170 |  |  | 32.8%
Outside services and consultants |  | 1,561 |  |  | — |  |  | 1,561 |  |  | 1,759 |  |  | — |  |  | 1,759 |  |  | (198) |  |  | (11.3)%
Loan expense |  | 2,876 |  |  | — |  |  | 2,876 |  |  | 2,692 |  |  | — |  |  | 2,692 |  |  | 184 |  |  | 6.8%
FDIC insurance expense |  | 570 |  |  | — |  |  | 570 |  |  | 235 |  |  | — |  |  | 235 |  |  | 335 |  |  | 142.6%
Other losses |  | 114 |  |  | — |  |  | 114 |  |  | 193 |  |  | — |  |  | 193 |  |  | (79) |  |  | (40.9)%
Other expense |  | 3,422 |  |  | — |  |  | 3,422 |  |  | 3,784 |  |  | — |  |  | 3,784 |  |  | (362) |  |  | (9.6)%
Total non–interest expense |  | $ | 33,407 |  |  | $ | — |  |  | $ | 33,407 |  |  | $ | 30,432 |  |  | $ | — |  |  | $ | 30,432 |  |  | $ | 2,975 |  |  | 9.8%
Annualized non–interest expense to average assets |  | 2.30 | % |  |  |  | 2.30 | % |  | 2.18 | % |  |  |  | 2.18 | % |  |  |  |

Total non–interest expense was $3.0 million higher in the third quarter of 2020 when compared to the second quarter of 2020. Increased salaries and employee benefits reflected higher performance–based compensation accruals following improved financial performance in the second half of this year, as well as the second quarter deferral of approximately $1.1 million in PPP loan origination costs that will be amortized over the life of the PPP loans and recognized when the loans are forgiven or paid off. Higher FDIC insurance expense reflected significant growth in deposits through the end of the third quarter of 2020. Loan expense and professional fees were partially offset by decreases in other expense, outside services and consultants and data processing.

|  | Three Months Ended |  |  |  |
|  | September 30, |  | September 30, |  |  |  |
|  | 2020 |  | 2019 |  | Adjusted
Non–interest Expense |  | Actual |  | Merger Expenses |  | Adjusted |  | Actual |  | Merger Expenses |  | Adjusted |  | Amount Change |  | Percent Change
Salaries and employee benefits |  | $ | 18,832 |  |  | $ | — |  |  | $ | 18,832 |  |  | $ | 16,948 |  |  | $ | — |  |  | $ | 16,948 |  |  | $ | 1,884 |  |  | 11.1%
Net occupancy expenses |  | 3,107 |  |  | — |  |  | 3,107 |  |  | 3,131 |  |  | — |  |  | 3,131 |  |  | (24) |  |  | (0.8)%
Data processing |  | 2,237 |  |  | — |  |  | 2,237 |  |  | 2,140 |  |  | — |  |  | 2,140 |  |  | 97 |  |  | 4.5%
Professional fees |  | 688 |  |  | — |  |  | 688 |  |  | 335 |  |  | — |  |  | 335 |  |  | 353 |  |  | 105.4%
Outside services and consultants |  | 1,561 |  |  | — |  |  | 1,561 |  |  | 1,552 |  |  | — |  |  | 1,552 |  |  | 9 |  |  | 0.6%
Loan expense |  | 2,876 |  |  | — |  |  | 2,876 |  |  | 2,198 |  |  | — |  |  | 2,198 |  |  | 678 |  |  | 30.8%
FDIC insurance expense |  | 570 |  |  | — |  |  | 570 |  |  | (273) |  |  | — |  |  | (273) |  |  | 843 |  |  | (308.8)%
Other losses |  | 114 |  |  | — |  |  | 114 |  |  | 90 |  |  | — |  |  | 90 |  |  | 24 |  |  | 26.7%
Other expense |  | 3,422 |  |  | — |  |  | 3,422 |  |  | 3,939 |  |  | — |  |  | 3,939 |  |  | (517) |  |  | (13.1)%
Total non–interest expense |  | $ | 33,407 |  |  | $ | — |  |  | $ | 33,407 |  |  | $ | 30,060 |  |  | $ | — |  |  | $ | 30,060 |  |  | $ | 3,347 |  |  | 11.1%
Annualized non–interest expense to average assets |  | 2.30 | % |  |  |  | 2.30 | % |  | 2.34 | % |  |  |  | 2.34 | % |  |  |  |

Total non–interest expense was $3.3 million higher in the third quarter of 2020 when compared to the third quarter of 2019. Increases in salaries and employee benefits, FDIC insurance expense, loan expense and professional fees were offset in part by a decrease in other expense.
8

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

|  | Nine Months Ended |  |  |  |
|  | September 30, |  | September 30, |  |  |  |
|  | 2020 |  | 2019 |  | Adjusted
Non–interest Expense |  | Actual |  | Merger Expenses |  | Adjusted |  | Actual |  | Merger Expenses |  | Adjusted |  | Amount Change |  | Percent Change
Salaries and employee benefits |  | $ | 51,052 |  |  | $ | — |  |  | $ | 51,052 |  |  | $ | 48,365 |  |  | $ | (484) |  |  | $ | 47,881 |  |  | $ | 3,171 |  |  | 6.6%
Net occupancy expenses |  | 9,549 |  |  | — |  |  | 9,549 |  |  | 9,051 |  |  | (75) |  |  | 8,976 |  |  | 573 |  |  | 6.4%
Data processing |  | 7,074 |  |  | — |  |  | 7,074 |  |  | 6,245 |  |  | (360) |  |  | 5,885 |  |  | 1,189 |  |  | 20.2%
Professional fees |  | 1,742 |  |  | — |  |  | 1,742 |  |  | 1,426 |  |  | (392) |  |  | 1,034 |  |  | 708 |  |  | 68.5%
Outside services and consultants |  | 5,235 |  |  | — |  |  | 5,235 |  |  | 6,737 |  |  | (2,466) |  |  | 4,271 |  |  | 964 |  |  | 22.6%
Loan expense |  | 7,667 |  |  | — |  |  | 7,667 |  |  | 6,195 |  |  | (2) |  |  | 6,193 |  |  | 1,474 |  |  | 23.8%
FDIC insurance expense |  | 955 |  |  | — |  |  | 955 |  |  | 252 |  |  | — |  |  | 252 |  |  | 703 |  |  | 279.0%
Other losses |  | 427 |  |  | — |  |  | 427 |  |  | 363 |  |  | (71) |  |  | 292 |  |  | 135 |  |  | 46.2%
Other expense |  | 11,287 |  |  | — |  |  | 11,287 |  |  | 12,748 |  |  | (1,800) |  |  | 10,948 |  |  | 339 |  |  | 3.1%
Total non–interest expense |  | $ | 94,988 |  |  | $ | — |  |  | $ | 94,988 |  |  | $ | 91,382 |  |  | $ | (5,650) |  |  | $ | 85,732 |  |  | $ | 9,256 |  |  | 10.8%
Annualized non–interest expense to average assets |  | 2.29 | % |  |  |  | 2.29 | % |  | 2.53 | % |  |  |  | 2.38 | % |  |  |  |

Total non–interest expense was $3.6 million higher for the first nine months of 2020 when compared to the same prior year period. Increases in salaries and employee benefits, loan expenses, data processing, FDIC insurance expense and net occupancy expenses were offset in part by decreases in outside services and consultants expense and other expense.
Annualized non–interest expense as a percent of average assets were 2.30%, 2.18% and 2.34% for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.
Annualized non–interest expense as a percent of average assets were 2.29% and 2.53% for the nine months ended September 30, 2020 and 2019, respectively. Annualized non–interest expense, excluding merger expenses, as a percent of average assets were 2.29% and 2.38% for the nine months ended September 30, 2020 and 2019, respectively.
Income tax expense totaled $4.3 million for the third quarter of 2020, an increase of $2.3 million when compared to the second quarter of 2020 and an increase of $322,000 when compared to the third quarter of 2019. The increase in income tax expense in the third quarter of 2020 compared to the second quarter of 2020 and the third quarter of 2019 was primarily due to increases in income before taxes of $8.0 million and $97,000, respectively.
Income tax expense totaled $7.9 million for the nine months ended September 30, 2020, a decrease of $1.5 million when compared to the same prior year period. The decrease in income tax expense was primarily due to a decrease in income before taxes of $2.9 million.
Capital
The capital resources of the Company and Horizon Bank (the “Bank”) exceeded regulatory capital ratios for “well capitalized” banks at September 30, 2020. Stockholders’ equity totaled $670.3 million at September 30, 2020 and the ratio of average stockholders’ equity to average assets was 11.90% for the nine months ended September 30, 2020.
Capital levels benefited from the Company’s previously disclosed public offering of subordinated notes raising $60.0 million in June 2020. Horizon’s fortress balance sheet at September 30, 2020 maintained adequate regulatory capital ratios when stress testing for highly adverse scenarios.
The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of September 30, 2020.
9

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

|  | Actual |  | Required for Capital Adequacy Purposes |  | Required for Capital Adequacy Purposes with Capital Buffer |  | Well Capitalized Under Prompt Corrective Action Provisions
|  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
Total capital (to risk–weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | $ | 640,728 |  |  | 14.38 | % |  | $ | 356,455 |  |  | 8.00 | % |  | $ | 467,847 |  |  | 10.50 | % |  | N/A |  | N/A
Bank |  | 514,974 |  |  | 11.56 | % |  | 356,383 |  |  | 8.00 | % |  | 467,753 |  |  | 10.50 | % |  | $ | 445,479 |  |  | 10.00%
Tier 1 capital (to risk–weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 601,331 |  |  | 13.49 | % |  | 267,456 |  |  | 6.00 | % |  | 378,896 |  |  | 8.50 | % |  | N/A |  | N/A
Bank |  | 475,588 |  |  | 10.67 | % |  | 267,435 |  |  | 6.00 | % |  | 378,866 |  |  | 8.50 | % |  | 356,580 |  |  | 8.00%
Common equity tier 1 capital (to risk–weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 485,235 |  |  | 10.89 | % |  | 200,510 |  |  | 4.50 | % |  | 311,905 |  |  | 7.00 | % |  | N/A |  | N/A
Bank |  | 475,588 |  |  | 10.67 | % |  | 200,576 |  |  | 4.50 | % |  | 312,007 |  |  | 7.00 | % |  | 289,721 |  |  | 6.50%
Tier 1 capital (to average assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 601,331 |  |  | 10.82 | % |  | 222,304 |  |  | 4.00 | % |  | 222,304 |  |  | 4.00 | % |  | N/A |  | N/A
Bank |  | 475,588 |  |  | 8.57 | % |  | 221,978 |  |  | 4.00 | % |  | 221,978 |  |  | 4.00 | % |  | 277,473 |  |  | 5.00 | %

“The strength and resilience of Horizon’s business is demonstrated by the Company’s strong operating fundamentals, ability to consistently generate retained earnings and growth in tangible book value per share and the Company’s healthy capital position overall,” said Mr. Dwight. “Accordingly, we will continue to be opportunistic with share repurchases under our current buyback authorization, and we remain committed to maintaining our current quarterly cash dividend.”
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, unpledged investment securities and borrowing relationships with correspondent banks, including the Federal Home Loan Bank of Indianapolis (the “FHLB”). At September 30, 2020, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $928.0 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank had approximately $517.2 million of unpledged investment securities at September 30, 2020.
Branch Network and Customer Experience
Horizon continues to implement its disciplined approach to enhancing the efficiency of its branch network on an ongoing basis, while leveraging technology to enhance the customer experience. At the same time, the Bank continues to invest in growth opportunities within its Midwest footprint, converting its Troy, Michigan loan production office into a full–service branch during the third quarter of 2020.
During the third quarter, Horizon also fully implemented live online chat support. During the fourth quarter the Bank expects to implement fully online and mobile enabled deposit account opening capabilities, for the convenience of new and prospective customers.
Use of Non–GAAP Financial Measures
Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non–GAAP financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for credit losses, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average equity and pre–tax, pre–
10

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
provision income. In each case, we have identified special circumstances that we consider to be non–recurring and have excluded them. We believe that this shows the impact of such events as acquisition–related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes these non–GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one–time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non–GAAP figures identified herein and their most comparable GAAP measures.

Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Total stockholders’ equity |  | $ | 670,293 |  |  | $ | 652,206 |  |  | $ | 630,842 |  |  | $ | 656,023 |  |  | $ | 642,711 |
Less: Intangible assets |  | 175,107 |  |  | 176,020 |  |  | 176,961 |  |  | 177,917 |  |  | 178,896 |
Total tangible stockholders’ equity |  | $ | 495,186 |  |  | $ | 476,186 |  |  | $ | 453,881 |  |  | $ | 478,106 |  |  | $ | 463,815 |
Common shares outstanding |  | 43,874,353 |  |  | 43,821,878 |  |  | 43,763,623 |  |  | 44,975,771 |  |  | 44,969,021 |
Book value per common share |  | $ | 15.28 |  |  | $ | 14.88 |  |  | $ | 14.41 |  |  | $ | 14.59 |  |  | $ | 14.29 |
Tangible book value per common share |  | $ | 11.29 |  |  | $ | 10.87 |  |  | $ | 10.37 |  |  | $ | 10.63 |  |  | $ | 10.31 |

11

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Non–interest expense as reported |  | $ | 33,407 |  |  | $ | 30,432 |  |  | $ | 31,149 |  |  | $ | 30,650 |  |  | $ | 30,060 |  |  | $ | 94,988 |  |  | $ | 91,382 |
Net interest income as reported |  | 43,397 |  |  | 42,996 |  |  | 40,925 |  |  | 41,519 |  |  | 43,463 |  |  | 127,318 |  |  | 119,272 |
Non–interest income as reported |  | $ | 16,700 |  |  | $ | 11,125 |  |  | $ | 12,063 |  |  | $ | 11,934 |  |  | $ | 11,514 |  |  | $ | 39,888 |  |  | $ | 31,124 |
Non–interest expense / (Net interest income + Non–interest income) (“Efficiency Ratio”) |  | 55.59 | % |  | 56.23 | % |  | 58.79 | % |  | 57.34 | % |  | 54.68 | % |  | 56.81 | % |  | 60.76 | %
Non–interest expense as reported |  | $ | 33,407 |  |  | $ | 30,432 |  |  | $ | 31,149 |  |  | $ | 30,650 |  |  | $ | 30,060 |  |  | $ | 94,988 |  |  | $ | 91,382 |
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (5,650) |
Non–interest expense excluding merger expenses |  | 33,407 |  |  | 30,432 |  |  | 31,149 |  |  | 30,650 |  |  | 30,060 |  |  | 94,988 |  |  | 85,732 |
Net interest income as reported |  | 43,397 |  |  | 42,996 |  |  | 40,925 |  |  | 41,519 |  |  | 43,463 |  |  | 127,318 |  |  | 119,272 |
Non–interest income as reported |  | 16,700 |  |  | 11,125 |  |  | 12,063 |  |  | 11,934 |  |  | 11,514 |  |  | 39,888 |  |  | 31,124 |
(Gain) / loss on sale of investment securities |  | (1,088) |  |  | (248) |  |  | (339) |  |  | (10) |  |  | — |  |  | (1,675) |  |  | 85 |
Death benefit on BOLI |  | (31) |  |  | — |  |  | (233) |  |  | — |  |  | (213) |  |  | (264) |  |  | (580) |
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI |  | $ | 15,581 |  |  | $ | 10,877 |  |  | $ | 11,491 |  |  | $ | 11,924 |  |  | $ | 11,301 |  |  | $ | 37,949 |  |  | $ | 30,629 |
Adjusted efficiency ratio |  | 56.64 | % |  | 56.49 | % |  | 59.43 | % |  | 57.35 | % |  | 54.89 | % |  | 57.48 | % |  | 57.19 | %

12

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Non–GAAP Reconciliation of Return on Average Assets
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Average assets |  | $ | 5,768,691 |  |  | $ | 5,620,695 |  |  | $ | 5,257,332 |  |  | $ | 5,250,574 |  |  | $ | 5,107,259 |  |  | $ | 5,549,696 |  |  | $ | 4,823,601 |
Return on average assets (“ROAA”) as reported |  | 1.40 | % |  | 1.05 | % |  | 0.89 | % |  | 1.40 | % |  | 1.60 | % |  | 1.12 | % |  | 1.33 | %
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.16 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.03) |
ROAA excluding merger expenses |  | 1.40 |  |  | 1.05 |  |  | 0.89 |  |  | 1.40 |  |  | 1.60 |  |  | 1.12 |  |  | 1.46 |
(Gain) / loss on sale of investment securities |  | (0.08) |  |  | (0.02) |  |  | (0.03) |  |  | — |  |  | — |  |  | (0.04) |  |  | — |
Tax effect |  | 0.02 |  |  | — |  |  | 0.01 |  |  | — |  |  | — |  |  | 0.01 |  |  | — |
ROAA excluding (gain) / loss on sale of investment securities |  | 1.34 |  |  | 1.03 |  |  | 0.87 |  |  | 1.40 |  |  | 1.60 |  |  | 1.09 |  |  | 1.46 |
Death benefit on BOLI |  | — |  |  | — |  |  | (0.02) |  |  | — |  |  | (0.02) |  |  | (0.01) |  |  | (0.02) |
ROAA excluding death benefit on BOLI |  | 1.34 |  |  | 1.03 |  |  | 0.85 |  |  | 1.40 |  |  | 1.58 |  |  | 1.08 |  |  | 1.44 |
Adjusted ROAA |  | 1.34 | % |  | 1.03 | % |  | 0.85 | % |  | 1.40 | % |  | 1.58 | % |  | 1.08 | % |  | 1.44 | %

13

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Non–GAAP Reconciliation of Return on Average Common Equity
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30, |  | September 30, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019 |  | 2020 |  | 2019
Average common equity |  | $ | 668,797 |  |  | $ | 649,490 |  |  | $ | 667,588 |  |  | $ | 653,071 |  |  | $ | 640,770 |  |  | $ | 660,278 |  |  | $ | 589,766 |
Return on average common equity (“ROACE”) as reported |  | 12.08 | % |  | 9.07 | % |  | 7.02 | % |  | 11.26 | % |  | 12.72 | % |  | 9.43 | % |  | 10.88 | %
Merger expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1.28 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.22) |
ROACE excluding merger expenses |  | 12.08 |  |  | 9.07 |  |  | 7.02 |  |  | 11.26 |  |  | 12.72 |  |  | 9.43 |  |  | 11.94 |
(Gain) / loss on sale of investment securities |  | (0.65) |  |  | (0.15) |  |  | (0.20) |  |  | (0.01) |  |  | — |  |  | (0.34) |  |  | 0.02 |
Tax effect |  | 0.14 |  |  | 0.03 |  |  | 0.04 |  |  | — |  |  | — |  |  | 0.07 |  |  | — |
ROACE excluding (gain) / loss on sale of investment securities |  | 11.57 |  |  | 8.95 |  |  | 6.86 |  |  | 11.25 |  |  | 12.72 |  |  | 9.16 |  |  | 11.96 |
Death benefit on BOLI |  | (0.02) |  |  | — |  |  | (0.14) |  |  | — |  |  | (0.13) |  |  | (0.05) |  |  | (0.13) |
ROACE excluding death benefit on BOLI |  | 11.55 |  |  | 8.95 |  |  | 6.72 |  |  | 11.25 |  |  | 12.59 |  |  | 9.11 |  |  | 11.83 |
Adjusted ROACE |  | 11.55 | % |  | 8.95 | % |  | 6.72 | % |  | 11.25 | % |  | 12.59 | % |  | 9.11 | % |  | 11.83 | %

Conference Call
As previously announced, Horizon will host a conference call to review its third quarter financial results and operating performance.
Participants may access the live conference call on October 29, 2020 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 877–317–6789 from the United States, 866–450–4696 from Canada or 412–317–6789 from international locations and requesting the “Horizon Bancorp Call.” Participants are asked to dial in approximately 10 minutes prior to the call.
A telephone replay of the call will be available approximately one hour after the end of the conference through November 5, 2020. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 412–317–0088 from other international locations, and entering the access code 10148396.
About Horizon Bancorp, Inc.
Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern and central Michigan through its commercial banking subsidiary, Horizon Bank. Horizon may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.
14

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results
Forward Looking Statements
This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward–looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward–looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward–looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.
Although management believes that the expectations reflected in such forward–looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon’s reports filed with the Securities and Exchange Commission, including those described in Horizon’s Annual Report on Form 10–K and its quarterly reports on Form 10–Q. Further, statements about the effects of the COVID–19 pandemic on our business, operations, financial performance, and prospects may constitute forward–looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward–looking statements due to factors and future developments that are uncertain, unpredictable, and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties, and us. Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward–looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Financial Highlights
(Dollars in Thousands, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Balance sheet: |  |  |  |  |  |  |  |  |  |
Total assets |  | $ | 5,790,143 |  |  | $ | 5,739,262 |  |  | $ | 5,351,325 |  |  | $ | 5,246,829 |  |  | $ | 5,186,714 |
Investment securities |  | 1,195,613 |  |  | 1,126,075 |  |  | 1,099,943 |  |  | 1,042,675 |  |  | 977,536 |
Commercial loans |  | 2,321,608 |  |  | 2,312,715 |  |  | 2,050,402 |  |  | 2,046,651 |  |  | 2,046,165 |
Mortgage warehouse loans |  | 374,653 |  |  | 300,386 |  |  | 223,519 |  |  | 150,293 |  |  | 155,631 |
Residential mortgage loans |  | 675,220 |  |  | 704,410 |  |  | 757,529 |  |  | 770,717 |  |  | 796,497 |
Consumer loans |  | 658,884 |  |  | 660,871 |  |  | 675,849 |  |  | 669,180 |  |  | 668,332 |
Earning assets |  | 5,262,054 |  |  | 5,143,978 |  |  | 4,835,934 |  |  | 4,706,051 |  |  | 4,667,668 |
Non–interest bearing deposit accounts |  | 1,016,646 |  |  | 981,868 |  |  | 709,978 |  |  | 709,760 |  |  | 756,707 |
Interest bearing transaction accounts |  | 2,600,691 |  |  | 2,510,854 |  |  | 2,264,576 |  |  | 2,245,631 |  |  | 2,173,100 |
Time deposits |  | 718,952 |  |  | 814,877 |  |  | 907,717 |  |  | 975,611 |  |  | 986,150 |
Borrowings |  | 587,473 |  |  | 583,073 |  |  | 704,613 |  |  | 549,741 |  |  | 516,591 |
Subordinated notes |  | 58,566 |  |  | 58,824 |  |  | — |  |  | — |  |  | — |
Junior subordinated debentures issued to capital trusts |  | 56,491 |  |  | 56,437 |  |  | 56,374 |  |  | 56,311 |  |  | 56,250 |
Total stockholders’ equity |  | 670,293 |  |  | 652,206 |  |  | 630,842 |  |  | 656,023 |  |  | 642,711 |

15

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
|  | Three Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Income statement: |  |  |  |  |  |  |  |  |  |
Net interest income |  | $ | 43,397 |  |  | $ | 42,996 |  |  | $ | 40,925 |  |  | $ | 41,519 |  |  | $ | 43,463 |
Credit loss expense |  | 2,052 |  |  | 7,057 |  |  | 8,600 |  |  | 340 |  |  | 376 |
Non–interest income |  | 16,700 |  |  | 11,125 |  |  | 12,063 |  |  | 11,934 |  |  | 11,514 |
Non–interest expense |  | 33,407 |  |  | 30,432 |  |  | 31,149 |  |  | 30,650 |  |  | 30,060 |
Income tax expense |  | 4,326 |  |  | 1,993 |  |  | 1,584 |  |  | 3,920 |  |  | 4,004 |
Net income |  | $ | 20,312 |  |  | $ | 14,639 |  |  | $ | 11,655 |  |  | $ | 18,543 |  |  | $ | 20,537 |
Per share data: |  |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 0.46 |  |  | $ | 0.33 |  |  | $ | 0.26 |  |  | $ | 0.41 |  |  | $ | 0.46 |
Diluted earnings per share |  | 0.46 |  |  | 0.33 |  |  | 0.26 |  |  | 0.41 |  |  | 0.46 |
Cash dividends declared per common share |  | 0.12 |  |  | 0.12 |  |  | 0.12 |  |  | 0.12 |  |  | 0.12 |
Book value per common share |  | 15.28 |  |  | 14.88 |  |  | 14.41 |  |  | 14.59 |  |  | 14.29 |
Tangible book value per common share |  | 11.29 |  |  | 10.87 |  |  | 10.37 |  |  | 10.63 |  |  | 10.31 |
Market value – high |  | 11.48 |  |  | 12.44 |  |  | 18.79 |  |  | 19.42 |  |  | 17.77 |
Market value – low |  | $ | 9.05 |  |  | $ | 8.40 |  |  | $ | 7.97 |  |  | $ | 16.60 |  |  | $ | 15.93 |
Weighted average shares outstanding – Basis |  | 43,862,435 |  |  | 43,781,249 |  |  | 44,658,512 |  |  | 44,971,676 |  |  | 45,038,021 |
Weighted average shares outstanding – Diluted |  | 43,903,881 |  |  | 43,802,794 |  |  | 44,756,716 |  |  | 45,103,065 |  |  | 45,113,730 |
Key ratios: |  |  |  |  |  |  |  |  |  |
Return on average assets |  | 1.40 | % |  | 1.05 | % |  | 0.89 | % |  | 1.40 | % |  | 1.60 | %
Return on average common stockholders’ equity |  | 12.08 |  |  | 9.07 |  |  | 7.02 |  |  | 11.26 |  |  | 12.72 |
Net interest margin |  | 3.39 |  |  | 3.47 |  |  | 3.56 |  |  | 3.58 |  |  | 3.82 |
Allowance for credit losses to total loans |  | 1.39 |  |  | 1.38 |  |  | 1.30 |  |  | 0.49 |  |  | 0.49 |
Average equity to average assets |  | 11.59 |  |  | 11.56 |  |  | 12.70 |  |  | 12.44 |  |  | 12.55 |
Bank only capital ratios: |  |  |  |  |  |  |  |  |  |
Tier 1 capital to average assets |  | 8.57 |  |  | 8.48 |  |  | 9.43 |  |  | 9.49 |  |  | 9.35 |
Tier 1 capital to risk weighted assets |  | 10.67 |  |  | 10.49 |  |  | 11.83 |  |  | 12.20 |  |  | 11.62 |
Total capital to risk weighted assets |  | 11.56 |  |  | 11.74 |  |  | 12.67 |  |  | 12.65 |  |  | 12.08 |

16

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
|  | Nine Months Ended
|  | September 30, |  | September 30,
|  | 2020 |  | 2019
Income statement: |  |  |  |
Net interest income |  | $ | 127,318 |  |  | $ | 119,272 |
Credit loss expense |  | 17,709 |  |  | 1,636 |
Non–interest income |  | 39,888 |  |  | 31,124 |
Non–interest expense |  | 94,988 |  |  | 91,382 |
Income tax expense |  | 7,903 |  |  | 9,383 |
Net income |  | $ | 46,606 |  |  | $ | 47,995 |
Per share data: |  |  |  |
Basic earnings per share |  | $ | 1.06 |  |  | $ | 1.12 |
Diluted earnings per share |  | 1.06 |  |  | 1.11 |
Cash dividends declared per common share |  | 0.36 |  |  | 0.34 |
Book value per common share |  | 15.28 |  |  | 14.29 |
Tangible book value per common share |  | 11.29 |  |  | 10.31 |
Market value – high |  | 18.79 |  |  | 17.82 |
Market value – low |  | $ | 7.97 |  |  | $ | 15.50 |
Weighted average shares outstanding – Basis |  | 44,099,862 |  |  | 42,995,082 |
Weighted average shares outstanding – Diluted |  | 44,165,650 |  |  | 43,070,095 |
Key ratios: |  |  |  |
Return on average assets |  | 1.12 | % |  | 1.33 | %
Return on average common stockholders’ equity |  | 9.43 |  |  | 10.88 |
Net interest margin |  | 3.48 |  |  | 3.72 |
Allowance for credit losses to total loans |  | 1.39 |  |  | 0.49 |
Average equity to average assets |  | 11.90 |  |  | 12.23 |
Bank only capital ratios: |  |  |  |
Tier 1 capital to average assets |  | 8.57 |  |  | 9.35 |
Tier 1 capital to risk weighted assets |  | 10.67 |  |  | 11.62 |
Total capital to risk weighted assets |  | 11.56 |  |  | 12.08 |

17

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Financial Highlights
(Dollars in Thousands Except Ratios, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Loan data: |  |  |  |  |  |  |  |  |  |
Substandard loans |  | $ | 88,286 |  |  | $ | 61,385 |  |  | $ | 61,322 |  |  | $ | 58,670 |  |  | $ | 62,130 |
30 to 89 days delinquent |  | 5,513 |  |  | 4,029 |  |  | 12,017 |  |  | 7,729 |  |  | 10,204 |
Non–performing loans: |  |  |  |  |  |  |  |  |  |
90 days and greater delinquent – accruing interest |  | 331 |  |  | 123 |  |  | 246 |  |  | 146 |  |  | 34 |
Trouble debt restructures – accruing interest |  | 1,825 |  |  | 2,039 |  |  | 2,115 |  |  | 3,354 |  |  | 3,491 |
Trouble debt restructures – non–accrual |  | 2,704 |  |  | 3,443 |  |  | 3,360 |  |  | 2,006 |  |  | 1,807 |
Non–accrual loans |  | 24,454 |  |  | 22,451 |  |  | 18,281 |  |  | 15,679 |  |  | 13,823 |
Total non–performing loans |  | $ | 29,314 |  |  | $ | 28,056 |  |  | $ | 24,002 |  |  | $ | 21,185 |  |  | $ | 19,155 |
Non–performing loans to total loans |  | 0.72 | % |  | 0.70 | % |  | 0.65 | % |  | 0.58 | % |  | 0.52 | %

Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Commercial |  | $ | 39,795 |  |  | $ | 39,147 |  |  | $ | 32,550 |  |  | $ | 11,996 |  |  | $ | 12,082 |
Residential mortgage |  | 5,464 |  |  | 5,832 |  |  | 5,654 |  |  | 923 |  |  | 1,449 |
Mortgage warehouse |  | 1,250 |  |  | 1,190 |  |  | 1,055 |  |  | 1,077 |  |  | 1,041 |
Consumer |  | 9,810 |  |  | 8,921 |  |  | 9,181 |  |  | 3,671 |  |  | 3,384 |
Total |  | $ | 56,319 |  |  | $ | 55,090 |  |  | $ | 48,440 |  |  | $ | 17,667 |  |  | $ | 17,956 |

Net Charge–offs (Recoveries)
(Dollars in Thousands Except Ratios, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Commercial |  | $ | 488 |  |  | $ | 6 |  |  | $ | (20) |  |  | $ | 146 |  |  | $ | 192 |
Residential mortgage |  | 136 |  |  | 24 |  |  | 17 |  |  | 40 |  |  | (7) |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 199 |  |  | 377 |  |  | 407 |  |  | 443 |  |  | 540 |
Total |  | $ | 823 |  |  | $ | 407 |  |  | $ | 404 |  |  | $ | 629 |  |  | $ | 725 |
Percent of net charge–offs (recoveries) to average loans outstanding for the period |  | 0.02 | % |  | 0.01 | % |  | 0.01 | % |  | 0.02 | % |  | 0.02 | %

18

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Total Non–performing Loans
(Dollars in Thousands Except Ratios, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Commercial |  | $ | 16,169 |  |  | $ | 14,238 |  |  | $ | 9,579 |  |  | $ | 7,347 |  |  | $ | 8,193 |
Residential mortgage |  | 9,209 |  |  | 9,945 |  |  | 10,411 |  |  | 9,884 |  |  | 7,212 |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 3,936 |  |  | 3,873 |  |  | 4,012 |  |  | 3,954 |  |  | 3,750 |
Total |  | $ | 29,314 |  |  | $ | 28,056 |  |  | $ | 24,002 |  |  | $ | 21,185 |  |  | $ | 19,155 |
Non–performing loans to total loans |  | 0.72 | % |  | 0.70 | % |  | 0.65 | % |  | 0.58 | % |  | 0.52 | %

Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Commercial |  | $ | 2,191 |  |  | $ | 2,374 |  |  | $ | 2,464 |  |  | $ | 3,698 |  |  | $ | 3,972 |
Residential mortgage |  | 70 |  |  | 249 |  |  | 336 |  |  | 28 |  |  | 48 |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 80 |  |  | 20 |  |  | 13 |  |  | — |  |  | 24 |
Total |  | $ | 2,341 |  |  | $ | 2,643 |  |  | $ | 2,813 |  |  | $ | 3,726 |  |  | $ | 4,044 |

19

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Average Balance Sheets
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Three Months Ended
|  | September 30, 2020 |  | September 30, 2019
|  | Average Balance |  | Interest |  | Average Rate |  | Average Balance |  | Interest |  | Average Rate
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Federal funds sold |  | $ | 45,307 |  |  | $ | 12 |  |  | 0.11 | % |  | $ | 18,133 |  |  | $ | 115 |  |  | 2.52 | %
Interest earning deposits |  | 28,428 |  |  | 53 |  |  | 0.74 | % |  | 17,823 |  |  | 93 |  |  | 2.07 | %
Investment securities – taxable |  | 447,762 |  |  | 1,639 |  |  | 1.46 | % |  | 478,764 |  |  | 2,949 |  |  | 2.44 | %
Investment securities – non–taxable (1) |  | 720,111 |  |  | 4,391 |  |  | 3.07 | % |  | 462,997 |  |  | 3,099 |  |  | 3.36 | %
Loans receivable (2) (3) |  | 4,010,003 |  |  | 44,051 |  |  | 4.39 | % |  | 3,646,268 |  |  | 49,455 |  |  | 5.41 | %
Total interest earning assets |  | 5,251,611 |  |  | 50,146 |  |  | 3.90 | % |  | 4,623,985 |  |  | 55,711 |  |  | 4.87 | %
Non–interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | 94,039 |  |  |  |  |  |  | 66,970 |  |  |  |  |
Allowance for credit losses |  | (55,271) |  |  |  |  |  |  | (18,277) |  |  |  |  |
Other assets |  | 478,312 |  |  |  |  |  |  | 434,581 |  |  |  |  |
Total average assets |  | $ | 5,768,691 |  |  |  |  |  |  | $ | 5,107,259 |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing deposits |  | $ | 3,334,436 |  |  | $ | 3,616 |  |  | 0.43 | % |  | $ | 3,132,852 |  |  | $ | 9,109 |  |  | 1.15 | %
Borrowings |  | 577,447 |  |  | 1,662 |  |  | 1.15 | % |  | 413,859 |  |  | 2,275 |  |  | 2.18 | %
Subordinated notes |  | 58,716 |  |  | 895 |  |  | 6.06 | % |  | — |  |  | — |  |  | — | %
Junior subordinated debentures issued to capital trusts |  | 56,458 |  |  | 576 |  |  | 4.06 | % |  | 54,433 |  |  | 864 |  |  | 6.30 | %
Total interest bearing liabilities |  | 4,027,057 |  |  | 6,749 |  |  | 0.67 | % |  | 3,601,144 |  |  | 12,248 |  |  | 1.35 | %
Non–interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits |  | 996,427 |  |  |  |  |  |  | 818,164 |  |  |  |  |
Accrued interest payable and other liabilities |  | 76,410 |  |  |  |  |  |  | 47,181 |  |  |  |  |
Stockholders’ equity |  | 668,797 |  |  |  |  |  |  | 640,770 |  |  |  |  |
Total average liabilities and stockholders’ equity |  | $ | 5,768,691 |  |  |  |  |  |  | $ | 5,107,259 |  |  |  |  |
Net interest income / spread |  |  |  | $ | 43,397 |  |  | 3.23 | % |  |  |  | $ | 43,463 |  |  | 3.52 | %
Net interest income as a percent of average interest earning assets (1) |  |  |  |  |  | 3.39 | % |  |  |  |  |  | 3.82 | %
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
(3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

20

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Average Balance Sheets
(Dollars in Thousands, Unaudited)
|  | Nine Months Ended |  | Nine Months Ended
|  | September 30, 2020 |  | September 30, 2019
|  | Average Balance |  | Interest |  | Average Rate |  | Average Balance |  | Interest |  | Average Rate
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Federal funds sold |  | $ | 44,375 |  |  | $ | 125 |  |  | 0.38 | % |  | $ | 14,778 |  |  | $ | 339 |  |  | 3.07 | %
Interest earning deposits |  | 25,083 |  |  | 216 |  |  | 1.15 | % |  | 21,938 |  |  | 284 |  |  | 1.73 | %
Investment securities – taxable |  | 476,735 |  |  | 6,582 |  |  | 1.84 | % |  | 469,330 |  |  | 8,929 |  |  | 2.54 | %
Investment securities – non–taxable (1) |  | 652,339 |  |  | 12,294 |  |  | 3.19 | % |  | 423,141 |  |  | 8,520 |  |  | 3.37 | %
Loans receivable (2) (3) |  | 3,839,008 |  |  | 132,927 |  |  | 4.64 | % |  | 3,447,654 |  |  | 136,862 |  |  | 5.32 | %
Total interest earning assets |  | 5,037,540 |  |  | 152,144 |  |  | 4.13 | % |  | 4,376,841 |  |  | 154,934 |  |  | 4.81 | %
Non–interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | 85,511 |  |  |  |  |  |  | 58,890 |  |  |  |  |
Allowance for credit losses |  | (42,864) |  |  |  |  |  |  | (18,053) |  |  |  |  |
Other assets |  | 469,509 |  |  |  |  |  |  | 405,923 |  |  |  |  |
Total average assets |  | $ | 5,549,696 |  |  |  |  |  |  | $ | 4,823,601 |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing deposits |  | $ | 3,286,648 |  |  | $ | 15,838 |  |  | 0.64 | % |  | $ | 2,924,433 |  |  | $ | 24,923 |  |  | 1.14 | %
Borrowings |  | 576,288 |  |  | 5,974 |  |  | 1.38 | % |  | 462,575 |  |  | 8,391 |  |  | 2.43 | %
Subordinated notes |  | 21,218 |  |  | 953 |  |  | 6.00 | % |  | — |  |  | — |  |  | — | %
Junior subordinated debentures issued to capital trusts |  | 56,398 |  |  | 2,061 |  |  | 4.88 | % |  | 48,666 |  |  | 2,348 |  |  | 6.45 | %
Total interest bearing liabilities |  | 3,940,552 |  |  | 24,826 |  |  | 0.84 | % |  | 3,435,674 |  |  | 35,662 |  |  | 1.39 | %
Non–interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits |  | 879,840 |  |  |  |  |  |  | 760,717 |  |  |  |  |
Accrued interest payable and other liabilities |  | 69,026 |  |  |  |  |  |  | 37,444 |  |  |  |  |
Stockholders’ equity |  | 660,278 |  |  |  |  |  |  | 589,766 |  |  |  |  |
Total average liabilities and stockholders’ equity |  | $ | 5,549,696 |  |  |  |  |  |  | $ | 4,823,601 |  |  |  |  |
Net interest income / spread |  |  |  | $ | 127,318 |  |  | 3.29 | % |  |  |  | $ | 119,272 |  |  | 3.42 | %
Net interest income as a percent of average interest earning assets (1) |  |  |  |  |  | 3.48 | % |  |  |  |  |  | 3.72 | %
(1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities. The average rate is presented on a tax equivalent basis.
(2) Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.
(3) Non–accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. The average rate is presented on a tax equivalent basis.

21

Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Condensed Consolidated Balance Sheets
(Dollars in Thousands)
|  | September 30, 2020 |  | December 31, 2019
|  | (Unaudited) |  |
Assets |  |  |  |
Cash and due from banks |  | $ | 99,126 |  |  | $ | 98,831 |
Interest earning time deposits |  | 9,213 |  |  | 8,455 |
Investment securities, available for sale |  | 1,015,343 |  |  | 834,776 |
Investment securities, held to maturity (fair value $191,612 and $215,147) |  | 180,270 |  |  | 207,899 |
Loans held for sale |  | 13,053 |  |  | 4,088 |
Loans, net of allowance for credit losses of $56,319 and $17,667 |  | 3,974,046 |  |  | 3,619,174 |
Premises and equipment, net |  | 92,189 |  |  | 92,209 |
Federal Home Loan Bank stock |  | 23,023 |  |  | 22,447 |
Goodwill |  | 151,238 |  |  | 151,238 |
Other intangible assets |  | 23,869 |  |  | 26,679 |
Interest receivable |  | 20,456 |  |  | 18,828 |
Cash value of life insurance |  | 96,198 |  |  | 95,577 |
Other assets |  | 92,119 |  |  | 66,628 |
Total assets |  | $ | 5,790,143 |  |  | $ | 5,246,829 |
Liabilities |  |  |  |
Deposits |  |  |  |
Non–interest bearing |  | $ | 1,016,646 |  |  | $ | 709,760 |
Interest bearing |  | 3,319,643 |  |  | 3,221,242 |
Total deposits |  | 4,336,289 |  |  | 3,931,002 |
Borrowings |  | 587,473 |  |  | 549,741 |
Subordinated notes |  | 58,566 |  |  | — |
Junior subordinated debentures issued to capital trusts |  | 56,491 |  |  | 56,311 |
Interest payable |  | 2,481 |  |  | 3,062 |
Other liabilities |  | 78,550 |  |  | 50,690 |
Total liabilities |  | 5,119,850 |  |  | 4,590,806 |
Commitments and contingent liabilities |  |  |  |
Stockholders’ equity |  |  |  |
Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares |  | — |  |  | — |
Common stock, no par value, Authorized 99,000,000 shares Issued 43,899,422 and 45,000,840 shares, Outstanding 43,874,353 and 44,975,771 shares |  | — |  |  | — |
Additional paid–in capital |  | 362,180 |  |  | 379,853 |
Retained earnings |  | 284,835 |  |  | 269,738 |
Accumulated other comprehensive income |  | 23,278 |  |  | 6,432 |
Total stockholders’ equity |  | 670,293 |  |  | 656,023 |
Total liabilities and stockholders’ equity |  | $ | 5,790,143 |  |  | $ | 5,246,829 |

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Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
|  | Three Months Ended
|  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | September 30,
|  | 2020 |  | 2020 |  | 2020 |  | 2019 |  | 2019
Interest income |  |  |  |  |  |  |  |  |  |
Loans receivable |  | $ | 44,051 |  |  | $ | 43,918 |  |  | $ | 44,958 |  |  | $ | 46,769 |  |  | $ | 49,455 |
Investment securities – taxable |  | 1,704 |  |  | 2,321 |  |  | 2,898 |  |  | 3,054 |  |  | 3,157 |
Investment securities – non–taxable |  | 4,391 |  |  | 4,105 |  |  | 3,798 |  |  | 3,575 |  |  | 3,099 |
Total interest income |  | 50,146 |  |  | 50,344 |  |  | 51,654 |  |  | 53,398 |  |  | 55,711 |
Interest expense |  |  |  |  |  |  |  |  |  |
Deposits |  | 3,616 |  |  | 4,506 |  |  | 7,716 |  |  | 8,767 |  |  | 9,109 |
Borrowed funds |  | 1,662 |  |  | 2,074 |  |  | 2,238 |  |  | 2,281 |  |  | 2,275 |
Subordinated notes |  | 895 |  |  | 58 |  |  | — |  |  | — |  |  | — |
Junior subordinated debentures issued to capital trusts |  | 576 |  |  | 710 |  |  | 775 |  |  | 831 |  |  | 864 |
Total interest expense |  | 6,749 |  |  | 7,348 |  |  | 10,729 |  |  | 11,879 |  |  | 12,248 |
Net interest income |  | 43,397 |  |  | 42,996 |  |  | 40,925 |  |  | 41,519 |  |  | 43,463 |
Credit loss expense |  | 2,052 |  |  | 7,057 |  |  | 8,600 |  |  | 340 |  |  | 376 |
Net interest income after credit loss expense |  | 41,345 |  |  | 35,939 |  |  | 32,325 |  |  | 41,179 |  |  | 43,087 |
Non–interest Income |  |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | 2,154 |  |  | 1,888 |  |  | 2,446 |  |  | 2,766 |  |  | 2,836 |
Wire transfer fees |  | 298 |  |  | 230 |  |  | 171 |  |  | 179 |  |  | 189 |
Interchange fees |  | 2,438 |  |  | 2,327 |  |  | 1,896 |  |  | 1,996 |  |  | 2,138 |
Fiduciary activities |  | 2,105 |  |  | 1,765 |  |  | 2,528 |  |  | 2,594 |  |  | 1,834 |
Gains / (losses) on sale of investment securities |  | 1,088 |  |  | 248 |  |  | 339 |  |  | 10 |  |  | — |
Gain on sale of mortgage loans |  | 8,813 |  |  | 6,620 |  |  | 3,473 |  |  | 3,119 |  |  | 2,702 |
Mortgage servicing income net of impairment |  | (1,308) |  |  | (2,760) |  |  | 25 |  |  | 294 |  |  | 444 |
Increase in cash value of bank owned life insurance |  | 566 |  |  | 557 |  |  | 554 |  |  | 566 |  |  | 556 |
Death benefit on bank owned life insurance |  | 31 |  |  | — |  |  | 233 |  |  | — |  |  | 213 |
Other income |  | 515 |  |  | 250 |  |  | 398 |  |  | 410 |  |  | 602 |
Total non–interest income |  | 16,700 |  |  | 11,125 |  |  | 12,063 |  |  | 11,934 |  |  | 11,514 |
Non–interest expense |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 18,832 |  |  | 15,629 |  |  | 16,591 |  |  | 16,841 |  |  | 16,948 |
Net occupancy expenses |  | 3,107 |  |  | 3,190 |  |  | 3,252 |  |  | 3,106 |  |  | 3,131 |
Data processing |  | 2,237 |  |  | 2,432 |  |  | 2,405 |  |  | 2,235 |  |  | 2,140 |
Professional fees |  | 688 |  |  | 518 |  |  | 536 |  |  | 520 |  |  | 335 |
Outside services and consultants |  | 1,561 |  |  | 1,759 |  |  | 1,915 |  |  | 1,415 |  |  | 1,552 |
Loan expense |  | 2,876 |  |  | 2,692 |  |  | 2,099 |  |  | 2,438 |  |  | 2,198 |
FDIC insurance expense |  | 570 |  |  | 235 |  |  | 150 |  |  | — |  |  | (273) |
Other losses |  | 114 |  |  | 193 |  |  | 120 |  |  | 377 |  |  | 90 |
Other expenses |  | 3,422 |  |  | 3,784 |  |  | 4,081 |  |  | 3,718 |  |  | 3,939 |
Total non–interest expense |  | 33,407 |  |  | 30,432 |  |  | 31,149 |  |  | 30,650 |  |  | 30,060 |
Income before income taxes |  | 24,638 |  |  | 16,632 |  |  | 13,239 |  |  | 22,463 |  |  | 24,541 |
Income tax expense |  | 4,326 |  |  | 1,993 |  |  | 1,584 |  |  | 3,920 |  |  | 4,004 |
Net income |  | $ | 20,312 |  |  | $ | 14,639 |  |  | $ | 11,655 |  |  | $ | 18,543 |  |  | $ | 20,537 |
Basic earnings per share |  | $ | 0.46 |  |  | $ | 0.33 |  |  | $ | 0.26 |  |  | $ | 0.41 |  |  | $ | 0.46 |
Diluted earnings per share |  | 0.46 |  |  | 0.33 |  |  | 0.26 |  |  | 0.41 |  |  | 0.46 |

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Horizon Bancorp, Inc. Announces Third Quarter 2020 Financial Results

Condensed Consolidated Statements of Income
(Dollars in Thousands, Expect Per Share Data, Unaudited)
|  | Nine Months Ended
|  | September 30,
|  | 2020 |  | 2019
Interest income |  |  |  |
Loans receivable |  | $ | 132,927 |  |  | $ | 136,862 |
Investment securities – taxable |  | 6,923 |  |  | 9,552 |
Investment securities – non–taxable |  | 12,294 |  |  | 8,520 |
Total interest income |  | 152,144 |  |  | 154,934 |
Interest expense |  |  |  |
Deposits |  | 15,838 |  |  | 24,923 |
Borrowed funds |  | 5,974 |  |  | 8,391 |
Subordinated notes |  | 953 |  |  | — |
Junior subordinated debentures issued to capital trusts |  | 2,061 |  |  | 2,348 |
Total interest expense |  | 24,826 |  |  | 35,662 |
Net interest income |  | 127,318 |  |  | 119,272 |
Credit loss expense |  | 17,709 |  |  | 1,636 |
Net interest income after credit loss expense |  | 109,609 |  |  | 117,636 |
Non–interest income |  |  |  |
Service charges on deposit accounts |  | 6,488 |  |  | 7,193 |
Wire transfer fees |  | 699 |  |  | 474 |
Interchange fees |  | 6,661 |  |  | 5,659 |
Fiduciary activities |  | 6,398 |  |  | 5,986 |
Gains / (losses) on sale of investment securities |  | 1,675 |  |  | (85) |
Gain on sale of mortgage loans |  | 18,906 |  |  | 6,089 |
Mortgage servicing income net of impairment |  | (4,043) |  |  | 1,620 |
Increase in cash value of bank owned life insurance |  | 1,677 |  |  | 1,624 |
Death benefit on bank owned life insurance |  | 264 |  |  | 580 |
Other income |  | 1,163 |  |  | 1,984 |
Total non–interest income |  | 39,888 |  |  | 31,124 |
Non-interest expense |  |  |  |
Salaries and employee benefits |  | 51,052 |  |  | 48,365 |
Net occupancy expenses |  | 9,549 |  |  | 9,051 |
Data processing |  | 7,074 |  |  | 6,245 |
Professional fees |  | 1,742 |  |  | 1,426 |
Outside services and consultants |  | 5,235 |  |  | 6,737 |
Loan expense |  | 7,667 |  |  | 6,195 |
FDIC insurance expense |  | 955 |  |  | 252 |
Other losses |  | 427 |  |  | 363 |
Other expense |  | 11,287 |  |  | 12,748 |
Total non–interest expense |  | 94,988 |  |  | 91,382 |
Income before income taxes |  | 54,509 |  |  | 57,378 |
Income tax expense |  | 7,903 |  |  | 9,383 |
Net income |  | $ | 46,606 |  |  | $ | 47,995 |
Basic earnings per share |  | $ | 1.06 |  |  | $ | 1.12 |
Diluted earnings per share |  | $ | 1.06 |  |  | $ | 1.11 |

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