EX-99.1 2 hbnc-20221231earningsrelea.htm EX-99.1

Contact: | Mark E. Secor
| Chief Financial Officer
Phone: | (219) 873-2611
Fax: | (219) 874-9280
Date: | January 25, 2023

FOR IMMEDIATE RELEASE
Horizon Bancorp, Inc. Announces Record Earnings for 2022
Michigan City, Indiana, January 25, 2023 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) — Horizon Bancorp, Inc. (“Horizon” or the “Company”) announced its unaudited financial results for the three and twelve months ended December 31, 2022.
“Horizon closed 2022 with record annual earnings reflecting continued strong growth in commercial and consumer loans through the fourth quarter, solid asset quality metrics and continued disciplined expense management,” Chairman and CEO Craig M. Dwight said. “We have continued to produce consistent and strong returns with ROAA of 1.24% and ROATE of 18.33% for 2022. As we enter 2023, we believe we are well–positioned with talent, technology and solid pipelines to continue to support our loan growth goals for the year, and focus on reinvesting our cash flows into higher yielding assets. Our well diversified balance sheet and low credit risk profile has performed well through previous economic cycles and, given the strong markets we operate in, we expect similar performance throughout the current economic cycle.”
Fourth Quarter and Full Year 2022 Highlights
•Return on average assets (“ROAA”) was 1.24% for the year ended 2022.
•Return on average tangible equity was 18.33% for the year ended 2022.
•Total loans grew 13.4% year–to–date and 12.8% annualized during the fourth quarter.
•Commercial loans grew to a record $2.42 billion, up 13.4% year–to–date and 10.8% annualized during the fourth quarter.
•Consumer loans grew to a record $967.8 million, up 30.6% year–to–date and 21.0% annualized during the fourth quarter.
•Asset quality remained solid with total loan delinquency at 0.26% of total loans, net charge–offs to average loans of 0.01% and non–performing loans to total loans at 0.52%.
•Total deposits remained strong increasing $26.9 million during the quarter at an average cost of 71 basis points and $54.8 million year–to–date at an average cost of 30 basis points.
•Fourth quarter net interest income was $48.8 million compared to $51.9 million in the previous quarter. Lower loan fees, less purchase accounting accretion and higher dealer reserve amortization represented $2.2 million of this decrease.
1

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
•An accounting revision was made to amounts reported in previously issued financial statements covering the third quarter of 2022 related to immaterial errors discovered in the fourth quarter of 2022. The errors relate to the inclusion of the dealer reserve amortization expense in loan expense in non–interest expenses for the third quarter of 2022 rather than loan interest income. The previously issued financial statements for the three and nine months dated September 30, 2022 have been revised to correct this error, which resulted in lowering both interest income and non–interest expense by $1.5 million for the quarter and lowering net interest margin by ten basis points from the historical presentation of these amounts (See Exhibit 1 – Revision of Previously Issued Financial Statements for details). All periods presented reflect this adjustment, and there was no impact to net income.
•Non–interest income increased by 4.8% from $10.2 million to $10.7 million from the third quarter to the fourth quarter of 2022.
•Non-interest expense was $35.7 million in the quarter, or 1.84% of average assets on an annualized basis, compared to $36.8 million, or 1.91%, in the third quarter of 2022. Year–to–date non–interest expense continued to be well managed at $143.2 million, or 1.90% of average assets.
•Net income totaled $21.2 million, compared to $23.8 million in the third quarter and $21.4 million in the prior year period. Diluted earnings per share (“EPS”) was $0.48 compared to $0.55 for the third quarter of 2022 and $0.49 for the fourth quarter of 2021.
•The Bank’s capital position continues to be robust with leverage and risk based capital ratios of 9.55% and 13.59%, respectively. The annualized dividend yield was 4.24% as of December 31, 2022.
Summary

|  | For the Three Months Ended
|  | December 31, |  | September 30, |  | December 31,
Net Interest Income and Net Interest Margin |  | 2022 |  | 2022 |  | 2021
Net interest income |  | $ | 48,782 |  |  | $ | 51,861 |  |  | $ | 48,477 |
Net interest margin |  | 2.85 | % |  | 3.04 | % |  | 2.87 | %
Adjusted net interest margin |  | 2.83 | % |  | 2.99 | % |  | 2.77 | %

“Horizon's net interest income of approximately $48.8 million in the fourth quarter was a reduction from the third quarter due to rapidly rising short term interest rates, some lag in repricing adjustable rate loans and lower fee and non–interest related income. In addition, Horizon's deposit betas increased at a faster pace in the fourth quarter due to the magnitude and velocity of the Federal Reserve Bank's Open Market Committee raising the targeted federal funds rate. We expect funding costs to stabilize in 2023 as the Federal Reserve Bank tempers the velocity of future rate increases,” Mr. Dwight commented.

|  | For the Three Months Ended
|  | December 31, |  | September 30, |  | December 31,
Asset Yields and Funding Costs |  | 2022 |  | 2022 |  | 2021
Interest earning assets |  | 3.88 | % |  | 3.58 | % |  | 3.11 | %
Interest bearing liabilities |  | 1.29 | % |  | 0.69 | % |  | 0.31 | %

|  | For the Three Months Ended
Non–interest Income and |  | December 31, |  | September 30, |  | December 31,
Mortgage Banking Income |  | 2022 |  | 2022 |  | 2021
Total non–interest income |  | $ | 10,674 |  |  | $ | 10,188 |  |  | $ | 12,828 |
Gain on sale of mortgage loans |  | 1,196 |  |  | 1,441 |  |  | 4,167 |
Mortgage servicing income net of impairment |  | 637 |  |  | 355 |  |  | 300 |

2

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

|  | For the Three Months Ended
|  | December 31, |  | September 30, |  | December 31,
Non–interest Expense |  | 2022 |  | 2022 |  | 2021
Total non–interest expense |  | $ | 35,711 |  |  | $ | 36,816 |  |  | $ | 37,871 |
Annualized non–interest expense to average assets |  | 1.84 | % |  | 1.91 | % |  | 2.01 | %

|  | For the Three Months Ended
|  | December 31, |  | September 30, |  | December 31,
Credit Quality |  | 2022 |  | 2022 |  | 2021
Allowance for credit losses to total loans |  | 1.21 | % |  | 1.27 | % |  | 1.48 | %
Non–performing loans to total loans |  | 0.52 | % |  | 0.47 | % |  | 0.52 | %
Percent of net charge–offs to average loans outstanding for the period |  | 0.01 | % |  | 0.00 | % |  | 0.04 | %

Allowance for |  | December 31, |  | Net Reserve |  | December 31,
Credit Losses |  | 2022 |  | 4Q22 |  | 3Q22 |  | 2Q22 |  | 1Q22 |  | 2021
Commercial |  | $ | 32,445 |  |  | $ | (1,361) |  |  | $ | (996) |  |  | $ | (2,987) |  |  | $ | (2,986) |  |  | $ | 40,775 |
Retail Mortgage |  | 5,577 |  |  | 440 |  |  | 715 |  |  | 71 |  |  | 495 |  |  | 3,856 |
Warehouse |  | 1,020 |  |  | (4) |  |  | (43) |  |  | 12 |  |  | (4) |  |  | 1,059 |
Consumer |  | 11,422 |  |  | 20 |  |  | (657) |  |  | 2,746 |  |  | 717 |  |  | 8,596 |
Allowance for Credit Losses (“ACL”) |  | $ | 50,464 |  |  | $ | (905) |  |  | $ | (981) |  |  | $ | (158) |  |  | $ | (1,778) |  |  | $ | 54,286 |
ACL / Total Loans |  | 1.21 | % |  |  |  |  |  |  |  |  |  | 1.48 | %
Acquired Loan Discount (“ALD”) |  | $ | 6,279 |  |  | $ | (308) |  |  | $ | (619) |  |  | $ | (1,122) |  |  | $ | (769) |  |  | $ | 9,097 |

“We continued to report solid asset quality metrics, including low net charge–offs and modest levels of non–performing loans to total loans. Asset quality continued to remain a hallmark of our franchise and a credit to our seasoned loan underwriters”, said Mr. Dwight.
3

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
Exhibit 1 – Revision of Previously Issued Financial Statements
We have revised amounts reported in previously issued financial statements for our third quarter 2022 results reflected in this press release related to immaterial errors. Subsequent to the third quarter of 2022, the Company’s management determined that the dealer reserve amortization expense was incorrectly included in loan expense in non–interest expenses rather than loan interest income. In addition, the dealer reserve asset was incorrectly included with other assets on the balance sheet rather than included with loans. As a result, loan interest income for the three and nine months ended September 30, 2022 has been revised to include dealer reserve amortization expense, and we have reversed the impact of the inclusion of the dealer reserve amortization expense in loan expense in non–interest expenses for the three and nine months ended September 30, 2022 and for all other prior periods presented. This revision for the third quarter reduced both loan interest income and loan expense by $1.5 million, and lowered the net interest margin by ten basis points from the amounts previously reported in the interim condensed consolidated statements of income for the three and nine months ended September 30, 2022. Our financial statements for the quarter and year ended December 31, 2022 and December 31, 2021 set forth in this press release reflect the inclusion of the dealer reserve amortization expense in loan interest income for those periods.
We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Quarterly Reports on Form 10–Q for the quarterly period ended September 30, 2022.

|  | Three Months Ended
|  | December 31, |  | December 31,
|  | 2022 |  | 2021
|  | Without Dealer Reserve Change |  | Dealer Reserve Change |  | Actual |  | Pre Revision |  | Revision |  | Post Revision
Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Loans, net of allowance for credit losses |  | $ | 4,089,370 |  |  | $ | 18,164 |  |  | $ | 4,107,534 |  |  | $ | 3,590,331 |  |  | $ | 13,917 |  |  | $ | 3,604,248 |
Other assets |  | 157,445 |  |  | (18,164) |  |  | 139,281 |  |  | 80,753 |  |  | (13,917) |  |  | 66,836 |
Total assets |  | 7,872,518 |  |  | — |  |  | 7,872,518 |  |  | 7,411,889 |  |  | — |  |  | 7,411,889 |
Income Statement |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | 69,211 |  |  | (2,024) |  |  | 67,187 |  |  | 54,118 |  |  | (1,499) |  |  | 52,619 |
Net interest income |  | 50,806 |  |  | (2,024) |  |  | 48,782 |  |  | 49,976 |  |  | (1,499) |  |  | 48,477 |
Non–interest expense |  | 37,735 |  |  | (2,024) |  |  | 35,711 |  |  | 39,370 |  |  | (1,499) |  |  | 37,871 |
Net income |  | 21,165 |  |  | — |  |  | 21,165 |  |  | 21,425 |  |  | — |  |  | 21,425 |
Average Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Loans |  | 4,019,744 |  |  | 18,912 |  |  | 4,038,656 |  |  | 3,630,896 |  |  | 13,792 |  |  | 3,644,688 |
Interest earning assets |  | 7,073,068 |  |  | 18,912 |  |  | 7,091,980 |  |  | 6,938,258 |  |  | 13,792 |  |  | 6,952,050 |
Other assets |  | 599,786 |  |  | (18,912) |  |  | 580,874 |  |  | 477,352 |  |  | (13,792) |  |  | 463,560 |
Total assets |  | $ | 7,718,366 |  |  | $ | — |  |  | $ | 7,718,366 |  |  | $ | 7,461,343 |  |  | $ | — |  |  | $ | 7,461,343 |
Other Financial Information |  |  |  |  |  |  |  |  |  |  |  |
Average rate on loans |  | 5.22 | % |  | (0.20) | % |  | 5.02 | % |  | 4.52 | % |  | (0.18) | % |  | 4.34 | %
Average rate on interest earning assets |  | 4.01 |  |  | (0.13) |  |  | 3.88 |  |  | 3.20 |  |  | (0.09) |  |  | 3.11 |
Net interest spread |  | 2.72 |  |  | (0.13) |  |  | 2.59 |  |  | 2.89 |  |  | (0.09) |  |  | 2.80 |
Net interest margin |  | 2.97 |  |  | (0.12) |  |  | 2.85 |  |  | 2.97 |  |  | (0.10) |  |  | 2.87 |
Efficiency ratio |  | 61.38 |  |  | (1.32) |  |  | 60.06 |  |  | 62.69 |  |  | (0.92) |  |  | 61.77 |
Non–interest expense to average assets |  | 1.94 | % |  | (0.10) | % |  | 1.84 | % |  | 2.09 | % |  | (0.08) | % |  | 2.01 | %

4

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

|  | Twelve Months Ended
|  | December 31, |  | December 31,
|  | 2022 |  | 2021
|  | Without Dealer Reserve Change |  | Dealer Reserve Change |  | Actual |  | Pre Revision |  | Revision |  | Post Revision
Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Loans, net of allowance for credit losses |  | $ | 4,089,370 |  |  | $ | 18,164 |  |  | $ | 4,107,534 |  |  | $ | 3,590,331 |  |  | $ | 13,917 |  |  | $ | 3,604,248 |
Other assets |  | 157,445 |  |  | (18,164) |  |  | 139,281 |  |  | 80,753 |  |  | (13,917) |  |  | 66,836 |
Total assets |  | 7,872,518 |  |  | — |  |  | 7,872,518 |  |  | 7,411,889 |  |  | — |  |  | 7,411,889 |
Income Statement |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | 241,895 |  |  | (5,862) |  |  | 236,033 |  |  | 199,995 |  |  | (5,885) |  |  | 194,110 |
Net interest income |  | 205,380 |  |  | (5,862) |  |  | 199,518 |  |  | 181,690 |  |  | (5,885) |  |  | 175,805 |
Non–interest expense |  | 149,063 |  |  | (5,862) |  |  | 143,201 |  |  | 139,279 |  |  | (5,885) |  |  | 133,394 |
Net income |  | 93,408 |  |  | — |  |  | 93,408 |  |  | 87,091 |  |  | — |  |  | 87,091 |
Average Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |
Loans |  | 3,828,090 |  |  | 17,047 |  |  | 3,845,137 |  |  | 3,626,033 |  |  | 13,421 |  |  | 3,639,454 |
Interest earning assets |  | 6,960,360 |  |  | 17,047 |  |  | 6,977,407 |  |  | 6,021,740 |  |  | 13,421 |  |  | 6,035,161 |
Other assets |  | 526,276 |  |  | (17,047) |  |  | 509,229 |  |  | 459,316 |  |  | (13,421) |  |  | 445,895 |
Total assets |  | $ | 7,533,915 |  |  | $ | — |  |  | $ | 7,533,915 |  |  | $ | 6,514,251 |  |  |  |  | $ | 6,514,251 |
Other Financial Information |  |  |  |  |  |  |  |  |  |  |  |
Average rate on loans |  | 4.70 | % |  | (0.17) | % |  | 4.53 | % |  | 4.47 | % |  | (0.17) | % |  | 4.30 | %
Average rate on interest earning assets |  | 3.60 |  |  | (0.10) |  |  | 3.50 |  |  | 3.43 |  |  | (0.10) |  |  | 3.33 |
Net interest spread |  | 2.93 |  |  | (0.10) |  |  | 2.83 |  |  | 3.03 |  |  | (0.10) |  |  | 2.93 |
Net interest margin |  | 3.07 |  |  | (0.09) |  |  | 2.98 |  |  | 3.13 |  |  | (0.10) |  |  | 3.03 |
Efficiency ratio |  | 58.96 |  |  | (0.98) |  |  | 57.98 |  |  | 58.12 |  |  | (1.05) |  |  | 57.07 |
Non–interest expense to average assets |  | 1.98 | % |  | (0.08) | % |  | 1.90 | % |  | 2.14 | % |  | (0.09) | % |  | 2.05 | %

Income Statement
Net income for the fourth quarter of 2022 was $21.2 million, or $0.48 diluted earnings per share, compared to $23.8 million, or $0.55, for the linked quarter and $21.4 million, or $0.49, for the prior year period.
The change in net income for the fourth quarter of 2022 when compared to the third quarter of 2022 reflects an increase in non–interest income of $486,000 and a decrease in non–interest expense of $1.1 million, offset by a decrease in net interest income of $3.1 million and an increase in credit loss expense of $532,000.
Non–interest expense of $35.7 million in the fourth quarter of 2022 reflected a $635,000 decrease in salaries and employee benefits, a $400,000 decrease in other expense, a $282,000 decrease in FDIC insurance expense and a $280,000 decrease in other losses, offset by a $345,000 increase in data processing expense and a $142,000 increase in professional fees from the linked quarter.
5

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
Net income for the fourth quarter of 2022 when compared to the same prior year period reflects a decrease in non–interest income of $2.2 million and an increase in credit loss expense of $2.0 million, offset by a decrease in non–interest expense of $2.2 million, a decrease in income tax expense of $1.4 million and an increase in net interest income of $305,000.
Net income for the year ended December 31, 2022 was $93.4 million, or $2.14 diluted earnings per share, compared to $87.1 million, or $1.98 diluted earnings per share, for the year ended December 31, 2021. Adjusted net income for the year ended December 31, 2022 was $92.8 million, or $2.13 diluted earnings per share, compared to $88.6 million, or $2.00 diluted earnings per share, for the year ended December 31, 2021. The increase in net income for the year ended December 31, 2022 when compared to the same prior year period reflects an increase in net interest income of $23.7 million and a decrease in income tax expense of $3.2 million, offset by an increase in non–interest expense of $9.8 million, a decrease in non–interest income of $10.5 million and an increase in credit loss expense of $268,000.
Net Interest Margin
Horizon’s net interest margin was 2.85% for the fourth quarter of 2022 compared to 3.04% for the third quarter. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 60 basis points, offset by an increase in the yield on interest earning assets of 42 basis points. Additionally, interest income from acquisition–related purchase accounting adjustments was $475,000 lower during the fourth quarter of 2022 when compared to the third quarter of 2022.
Horizon’s net interest margin decreased to 2.98% for the year ended December 31, 2022 compared to 3.03% for the same prior year period. The decrease in net interest margin reflects an increase in the cost of interest bearing liabilities of 27 basis points, offset by an increase in the yield on interest earning assets of 28 basis points.
Net interest margin, excluding acquisition–related purchase accounting adjustments (“adjusted net interest margin”), was 2.83% for the fourth quarter of 2022, compared to 2.99% for the linked quarter and 2.77% for the fourth quarter of 2021. Interest income from acquisition–related purchase accounting adjustments was $431,000, $906,000 and $1.8 million for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
The adjusted net interest margin was 2.93% for the year ended December 31, 2022 compared to 2.96% for the same prior year period. Interest income from acquisition–related purchase accounting adjustments was $3.5 million and $4.5 million for the year ended December 31, 2022 and 2021, respectively.
Lending Activity
Total loan balances were $4.16 billion, or $4.11 billion excluding PPP loans and sold commercial participation loans, on December 31, 2022 compared to $4.03 billion, or $3.98 billion excluding PPP loans and sold commercial participation loans, on September 30, 2022. During the three months ended December 31, 2022, commercial loans, excluding PPP loans and sold commercial participation loans, increased $63.8 million, consumer loans increased $48.6 million, residential mortgage loans increased $18.4 million, and loans held for sale increased $4.0 million, offset by a decrease in mortgage warehouse loans of $4.2 million.
6

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Loan Growth by Type
(Dollars in Thousands, Unaudited)
|  | December 31, |  | September 30, |  |  |  |  |  | QTD |  | QTD |  | Annualized
|  | 2022 |  | 2022 |  |  |  |  |  | $ Change |  | % Change |  | % Change
Commercial, excluding PPP loans and sold commercial participation loans |  | $ | 2,416,249 |  |  | $ | 2,352,446 |  |  |  |  |  |  | $ | 63,803 |  |  | 2.7% |  | 10.8%
PPP loans |  | 217 |  |  | 315 |  |  |  |  |  |  | (98) |  |  | (31.1)% |  | (123.4)%
Sold commercial participation loans |  | 50,956 |  |  | 50,982 |  |  |  |  |  |  | (26) |  |  | (0.1)% |  | (0.2)%
Residential mortgage |  | 653,292 |  |  | 634,901 |  |  |  |  |  |  | 18,391 |  |  | 2.9% |  | 11.5%
Consumer |  | 967,755 |  |  | 919,198 |  |  |  |  |  |  | 48,557 |  |  | 5.3% |  | 21.0%
Subtotal |  | 4,088,469 |  |  | 3,957,842 |  |  |  |  |  |  | 130,627 |  |  | 3.3% |  | 13.1%
Loans held for sale |  | 5,807 |  |  | 1,852 |  |  |  |  |  |  | 3,955 |  |  | 213.6% |  | 847.2%
Mortgage warehouse |  | 69,529 |  |  | 73,690 |  |  |  |  |  |  | (4,161) |  |  | (5.6)% |  | (22.4)%
Total loans |  | $ | 4,163,805 |  |  | $ | 4,033,384 |  |  |  |  |  |  | $ | 130,421 |  |  | 3.2% |  | 12.8%
Total loans, excluding PPP loans and sold commercial participation loans |  | $ | 4,112,632 |  |  | $ | 3,982,087 |  |  |  |  |  |  | $ | 130,545 |  |  | 3.3% |  | 13.0%

Loan Growth by Type
(Dollars in Thousands, Unaudited)
|  | December 31, |  | December 31, |  |  |  |  |  | YTD |  | YTD
|  | 2022 |  | 2021 |  |  |  |  |  | $ Change |  | % Change
Commercial, excluding PPP loans and sold commercial participation loans |  | $ | 2,416,249 |  |  | $ | 2,131,644 |  |  |  |  |  |  | $ | 284,605 |  |  | 13.4%
PPP loans |  | 217 |  |  | 25,844 |  |  |  |  |  |  | (25,627) |  |  | (99.2)%
Sold commercial participation loans |  | 50,956 |  |  | 56,457 |  |  |  |  |  |  | (5,501) |  |  | (9.7)%
Residential mortgage |  | 653,292 |  |  | 594,382 |  |  |  |  |  |  | 58,910 |  |  | 9.9%
Consumer |  | 967,755 |  |  | 741,176 |  |  |  |  |  |  | 226,579 |  |  | 30.6%
Subtotal |  | 4,088,469 |  |  | 3,549,503 |  |  |  |  |  |  | 538,966 |  |  | 15.2%
Loans held for sale |  | 5,807 |  |  | 12,579 |  |  |  |  |  |  | (6,772) |  |  | (53.8)%
Mortgage warehouse |  | 69,529 |  |  | 109,031 |  |  |  |  |  |  | (39,502) |  |  | (36.2)%
Total loans |  | $ | 4,163,805 |  |  | $ | 3,671,113 |  |  |  |  |  |  | $ | 492,692 |  |  | 13.4%
Total loans, excluding PPP loans and sold commercial participation loans |  | $ | 4,112,632 |  |  | $ | 3,588,812 |  |  |  |  |  |  | $ | 523,820 |  |  | 14.6%

Residential mortgage lending activity for the three months ended December 31, 2022 generated $1.2 million in income from the gain on sale of mortgage loans, decreasing $245,000 from the third quarter of 2022 and decreasing $3.0 million from the fourth quarter of 2021. Total mortgage origination volume for the fourth quarter of 2022, including loans placed into the portfolio, totaled $62.3 million, representing a decrease of 43.8% from third quarter 2022 levels, and a decrease of 58.6% from the fourth quarter of 2021. As a percentage of total mortgage loan originations, 8% of the volume was from refinancing and 92% was from new purchases during the fourth quarter of 2022. Total origination volume of loans sold to the secondary market totaled $23.0 million, compared to $50.2 million in the third quarter.
Gain on sale of mortgage loans and mortgage warehousing income was 3.2% of total revenue for the three months ended December 31, 2022, compared to 3.8% for the linked quarter and 8.8% for the three months ended December 31, 2021.
7

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
Deposit Activity
Total deposit balances of $5.86 billion on December 31, 2022 increased 0.5% compared to $5.83 billion on September 30, 2022, or 1.8% annualized.

Deposit Growth by Type
(Dollars in Thousands, Unaudited)
| December 31, |  | September 30, |  |  |  |  |  | QTD |  | QTD |  | Annualized
| 2022 |  | 2022 |  |  |  |  |  | $ Change |  | % Change |  | % Change
Non–interest bearing | $ | 1,277,768 |  |  | $ | 1,315,155 |  |  |  |  |  |  | $ | (37,387) |  |  | (2.8)% |  | (11.3)%
Interest bearing | 3,582,891 |  |  | 3,736,798 |  |  |  |  |  |  | (153,907) |  |  | (4.1)% |  | (16.3)%
Time deposits | 997,115 |  |  | 778,885 |  |  |  |  |  |  | 218,230 |  |  | 28.0% |  | 111.2%
Total deposits | $ | 5,857,774 |  |  | $ | 5,830,838 |  |  |  |  |  |  | $ | 26,936 |  |  | 0.5% |  | 1.8%

Total deposit balances of $5.86 billion on December 31, 2022 increased 0.9% compared to $5.80 billion on December 31, 2021.

Deposit Growth by Type
(Dollars in Thousands, Unaudited)
| December 31, |  | December 31, |  |  |  |  |  | YTD |  | YTD
| 2022 |  | 2021 |  |  |  |  |  | $ Change |  | % Change
Non–interest bearing | $ | 1,277,768 |  |  | $ | 1,360,338 |  |  |  |  |  |  | $ | (82,570) |  |  | (6.1)%
Interest bearing | 3,582,891 |  |  | 3,711,767 |  |  |  |  |  |  | (128,876) |  |  | (3.5)%
Time deposits | 997,115 |  |  | 730,886 |  |  |  |  |  |  | 266,229 |  |  | 36.4%
Total deposits | $ | 5,857,774 |  |  | $ | 5,802,991 |  |  |  |  |  |  | $ | 54,783 |  |  | 0.9%

Expense Management

Non–Interest Expense
(Dollars in Thousands, Unaudited)
|  | Three Months Ended
|  | December 31, |  | September 30, |  | QTD |  | QTD
Non–interest Expense |  | 2022 |  | 2022 |  | $ Change |  | % Change
Salaries and employee benefits |  | $ | 19,978 |  |  |  |  |  |  | $ | 20,613 |  |  |  |  |  |  | $ | (635) |  |  | (3.1)%
Net occupancy expenses |  | 3,279 |  |  |  |  |  |  | 3,293 |  |  |  |  |  |  | (14) |  |  | (0.4)%
Data processing |  | 2,884 |  |  |  |  |  |  | 2,539 |  |  |  |  |  |  | 345 |  |  | 13.6%
Professional fees |  | 694 |  |  |  |  |  |  | 552 |  |  |  |  |  |  | 142 |  |  | 25.7%
Outside services and consultants |  | 2,985 |  |  |  |  |  |  | 2,855 |  |  |  |  |  |  | 130 |  |  | 4.6%
Loan expense |  | 1,281 |  |  |  |  |  |  | 1,392 |  |  |  |  |  |  | (111) |  |  | (8.0)%
FDIC insurance expense |  | 388 |  |  |  |  |  |  | 670 |  |  |  |  |  |  | (282) |  |  | (42.1)%
Other losses |  | 118 |  |  |  |  |  |  | 398 |  |  |  |  |  |  | (280) |  |  | (70.4)%
Other expense |  | 4,104 |  |  |  |  |  |  | 4,504 |  |  |  |  |  |  | (400) |  |  | (8.9)%
Total non–interest expense |  | $ | 35,711 |  |  |  |  |  |  | $ | 36,816 |  |  |  |  |  |  | $ | (1,105) |  |  | (3.0)%
Annualized non–interest expense to average assets |  | 1.84 | % |  |  |  |  |  | 1.91 | % |  |  |  |  |  |  |  |

Total non–interest expense was $1.1 million lower in the fourth quarter of 2022 when compared to the third quarter of 2022. The decrease in expenses was primarily due to a decrease in salaries and employee benefits of $635,000 from lower commissions and health care costs, a decrease in other expense of $400,000, a decrease in FDIC insurance expense of $282,000 and a decrease in other losses of $280,000, offset by an increase in data processing of $345,000 and professional fees of $142,000.
8

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Non–Interest Expense
(Dollars in Thousands, Unaudited)
|  | Three Months Ended
|  | December 31, |  | December 31, |  |  |  |
|  | 2022 |  | 2021 |  | Adjusted
Non–interest Expense |  | Actual |  | Acquisition & Non–Recurring Expenses |  | Adjusted |  | Actual |  | Acquisition & Non–Recurring Expenses |  | Adjusted |  | Amount Change |  | Percent Change
Salaries and employee benefits |  | $ | 19,978 |  |  | $ | — |  |  | $ | 19,978 |  |  | $ | 20,549 |  |  | $ | (202) |  |  | $ | 20,347 |  |  | $ | (369) |  |  | (1.8)%
Net occupancy expenses |  | 3,279 |  |  | — |  |  | 3,279 |  |  | 3,204 |  |  | — |  |  | 3,204 |  |  | 75 |  |  | 2.3%
Data processing |  | 2,884 |  |  | — |  |  | 2,884 |  |  | 2,672 |  |  | (1) |  |  | 2,671 |  |  | 213 |  |  | 8.0%
Professional fees |  | 694 |  |  | — |  |  | 694 |  |  | 562 |  |  | (45) |  |  | 517 |  |  | 177 |  |  | 34.2%
Outside services and consultants |  | 2,985 |  |  | — |  |  | 2,985 |  |  | 2,197 |  |  | (162) |  |  | 2,035 |  |  | 950 |  |  | 46.7%
Loan expense |  | 1,281 |  |  | — |  |  | 1,281 |  |  | 1,304 |  |  | (83) |  |  | 1,221 |  |  | 60 |  |  | 4.9%
FDIC insurance expense |  | 388 |  |  | — |  |  | 388 |  |  | 798 |  |  | (6) |  |  | 792 |  |  | (404) |  |  | (51.0)%
Other losses |  | 118 |  |  | — |  |  | 118 |  |  | 1,925 |  |  | (1,904) |  |  | 21 |  |  | 97 |  |  | 461.9%
Other expense |  | 4,104 |  |  | — |  |  | 4,104 |  |  | 4,660 |  |  | (381) |  |  | 4,279 |  |  | (175) |  |  | (4.1)%
Total non–interest expense |  | $ | 35,711 |  |  | $ | — |  |  | $ | 35,711 |  |  | $ | 37,871 |  |  | $ | (2,784) |  |  | $ | 35,087 |  |  | $ | 624 |  |  | 1.8%
Annualized non–interest expense to average assets |  | 1.84 | % |  |  |  | 1.84 | % |  | 2.01 | % |  |  |  | 1.87 | % |  |  |  |

Total adjusted non–interest expense was $624,000 higher in the fourth quarter of 2022 when compared to the fourth quarter of 2021. The increase in expenses was primarily due to an increase in outside services and consultants of $950,000 and an increase in data processing of $213,000, offset by a decrease in salaries and employee benefits of $369,000, a decrease in FDIC insurance expense of $404,000 and a decrease in other expense of $175,000.
9

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Non–Interest Expense
(Dollars in Thousands, Unaudited)
|  | Twelve Months Ended
|  | December 31, |  | December 31, |  |  |  |
|  | 2022 |  | 2021 |  | Adjusted
Non–interest Expense |  | Actual |  | Acquisition & Non–Recurring Expenses |  | Adjusted |  | Actual |  | Acquisition & Non–Recurring Expenses |  | Adjusted |  | Amount Change |  | Percent Change
Salaries and employee benefits |  | $ | 80,283 |  |  | $ | — |  |  | $ | 80,283 |  |  | $ | 74,051 |  |  | $ | (227) |  |  | $ | 73,824 |  |  | $ | 6,459 |  |  | 8.7%
Net occupancy expenses |  | 13,323 |  |  | — |  |  | 13,323 |  |  | 12,541 |  |  | (13) |  |  | 12,528 |  |  | 795 |  |  | 6.3%
Data processing |  | 10,567 |  |  | — |  |  | 10,567 |  |  | 9,962 |  |  | (18) |  |  | 9,944 |  |  | 623 |  |  | 6.3%
Professional fees |  | 1,843 |  |  | — |  |  | 1,843 |  |  | 2,216 |  |  | (149) |  |  | 2,067 |  |  | (224) |  |  | (10.8)%
Outside services and consultants |  | 10,850 |  |  | — |  |  | 10,850 |  |  | 8,449 |  |  | (750) |  |  | 7,699 |  |  | 3,151 |  |  | 40.9%
Loan expense |  | 5,411 |  |  | — |  |  | 5,411 |  |  | 5,492 |  |  | (83) |  |  | 5,409 |  |  | 2 |  |  | —%
FDIC insurance expense |  | 2,558 |  |  | — |  |  | 2,558 |  |  | 2,377 |  |  | (6) |  |  | 2,371 |  |  | 187 |  |  | 7.9%
Other losses |  | 1,046 |  |  | — |  |  | 1,046 |  |  | 2,283 |  |  | (5) |  |  | 2,278 |  |  | (1,232) |  |  | (54.1)%
Other expense |  | 17,320 |  |  | — |  |  | 17,320 |  |  | 16,023 |  |  | (2,574) |  |  | 13,449 |  |  | 3,871 |  |  | 28.8%
Total non–interest expense |  | $ | 143,201 |  |  | $ | — |  |  | $ | 143,201 |  |  | $ | 133,394 |  |  | $ | (3,825) |  |  | $ | 129,569 |  |  | $ | 13,632 |  |  | 10.5%
Annualized non–interest expense to average assets |  | 1.90 | % |  |  |  | 1.90 | % |  | 2.05 | % |  |  |  | 1.99 | % |  |  |  |

Total adjusted non–interest expense was $13.6 million higher for the year ended December 31, 2022 when compared to the same prior year period. The year–over–increase was due to increases in salaries and employee benefits, outside services and consultants, other expense, net occupancy expenses and data processing, offset by a decrease in other losses.
Annualized non–interest expense as a percent of average assets was 1.84%, 1.91% and 2.01% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively. Annualized non–interest expense, excluding acquisition expenses and non–recurring ESOP settlement expenses, as a percent of average assets was 1.84%, 1.91% and 1.87% for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
Annualized non–interest expense as a percent of average assets was 1.90% and 2.05% for the year ended December 31, 2022 and 2021, respectively. Annualized non–interest expense, excluding acquisition expenses and non–recurring ESOP settlement expenses, as a percentage of average assets was 1.90% and 1.99% for the year ended December 31, 2022 and 2021, respectively.
Income tax expense totaled $2.6 million for the fourth quarter of 2022, $2.0 million for the third quarters of 2022 and $4.1 million for the fourth quarter of 2021.
Income tax expense totaled $12.2 million for the year ended December 31, 2022, a decrease of $3.2 million when compared to the year ended December 31, 2021. The decrease in income tax expense was primarily due to an increase income tax credits received during 2022.
10

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
Capital
The capital resources of the Company and the Bank exceeded regulatory capital ratios for “well capitalized” banks at December 31, 2022. Stockholders’ equity totaled $677.4 million at December 31, 2022 and the ratio of average stockholders’ equity to average assets was 9.07% for the twelve months ended December 31, 2022.
The following table presents the actual regulatory capital dollar amounts and ratios of the Company and the Bank as of December 31, 2022.

|  | 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 |  | $ | 782,705 |  |  | 14.48 | % |  | $ | 432,525 |  |  | 8.00 | % |  | $ | 567,688 |  |  | 10.50 | % |  | N/A |  | N/A
Bank |  | 734,578 |  |  | 13.59 | % |  | 432,413 |  |  | 8.00 | % |  | 567,542 |  |  | 10.50 | % |  | $ | 540,516 |  |  | 10.00 | %
Tier 1 capital (to risk–weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 736,150 |  |  | 13.62 | % |  | 324,393 |  |  | 6.00 | % |  | 459,557 |  |  | 8.50 | % |  | N/A |  | N/A
Bank |  | 686,069 |  |  | 12.69 | % |  | 324,310 |  |  | 6.00 | % |  | 459,439 |  |  | 8.50 | % |  | 432,413 |  |  | 8.00 | %
Common equity tier 1 capital (to risk–weighted assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 616,231 |  |  | 11.40 | % |  | 243,295 |  |  | 4.50 | % |  | 378,459 |  |  | 7.00 | % |  | N/A |  | N/A
Bank |  | 686,069 |  |  | 12.69 | % |  | 243,232 |  |  | 4.50 | % |  | 378,361 |  |  | 7.00 | % |  | 351,336 |  |  | 6.50 | %
Tier 1 capital (to average assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated |  | 736,150 |  |  | 10.23 | % |  | 287,867 |  |  | 4.00 | % |  | 287,867 |  |  | 4.00 | % |  | N/A |  | N/A
Bank |  | 686,069 |  |  | 9.55 | % |  | 287,262 |  |  | 4.00 | % |  | 287,262 |  |  | 4.00 | % |  | 359,077 |  |  | 5.00 | %

Tangible book value per common share (“TBVPS”) declined $0.99 during the twelve months ended December 31, 2022 to $11.59, as unrealized net losses on securities available for sale (“AFS”) of $2.71 per common share, reduced accumulated other comprehensive income (“AOCI”) by $118.0 million during the twelve months ended December 31, 2022..
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, while other sources of liquidity for Horizon include earnings, loan repayments, 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 December 31, 2022, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $438.0 million in unused credit lines with various money center banks, including the FHLB and the Federal Reserve Discount Window. The Bank also had approximately $2.1 billion of unpledged investment securities at December 31, 2022. Total available liquidity was $2.7 billion at December 31, 2022.
11

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter 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 (the “SEC”). 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: changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; continuing increases in inflation; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; continuing risks and uncertainties relating to the COVID–19 pandemic and government responses thereto; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; material changes outside the U.S. or in overseas relations, including changes in U.S. trade relations related to imposition of tariffs, Brexit, and the phase out of the London Interbank Offered Rate (“LIBOR”); the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward–looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10–K, Quarterly Reports on Form 10–Q, and Current Reports on Form 8–K) filed with the SEC and available at the SEC’s Internet website (www.sec.gov).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.
12

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Financial Highlights
(Dollars in Thousands, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Balance sheet: |  |  |  |  |  |  |  |  |  |
Total assets |  | $ | 7,872,518 |  |  | $ | 7,718,695 |  |  | $ | 7,640,936 |  |  | $ | 7,420,328 |  |  | $ | 7,374,903 |
Interest earning deposits & federal funds sold |  | 12,233 |  |  | 7,302 |  |  | 5,646 |  |  | 20,827 |  |  | 502,364 |
Interest earning time deposits |  | 2,812 |  |  | 2,814 |  |  | 3,799 |  |  | 4,046 |  |  | 4,782 |
Investment securities |  | 3,020,306 |  |  | 3,017,191 |  |  | 3,093,792 |  |  | 3,118,641 |  |  | 2,713,255 |
Commercial loans |  | 2,467,422 |  |  | 2,403,743 |  |  | 2,363,991 |  |  | 2,259,327 |  |  | 2,213,945 |
Mortgage warehouse loans |  | 69,529 |  |  | 73,690 |  |  | 116,488 |  |  | 105,118 |  |  | 109,031 |
Residential mortgage loans |  | 653,292 |  |  | 634,901 |  |  | 608,582 |  |  | 593,372 |  |  | 594,382 |
Consumer loans |  | 967,755 |  |  | 919,198 |  |  | 866,819 |  |  | 768,854 |  |  | 741,176 |
Total loans |  | 4,157,998 |  |  | 4,031,532 |  |  | 3,955,880 |  |  | 3,726,671 |  |  | 3,658,534 |
Earning assets |  | 7,225,833 |  |  | 7,087,368 |  |  | 7,088,737 |  |  | 6,898,208 |  |  | 6,878,968 |
Non–interest bearing deposit accounts |  | 1,277,768 |  |  | 1,315,155 |  |  | 1,328,213 |  |  | 1,325,570 |  |  | 1,360,338 |
Interest bearing transaction accounts |  | 3,582,891 |  |  | 3,736,798 |  |  | 3,760,890 |  |  | 3,782,644 |  |  | 3,711,767 |
Time deposits |  | 997,115 |  |  | 778,885 |  |  | 756,482 |  |  | 743,283 |  |  | 730,886 |
Total deposits |  | 5,857,774 |  |  | 5,830,838 |  |  | 5,845,585 |  |  | 5,851,497 |  |  | 5,802,991 |
Borrowings |  | 1,142,949 |  |  | 1,048,091 |  |  | 959,222 |  |  | 728,664 |  |  | 712,739 |
Subordinated notes |  | 58,896 |  |  | 58,860 |  |  | 58,823 |  |  | 58,786 |  |  | 58,750 |
Junior subordinated debentures issued to capital trusts |  | 57,027 |  |  | 56,966 |  |  | 56,907 |  |  | 56,850 |  |  | 56,785 |
Total stockholders’ equity |  | 677,375 |  |  | 644,993 |  |  | 657,865 |  |  | 677,450 |  |  | 723,209 |

13

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
|  | Three Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Income statement: |  |  |  |  |  |  |  |  |  |
Net interest income |  | $ | 48,782 |  |  | $ | 51,861 |  |  | $ | 52,044 |  |  | $ | 46,831 |  |  | $ | 48,477 |
Credit loss expense (recovery) |  | (69) |  |  | (601) |  |  | 240 |  |  | (1,386) |  |  | (2,071) |
Non–interest income |  | 10,674 |  |  | 10,188 |  |  | 12,434 |  |  | 14,155 |  |  | 12,828 |
Non–interest expense |  | 35,711 |  |  | 36,816 |  |  | 35,404 |  |  | 35,270 |  |  | 37,871 |
Income tax expense |  | 2,649 |  |  | 2,013 |  |  | 3,975 |  |  | 3,539 |  |  | 4,080 |
Net income |  | $ | 21,165 |  |  | $ | 23,821 |  |  | $ | 24,859 |  |  | $ | 23,563 |  |  | $ | 21,425 |
Per share data: |  |  |  |  |  |  |  |  |  |
Basic earnings per share |  | $ | 0.49 |  |  | $ | 0.55 |  |  | $ | 0.57 |  |  | $ | 0.54 |  |  | $ | 0.49 |
Diluted earnings per share |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.49 |
Cash dividends declared per common share |  | 0.16 |  |  | 0.16 |  |  | 0.16 |  |  | 0.15 |  |  | 0.15 |
Book value per common share |  | 15.55 |  |  | 14.80 |  |  | 15.10 |  |  | 15.55 |  |  | 16.61 |
Tangible book value per common share |  | 11.59 |  |  | 10.82 |  |  | 11.11 |  |  | 11.54 |  |  | 12.58 |
Market value – high |  | 20.00 |  |  | 20.59 |  |  | 19.21 |  |  | 23.45 |  |  | 21.14 |
Market value – low |  | $ | 14.51 |  |  | $ | 16.74 |  |  | $ | 16.72 |  |  | $ | 18.67 |  |  | $ | 18.01 |
Weighted average shares outstanding – Basis |  | 43,574,151 |  |  | 43,573,370 |  |  | 43,572,796 |  |  | 43,554,713 |  |  | 43,534,298 |
Weighted average shares outstanding – Diluted |  | 43,667,954 |  |  | 43,703,793 |  |  | 43,684,691 |  |  | 43,734,556 |  |  | 43,733,416 |
Key ratios: |  |  |  |  |  |  |  |  |  |
Return on average assets |  | 1.09 | % |  | 1.24 | % |  | 1.33 | % |  | 1.31 | % |  | 1.14 | %
Return on average common stockholders’ equity |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 11.81 |
Net interest margin |  | 2.85 |  |  | 3.04 |  |  | 3.13 |  |  | 2.90 |  |  | 2.87 |
Allowance for credit losses to total loans |  | 1.21 |  |  | 1.27 |  |  | 1.32 |  |  | 1.41 |  |  | 1.48 |
Average equity to average assets |  | 8.55 |  |  | 8.91 |  |  | 9.06 |  |  | 9.79 |  |  | 9.64 |
Efficiency ratio |  | 60.06 |  |  | 59.33 |  |  | 54.91 |  |  | 57.83 |  |  | 61.77 |
Annualized non–interest expense to average assets |  | 1.84 |  |  | 1.91 |  |  | 1.90 |  |  | 1.95 |  |  | 2.01 |
Bank only capital ratios: |  |  |  |  |  |  |  |  |  |
Tier 1 capital to average assets |  | 9.55 |  |  | 8.84 |  |  | 8.85 |  |  | 8.83 |  |  | 8.50 |
Tier 1 capital to risk weighted assets |  | 12.69 |  |  | 12.74 |  |  | 12.87 |  |  | 13.23 |  |  | 13.69 |
Total capital to risk weighted assets |  | 13.59 |  |  | 13.65 |  |  | 13.83 |  |  | 14.25 |  |  | 14.72 |

14

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Financial Highlights
(Dollars in Thousands Except Share and Per Share Data and Ratios, Unaudited)
|  | Twelve Months Ended
|  | December 31, |  | December 31,
|  | 2022 |  | 2021
Income statement: |  |  |  |
Net interest income |  | $ | 199,518 |  |  | $ | 175,805 |
Credit loss expense (recovery) |  | (1,816) |  |  | (2,084) |
Non–interest income |  | 47,451 |  |  | 57,952 |
Non–interest expense |  | 143,201 |  |  | 133,394 |
Income tax expense |  | 12,176 |  |  | 15,356 |
Net income |  | $ | 93,408 |  |  | $ | 87,091 |
Per share data: |  |  |  |
Basic earnings per share |  | $ | 2.14 |  |  | $ | 1.99 |
Diluted earnings per share |  | 2.14 |  |  | 1.98 |
Cash dividends declared per common share |  | 0.63 |  |  | 0.56 |
Book value per common share |  | 15.55 |  |  | 16.61 |
Tangible book value per common share |  | 11.59 |  |  | 12.58 |
Market value – high |  | 23.45 |  |  | 21.14 |
Market value – low |  | $ | 14.51 |  |  | $ | 15.43 |
Weighted average shares outstanding – Basis |  | 43,568,823 |  |  | 43,802,733 |
Weighted average shares outstanding – Diluted |  | 43,699,734 |  |  | 43,955,280 |
Key ratios: |  |  |  |
Return on average assets |  | 1.24 | % |  | 1.34 | %
Return on average common stockholders’ equity |  | 13.66 |  |  | 12.23 |
Net interest margin |  | 2.98 |  |  | 3.03 |
Allowance for credit losses to total loans |  | 1.21 |  |  | 1.48 |
Average equity to average assets |  | 9.07 |  |  | 10.93 |
Efficiency ratio |  | 57.98 |  |  | 57.07 |
Annualized non–interest expense to average assets |  | 1.90 |  |  | 2.05 |
Bank only capital ratios: |  |  |  |
Tier 1 capital to average assets |  | 9.55 |  |  | 8.50 |
Tier 1 capital to risk weighted assets |  | 12.69 |  |  | 13.69 |
Total capital to risk weighted assets |  | 13.59 |  |  | 14.72 |

15

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Financial Highlights
(Dollars in Thousands Except Ratios, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Loan data: |  |  |  |  |  |  |  |  |  |
Substandard loans |  | $ | 56,194 |  |  | $ | 57,932 |  |  | $ | 59,377 |  |  | $ | 57,928 |  |  | $ | 56,968 |
30 to 89 days delinquent |  | 10,709 |  |  | 6,970 |  |  | 6,739 |  |  | 6,358 |  |  | 8,536 |
Non–performing loans: |  |  |  |  |  |  |  |  |  |
90 days and greater delinquent – accruing interest |  | 92 |  |  | 193 |  |  | 210 |  |  | 107 |  |  | 145 |
Trouble debt restructures – accruing interest |  | 2,570 |  |  | 2,529 |  |  | 2,535 |  |  | 2,372 |  |  | 2,391 |
Trouble debt restructures – non–accrual |  | 1,548 |  |  | 1,665 |  |  | 1,345 |  |  | 1,501 |  |  | 1,521 |
Non–accrual loans |  | 17,630 |  |  | 14,771 |  |  | 16,116 |  |  | 16,133 |  |  | 14,962 |
Total non–performing loans |  | $ | 21,840 |  |  | $ | 19,158 |  |  | $ | 20,206 |  |  | $ | 20,113 |  |  | $ | 19,019 |
Non–performing loans to total loans |  | 0.52 | % |  | 0.47 | % |  | 0.51 | % |  | 0.54 | % |  | 0.52 | %

Allocation of the Allowance for Credit Losses
(Dollars in Thousands, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Commercial |  | $ | 32,445 |  |  | $ | 33,806 |  |  | $ | 34,802 |  |  | $ | 37,789 |  |  | $ | 40,775 |
Residential mortgage |  | 5,577 |  |  | 5,137 |  |  | 4,422 |  |  | 4,351 |  |  | 3,856 |
Mortgage warehouse |  | 1,020 |  |  | 1,024 |  |  | 1,067 |  |  | 1,055 |  |  | 1,059 |
Consumer |  | 11,422 |  |  | 11,402 |  |  | 12,059 |  |  | 9,313 |  |  | 8,596 |
Total |  | $ | 50,464 |  |  | $ | 51,369 |  |  | $ | 52,350 |  |  | $ | 52,508 |  |  | $ | 54,286 |

Net Charge–offs (Recoveries)
(Dollars in Thousands Except Ratios, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Commercial |  | $ | (94) |  |  | $ | 51 |  |  | $ | (75) |  |  | $ | 38 |  |  | $ | 926 |
Residential mortgage |  | (8) |  |  | (75) |  |  | 40 |  |  | (10) |  |  | 126 |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 387 |  |  | 162 |  |  | 319 |  |  | 108 |  |  | 360 |
Total |  | $ | 285 |  |  | $ | 138 |  |  | $ | 284 |  |  | $ | 136 |  |  | $ | 1,412 |
Percent of net charge–offs (recoveries) to average loans outstanding for the period |  | 0.01 | % |  | 0.00 | % |  | 0.01 | % |  | 0.00 | % |  | 0.04 | %

16

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Total Non–performing Loans
(Dollars in Thousands Except Ratios, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Commercial |  | $ | 9,330 |  |  | $ | 7,199 |  |  | $ | 8,008 |  |  | $ | 7,844 |  |  | $ | 7,509 |
Residential mortgage |  | 8,123 |  |  | 8,047 |  |  | 8,469 |  |  | 8,584 |  |  | 8,005 |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 4,387 |  |  | 3,912 |  |  | 3,729 |  |  | 3,685 |  |  | 3,505 |
Total |  | $ | 21,840 |  |  | $ | 19,158 |  |  | $ | 20,206 |  |  | $ | 20,113 |  |  | $ | 19,019 |
Non–performing loans to total loans |  | 0.52 | % |  | 0.47 | % |  | 0.51 | % |  | 0.54 | % |  | 0.52 | %

Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Commercial |  | $ | 1,881 |  |  | $ | 3,206 |  |  | $ | 1,414 |  |  | $ | 2,245 |  |  | $ | 2,861 |
Residential mortgage |  | 107 |  |  | 22 |  |  | — |  |  | 170 |  |  | 695 |
Mortgage warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer |  | 152 |  |  | 14 |  |  | 58 |  |  | 5 |  |  | 5 |
Total |  | $ | 2,140 |  |  | $ | 3,242 |  |  | $ | 1,472 |  |  | $ | 2,420 |  |  | $ | 3,561 |

17

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Average Balance Sheets
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Three Months Ended
|  | December 31, 2022 |  | December 31, 2021
|  | Average Balance |  | Interest |  | Average Rate |  | Average Balance |  | Interest |  | Average Rate
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Federal funds sold |  | $ | 4,023 |  |  | $ | 34 |  |  | 3.35 | % |  | $ | 654,225 |  |  | $ | 251 |  |  | 0.15 | %
Interest earning deposits |  | 8,233 |  |  | 48 |  |  | 2.31 | % |  | 22,537 |  |  | 32 |  |  | 0.56 | %
Investment securities – taxable |  | 1,655,728 |  |  | 8,703 |  |  | 2.09 | % |  | 1,405,689 |  |  | 6,208 |  |  | 1.75 | %
Investment securities – non–taxable (1) |  | 1,385,340 |  |  | 7,543 |  |  | 2.73 | % |  | 1,224,911 |  |  | 6,456 |  |  | 2.65 | %
Loans receivable (2) (3) |  | 4,038,656 |  |  | 50,859 |  |  | 5.02 | % |  | 3,644,688 |  |  | 39,672 |  |  | 4.34 | %
Total interest earning assets |  | 7,091,980 |  |  | 67,187 |  |  | 3.88 | % |  | 6,952,050 |  |  | 52,619 |  |  | 3.11 | %
Non–interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | 96,835 |  |  |  |  |  |  | 102,273 |  |  |  |  |
Allowance for credit losses |  | (51,323) |  |  |  |  |  |  | (56,540) |  |  |  |  |
Other assets |  | 580,874 |  |  |  |  |  |  | 463,560 |  |  |  |  |
Total average assets |  | $ | 7,718,366 |  |  |  |  |  |  | $ | 7,461,343 |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing deposits |  | $ | 4,555,887 |  |  | $ | 10,520 |  |  | 0.92 | % |  | $ | 4,543,989 |  |  | $ | 1,663 |  |  | 0.15 | %
Borrowings |  | 850,236 |  |  | 5,729 |  |  | 2.67 | % |  | 525,638 |  |  | 1,025 |  |  | 0.77 | %
Repurchase agreements |  | 141,676 |  |  | 311 |  |  | 0.87 | % |  | 137,868 |  |  | 36 |  |  | 0.10 | %
Subordinated notes |  | 58,874 |  |  | 881 |  |  | 5.94 | % |  | 58,728 |  |  | 881 |  |  | 5.95 | %
Junior subordinated debentures issued to capital trusts |  | 56,988 |  |  | 964 |  |  | 6.71 | % |  | 56,745 |  |  | 537 |  |  | 3.75 | %
Total interest bearing liabilities |  | 5,663,661 |  |  | 18,405 |  |  | 1.29 | % |  | 5,322,968 |  |  | 4,142 |  |  | 0.31 | %
Non–interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits |  | 1,321,139 |  |  |  |  |  |  | 1,366,621 |  |  |  |  |
Accrued interest payable and other liabilities |  | 73,378 |  |  |  |  |  |  | 52,111 |  |  |  |  |
Stockholders’ equity |  | 660,188 |  |  |  |  |  |  | 719,643 |  |  |  |  |
Total average liabilities and stockholders’ equity |  | $ | 7,718,366 |  |  |  |  |  |  | $ | 7,461,343 |  |  |  |  |
Net interest income / spread |  |  |  | $ | 48,782 |  |  | 2.59 | % |  |  |  | $ | 48,477 |  |  | 2.80 | %
Net interest income as a percent of average interest earning assets (1) |  |  |  |  |  | 2.85 | % |  |  |  |  |  | 2.87 | %
(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.

18

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Average Balance Sheets
(Dollars in Thousands, Unaudited)
|  | Twelve Months Ended |  | Twelve Months Ended
|  | December 31, 2022 |  | December 31, 2021
|  | Average Balance |  | Interest |  | Average Rate |  | Average Balance |  | Interest |  | Average Rate
Assets |  |  |  |  |  |  |  |  |  |  |  |
Interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Federal funds sold |  | $ | 62,211 |  |  | $ | 165 |  |  | 0.27 | % |  | $ | 398,528 |  |  | $ | 535 |  |  | 0.13 | %
Interest earning deposits |  | 13,596 |  |  | 141 |  |  | 1.04 | % |  | 25,993 |  |  | 160 |  |  | 0.62 | %
Investment securities – taxable |  | 1,700,418 |  |  | 33,202 |  |  | 1.95 | % |  | 884,244 |  |  | 14,437 |  |  | 1.63 | %
Investment securities – non–taxable (1) |  | 1,356,045 |  |  | 29,025 |  |  | 2.71 | % |  | 1,086,942 |  |  | 23,246 |  |  | 2.71 | %
Loans receivable (2) (3) |  | 3,845,137 |  |  | 173,500 |  |  | 4.53 | % |  | 3,639,454 |  |  | 155,732 |  |  | 4.30 | %
Total interest earning assets |  | 6,977,407 |  |  | 236,033 |  |  | 3.50 | % |  | 6,035,161 |  |  | 194,110 |  |  | 3.33 | %
Non–interest earning assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | 99,885 |  |  |  |  |  |  | 89,993 |  |  |  |  |
Allowance for credit losses |  | (52,606) |  |  |  |  |  |  | (56,798) |  |  |  |  |
Other assets |  | 509,229 |  |  |  |  |  |  | 445,895 |  |  |  |  |
Total average assets |  | $ | 7,533,915 |  |  |  |  |  |  | $ | 6,514,251 |  |  |  |  |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Interest bearing deposits |  | $ | 4,513,668 |  |  | $ | 17,809 |  |  | 0.39 | % |  | $ | 3,897,750 |  |  | $ | 7,867 |  |  | 0.20 | %
Borrowings |  | 696,584 |  |  | 11,938 |  |  | 1.71 | % |  | 425,214 |  |  | 4,546 |  |  | 1.07 | %
Repurchase agreements |  | 141,048 |  |  | 527 |  |  | 0.37 | % |  | 123,675 |  |  | 155 |  |  | 0.13 | %
Subordinated notes |  | 58,819 |  |  | 3,522 |  |  | 5.99 | % |  | 58,672 |  |  | 3,522 |  |  | 6.00 | %
Junior subordinated debentures issued to capital trusts |  | 56,899 |  |  | 2,719 |  |  | 4.78 | % |  | 56,657 |  |  | 2,215 |  |  | 3.91 | %
Total interest bearing liabilities |  | 5,467,018 |  |  | 36,515 |  |  | 0.67 | % |  | 4,561,968 |  |  | 18,305 |  |  | 0.40 | %
Non–interest bearing liabilities |  |  |  |  |  |  |  |  |  |  |  |
Demand deposits |  | 1,332,937 |  |  |  |  |  |  | 1,188,275 |  |  |  |  |
Accrued interest payable and other liabilities |  | 50,330 |  |  |  |  |  |  | 51,886 |  |  |  |  |
Stockholders’ equity |  | 683,630 |  |  |  |  |  |  | 712,122 |  |  |  |  |
Total average liabilities and stockholders’ equity |  | $ | 7,533,915 |  |  |  |  |  |  | $ | 6,514,251 |  |  |  |  |
Net interest income / spread |  |  |  | $ | 199,518 |  |  | 2.83 | % |  |  |  | $ | 175,805 |  |  | 2.93 | %
Net interest income as a percent of average interest earning assets (1) |  |  |  |  |  | 2.98 | % |  |  |  |  |  | 3.03 | %
(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.

19

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Condensed Consolidated Balance Sheets
(Dollars in Thousands)
|  | December 31, 2022 |  | December 31, 2021
|  | (Unaudited) |  |
Assets |  |  |  |
Cash and due from banks |  | $ | 123,505 |  |  | $ | 593,508 |
Interest earning time deposits |  | 2,812 |  |  | 4,782 |
Investment securities, available for sale |  | 997,558 |  |  | 1,160,812 |
Investment securities, held to maturity (fair value $1,681,309 and $1,559,991) |  | 2,022,748 |  |  | 1,552,443 |
Loans held for sale |  | 5,807 |  |  | 12,579 |
Loans, net of allowance for credit losses of $50,464 and $54,286 |  | 4,107,534 |  |  | 3,604,248 |
Premises and equipment, net |  | 92,677 |  |  | 93,441 |
Federal Home Loan Bank stock |  | 26,677 |  |  | 24,440 |
Goodwill |  | 155,211 |  |  | 154,572 |
Other intangible assets |  | 17,239 |  |  | 20,941 |
Interest receivable |  | 35,294 |  |  | 26,137 |
Cash value of life insurance |  | 146,175 |  |  | 97,150 |
Other assets |  | 139,281 |  |  | 66,836 |
Total assets |  | $ | 7,872,518 |  |  | $ | 7,411,889 |
Liabilities |  |  |  |
Deposits |  |  |  |
Non–interest bearing |  | $ | 1,277,768 |  |  | $ | 1,360,338 |
Interest bearing |  | 4,580,006 |  |  | 4,442,653 |
Total deposits |  | 5,857,774 |  |  | 5,802,991 |
Borrowings |  | 1,142,949 |  |  | 712,739 |
Subordinated notes |  | 58,896 |  |  | 58,750 |
Junior subordinated debentures issued to capital trusts |  | 57,027 |  |  | 56,785 |
Interest payable |  | 5,380 |  |  | 2,235 |
Other liabilities |  | 73,117 |  |  | 55,180 |
Total liabilities |  | 7,195,143 |  |  | 6,688,680 |
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 and Outstanding 43,937,889 and 43,811,421 shares |  | — |  |  | — |
Additional paid–in capital |  | 354,188 |  |  | 352,122 |
Retained earnings |  | 429,385 |  |  | 363,742 |
Accumulated other comprehensive income |  | (106,198) |  |  | 7,345 |
Total stockholders’ equity |  | 677,375 |  |  | 723,209 |
Total liabilities and stockholders’ equity |  | $ | 7,872,518 |  |  | $ | 7,411,889 |

20

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
|  | Three Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Interest income |  |  |  |  |  |  |  |  |  |
Loans receivable |  | $ | 50,859 |  |  | $ | 45,517 |  |  | $ | 40,585 |  |  | $ | 36,539 |  |  | $ | 39,672 |
Investment securities – taxable |  | 8,785 |  |  | 8,501 |  |  | 8,716 |  |  | 7,506 |  |  | 6,491 |
Investment securities – non–taxable |  | 7,543 |  |  | 7,478 |  |  | 7,307 |  |  | 6,697 |  |  | 6,456 |
Total interest income |  | 67,187 |  |  | 61,496 |  |  | 56,608 |  |  | 50,742 |  |  | 52,619 |
Interest expense |  |  |  |  |  |  |  |  |  |
Deposits |  | 10,520 |  |  | 4,116 |  |  | 1,677 |  |  | 1,496 |  |  | 1,663 |
Borrowed funds |  | 6,040 |  |  | 3,895 |  |  | 1,450 |  |  | 1,080 |  |  | 1,061 |
Subordinated notes |  | 881 |  |  | 880 |  |  | 881 |  |  | 880 |  |  | 881 |
Junior subordinated debentures issued to capital trusts |  | 964 |  |  | 744 |  |  | 556 |  |  | 455 |  |  | 537 |
Total interest expense |  | 18,405 |  |  | 9,635 |  |  | 4,564 |  |  | 3,911 |  |  | 4,142 |
Net interest income |  | 48,782 |  |  | 51,861 |  |  | 52,044 |  |  | 46,831 |  |  | 48,477 |
Credit loss expense (recovery) |  | (69) |  |  | (601) |  |  | 240 |  |  | (1,386) |  |  | (2,071) |
Net interest income after credit loss expense (recovery) |  | 48,851 |  |  | 52,462 |  |  | 51,804 |  |  | 48,217 |  |  | 50,548 |
Non–interest Income |  |  |  |  |  |  |  |  |  |
Service charges on deposit accounts |  | 2,947 |  |  | 3,023 |  |  | 2,833 |  |  | 2,795 |  |  | 2,510 |
Wire transfer fees |  | 118 |  |  | 148 |  |  | 170 |  |  | 159 |  |  | 205 |
Interchange fees |  | 2,951 |  |  | 3,089 |  |  | 3,582 |  |  | 2,780 |  |  | 3,082 |
Fiduciary activities |  | 1,270 |  |  | 1,203 |  |  | 1,405 |  |  | 1,503 |  |  | 1,591 |
Gain on sale of mortgage loans |  | 1,196 |  |  | 1,441 |  |  | 2,501 |  |  | 2,027 |  |  | 4,167 |
Mortgage servicing income net of impairment |  | 637 |  |  | 355 |  |  | 319 |  |  | 3,489 |  |  | 300 |
Increase in cash value of bank owned life insurance |  | 751 |  |  | 814 |  |  | 519 |  |  | 510 |  |  | 547 |
Death benefit on bank owned life insurance |  | — |  |  | — |  |  | 644 |  |  | — |  |  | — |
Other income |  | 804 |  |  | 115 |  |  | 461 |  |  | 892 |  |  | 426 |
Total non–interest income |  | 10,674 |  |  | 10,188 |  |  | 12,434 |  |  | 14,155 |  |  | 12,828 |
Non–interest expense |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 19,978 |  |  | 20,613 |  |  | 19,957 |  |  | 19,735 |  |  | 20,549 |
Net occupancy expenses |  | 3,279 |  |  | 3,293 |  |  | 3,190 |  |  | 3,561 |  |  | 3,204 |
Data processing |  | 2,884 |  |  | 2,539 |  |  | 2,607 |  |  | 2,537 |  |  | 2,672 |
Professional fees |  | 694 |  |  | 552 |  |  | 283 |  |  | 314 |  |  | 562 |
Outside services and consultants |  | 2,985 |  |  | 2,855 |  |  | 2,485 |  |  | 2,525 |  |  | 2,197 |
Loan expense |  | 1,281 |  |  | 1,392 |  |  | 1,533 |  |  | 1,205 |  |  | 1,304 |
FDIC insurance expense |  | 388 |  |  | 670 |  |  | 775 |  |  | 725 |  |  | 798 |
Other losses |  | 118 |  |  | 398 |  |  | 362 |  |  | 168 |  |  | 1,925 |
Other expenses |  | 4,104 |  |  | 4,504 |  |  | 4,212 |  |  | 4,500 |  |  | 4,660 |
Total non–interest expense |  | 35,711 |  |  | 36,816 |  |  | 35,404 |  |  | 35,270 |  |  | 37,871 |
Income before income taxes |  | 23,814 |  |  | 25,834 |  |  | 28,834 |  |  | 27,102 |  |  | 25,505 |
Income tax expense |  | 2,649 |  |  | 2,013 |  |  | 3,975 |  |  | 3,539 |  |  | 4,080 |
Net income |  | $ | 21,165 |  |  | $ | 23,821 |  |  | $ | 24,859 |  |  | $ | 23,563 |  |  | $ | 21,425 |
Basic earnings per share |  | $ | 0.49 |  |  | $ | 0.55 |  |  | $ | 0.57 |  |  | $ | 0.54 |  |  | $ | 0.49 |
Diluted earnings per share |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.49 |

21

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Condensed Consolidated Statements of Income
(Dollars in Thousands Except Per Share Data, Unaudited)
|  | Twelve Months Ended
|  | December 31, |  | December 31,
|  | 2022 |  | 2021
Interest income |  |  |  |
Loans receivable |  | $ | 173,500 |  |  | $ | 155,732 |
Investment securities – taxable |  | 33,508 |  |  | 15,132 |
Investment securities – non–taxable |  | 29,025 |  |  | 23,246 |
Total interest income |  | 236,033 |  |  | 194,110 |
Interest expense |  |  |  |
Deposits |  | 17,809 |  |  | 7,867 |
Borrowed funds |  | 12,465 |  |  | 4,701 |
Subordinated notes |  | 3,522 |  |  | 3,522 |
Junior subordinated debentures issued to capital trusts |  | 2,719 |  |  | 2,215 |
Total interest expense |  | 36,515 |  |  | 18,305 |
Net interest income |  | 199,518 |  |  | 175,805 |
Credit loss expense (recovery) |  | (1,816) |  |  | (2,084) |
Net interest income after credit loss expense (recovery) |  | 201,334 |  |  | 177,889 |
Non–interest Income |  |  |  |
Service charges on deposit accounts |  | 11,598 |  |  | 9,192 |
Wire transfer fees |  | 595 |  |  | 892 |
Interchange fees |  | 12,402 |  |  | 10,901 |
Fiduciary activities |  | 5,381 |  |  | 7,419 |
Gains / (losses) on sale of investment securities |  | — |  |  | 914 |
Gain on sale of mortgage loans |  | 7,165 |  |  | 19,163 |
Mortgage servicing income net of impairment |  | 4,800 |  |  | 2,352 |
Increase in cash value of bank owned life insurance |  | 2,594 |  |  | 2,094 |
Death benefit on bank owned life insurance |  | 644 |  |  | 783 |
Other income |  | 2,272 |  |  | 4,242 |
Total non–interest income |  | 47,451 |  |  | 57,952 |
Non–interest expense |  |  |  |
Salaries and employee benefits |  | 80,283 |  |  | 74,051 |
Net occupancy expenses |  | 13,323 |  |  | 12,541 |
Data processing |  | 10,567 |  |  | 9,962 |
Professional fees |  | 1,843 |  |  | 2,216 |
Outside services and consultants |  | 10,850 |  |  | 8,449 |
Loan expense |  | 5,411 |  |  | 5,492 |
FDIC insurance expense |  | 2,558 |  |  | 2,377 |
Other losses |  | 1,046 |  |  | 2,283 |
Other expenses |  | 17,320 |  |  | 16,023 |
Total non–interest expense |  | 143,201 |  |  | 133,394 |
Income before income taxes |  | 105,584 |  |  | 102,447 |
Income tax expense |  | 12,176 |  |  | 15,356 |
Net income |  | $ | 93,408 |  |  | $ | 87,091 |
Basic earnings per share |  | $ | 2.14 |  |  | $ | 1.99 |
Diluted earnings per share |  | 2.14 |  |  | 1.98 |

22

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
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, pre–tax, pre–provision income, net interest margin, tangible stockholders’ equity, tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity and the return on average tangible equity. 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 and financial results 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 information identified herein and its most comparable GAAP measures.
23

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Net Income
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Net income as reported |  | $ | 21,165 |  |  | $ | 23,821 |  |  | $ | 24,859 |  |  | $ | 23,563 |  |  | $ | 21,425 |  |  | $ | 93,408 |  |  | $ | 87,091 |
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 884 |  |  | — |  |  | 1,925 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (184) |  |  | — |  |  | (401) |
Net income excluding acquisition expenses |  | 21,165 |  |  | 23,821 |  |  | 24,859 |  |  | 23,563 |  |  | 22,125 |  |  | 93,408 |  |  | 88,615 |
Credit loss expense acquired loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,034 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (427) |
Net income excluding credit loss expense acquired loans |  | 21,165 |  |  | 23,821 |  |  | 24,859 |  |  | 23,563 |  |  | 22,125 |  |  | 93,408 |  |  | 90,222 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,329) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 489 |
Net income excluding gain on sale of ESOP trustee accounts |  | 21,165 |  |  | 23,821 |  |  | 24,859 |  |  | 23,563 |  |  | 22,125 |  |  | 93,408 |  |  | 88,382 |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,900 |  |  | — |  |  | 1,900 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (315) |  |  | — |  |  | (315) |
Net income excluding ESOP settlement expenses |  | 21,165 |  |  | 23,821 |  |  | 24,859 |  |  | 23,563 |  |  | 23,710 |  |  | 93,408 |  |  | 89,967 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (914) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 192 |
Net income excluding (gain) / loss on sale of investment securities |  | 21,165 |  |  | 23,821 |  |  | 24,859 |  |  | 23,563 |  |  | 23,710 |  |  | 93,408 |  |  | 89,245 |
Death benefit on bank owned life insurance (“BOLI”) |  | — |  |  | — |  |  | (644) |  |  | — |  |  | — |  |  | (644) |  |  | (783) |
Net income excluding death benefit on BOLI |  | 21,165 |  |  | 23,821 |  |  | 24,215 |  |  | 23,563 |  |  | 23,710 |  |  | 92,764 |  |  | 88,462 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 125 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (26) |
Net income excluding prepayment penalties on borrowings |  | 21,165 |  |  | 23,821 |  |  | 24,215 |  |  | 23,563 |  |  | 23,710 |  |  | 92,764 |  |  | 88,561 |
Adjusted net income |  | $ | 21,165 |  |  | $ | 23,821 |  |  | $ | 24,215 |  |  | $ | 23,563 |  |  | $ | 23,710 |  |  | $ | 92,764 |  |  | $ | 88,561 |

24

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Diluted Earnings per Share
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Diluted earnings per share (“EPS”) as reported |  | $ | 0.48 |  |  | $ | 0.55 |  |  | $ | 0.57 |  |  | $ | 0.54 |  |  | $ | 0.49 |  |  | $ | 2.14 |  |  | $ | 1.98 |
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.02 |  |  | — |  |  | 0.04 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Diluted EPS excluding acquisition expenses |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.51 |  |  | 2.14 |  |  | 2.02 |
Credit loss expense acquired loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.05 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |
Diluted EPS excluding credit loss expense acquired loans |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.51 |  |  | 2.14 |  |  | 2.06 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.05) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.01 |
Diluted EPS excluding gain on sale of ESOP trustee accounts |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.51 |  |  | 2.14 |  |  | 2.02 |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.04 |  |  | — |  |  | 0.04 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |  |  | — |  |  | (0.01) |
Diluted EPS excluding ESOP settlement expenses |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.54 |  |  | 2.14 |  |  | 2.05 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.02) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Diluted EPS excluding (gain) / loss on sale of investment securities |  | 0.48 |  |  | 0.55 |  |  | 0.57 |  |  | 0.54 |  |  | 0.54 |  |  | 2.14 |  |  | 2.03 |
Death benefit on bank owned life insurance (“BOLI”) |  | — |  |  | — |  |  | (0.01) |  |  | — |  |  | — |  |  | (0.01) |  |  | (0.03) |
Diluted EPS excluding death benefit on BOLI |  | 0.48 |  |  | 0.55 |  |  | 0.56 |  |  | 0.54 |  |  | 0.54 |  |  | 2.13 |  |  | 2.00 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Diluted EPS excluding prepayment penalties on borrowings |  | 0.48 |  |  | 0.55 |  |  | 0.56 |  |  | 0.54 |  |  | 0.54 |  |  | 2.13 |  |  | 2.00 |
Adjusted diluted EPS |  | $ | 0.48 |  |  | $ | 0.55 |  |  | $ | 0.56 |  |  | $ | 0.54 |  |  | $ | 0.54 |  |  | $ | 2.13 |  |  | $ | 2.00 |

25

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Pre–Tax, Pre–Provision Income
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Pre–tax income |  | $ | 23,814 |  |  | $ | 25,834 |  |  | $ | 28,834 |  |  | $ | 27,102 |  |  | $ | 25,505 |  |  | $ | 105,584 |  |  | $ | 102,447 |
Credit loss expense |  | (69) |  |  | (601) |  |  | 240 |  |  | (1,386) |  |  | (2,071) |  |  | (1,816) |  |  | (2,084) |
Pre–tax, pre–provision income |  | $ | 23,745 |  |  | $ | 25,233 |  |  | $ | 29,074 |  |  | $ | 25,716 |  |  | $ | 23,434 |  |  | $ | 103,768 |  |  | $ | 100,363 |
Pre–tax, pre–provision income |  | $ | 23,745 |  |  | $ | 25,233 |  |  | $ | 29,074 |  |  | $ | 25,716 |  |  | $ | 23,434 |  |  | $ | 103,768 |  |  | $ | 100,363 |
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 884 |  |  | — |  |  | 1,925 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,329) |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,900 |  |  | — |  |  | 1,900 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (914) |
Death benefit on BOLI |  | — |  |  | — |  |  | (644) |  |  | — |  |  | — |  |  | (644) |  |  | (783) |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 125 |
Adjusted pre–tax, pre–provision income |  | $ | 23,745 |  |  | $ | 25,233 |  |  | $ | 28,430 |  |  | $ | 25,716 |  |  | $ | 26,218 |  |  | $ | 103,124 |  |  | $ | 100,162 |

Non–GAAP Reconciliation of Net Interest Margin
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Net interest income as reported |  | $ | 48,782 |  |  | $ | 51,861 |  |  | $ | 52,044 |  |  | $ | 46,831 |  |  | $ | 48,477 |  |  | $ | 199,518 |  |  | $ | 175,805 |
Average interest earning assets |  | 7,091,980 |  |  | 7,056,208 |  |  | 6,943,633 |  |  | 6,814,756 |  |  | 6,952,050 |  |  | 6,977,407 |  |  | 6,035,161 |
Net interest income as a percentage of average interest earning assets (“Net Interest Margin”) |  | 2.85 | % |  | 3.04 | % |  | 3.13 | % |  | 2.90 | % |  | 2.87 | % |  | 2.98 | % |  | 3.03 | %
Net interest income as reported |  | $ | 48,782 |  |  | $ | 51,861 |  |  | $ | 52,044 |  |  | $ | 46,831 |  |  | $ | 48,477 |  |  | $ | 199,518 |  |  | $ | 175,805 |
Acquisition–related purchase accounting adjustments (“PAUs”) |  | (431) |  |  | (906) |  |  | (1,223) |  |  | (916) |  |  | (1,819) |  |  | (3,476) |  |  | (4,503) |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 125 |
Adjusted net interest income |  | $ | 48,351 |  |  | $ | 50,955 |  |  | $ | 50,821 |  |  | $ | 45,915 |  |  | $ | 46,658 |  |  | $ | 196,042 |  |  | $ | 171,302 |
Adjusted net interest margin |  | 2.83 | % |  | 2.99 | % |  | 3.06 | % |  | 2.85 | % |  | 2.77 | % |  | 2.93 | % |  | 2.96 | %

26

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Tangible Stockholders’ Equity and Tangible Book Value per Share
(Dollars in Thousands, Unaudited)
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021
Total stockholders’ equity |  | $ | 677,375 |  |  | $ | 644,993 |  |  | $ | 657,865 |  |  | $ | 677,450 |  |  | $ | 723,209 |
Less: Intangible assets |  | 172,450 |  |  | 173,375 |  |  | 173,662 |  |  | 174,588 |  |  | 175,513 |
Total tangible stockholders’ equity |  | $ | 504,925 |  |  | $ | 471,618 |  |  | $ | 484,203 |  |  | $ | 502,862 |  |  | $ | 547,696 |
Common shares outstanding |  | 43,574,151 |  |  | 43,574,151 |  |  | 43,572,796 |  |  | 43,572,796 |  |  | 43,547,942 |
Book value per common share |  | $ | 15.55 |  |  | $ | 14.80 |  |  | $ | 15.10 |  |  | $ | 15.55 |  |  | $ | 16.61 |
Tangible book value per common share |  | $ | 11.59 |  |  | $ | 10.82 |  |  | $ | 11.11 |  |  | $ | 11.54 |  |  | $ | 12.58 |

27

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Non–interest expense as reported |  | $ | 35,711 |  |  | $ | 36,816 |  |  | $ | 35,404 |  |  | $ | 35,270 |  |  | $ | 37,871 |  |  | $ | 143,201 |  |  | $ | 133,394 |
Net interest income as reported |  | 48,782 |  |  | 51,861 |  |  | 52,044 |  |  | 46,831 |  |  | 48,477 |  |  | 199,518 |  |  | 175,805 |
Non–interest income as reported |  | $ | 10,674 |  |  | $ | 10,188 |  |  | $ | 12,434 |  |  | $ | 14,155 |  |  | $ | 12,828 |  |  | $ | 47,451 |  |  | $ | 57,952 |
Non–interest expense / (Net interest income + Non–interest income) (“Efficiency Ratio”) |  | 60.06 | % |  | 59.33 | % |  | 54.91 | % |  | 57.83 | % |  | 61.77 | % |  | 57.98 | % |  | 57.07 | %
Non–interest expense as reported |  | $ | 35,711 |  |  | $ | 36,816 |  |  | $ | 35,404 |  |  | $ | 35,270 |  |  | $ | 37,871 |  |  | $ | 143,201 |  |  | $ | 133,394 |
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | (884) |  |  | — |  |  | (1,925) |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,900) |  |  | — |  |  | (1,900) |
Non–interest expense excluding acquisition expenses and ESOP settlement expenses |  | 35,711 |  |  | 36,816 |  |  | 35,404 |  |  | 35,270 |  |  | 35,087 |  |  | 143,201 |  |  | 129,569 |
Net interest income as reported |  | 48,782 |  |  | 51,861 |  |  | 52,044 |  |  | 46,831 |  |  | 48,477 |  |  | 199,518 |  |  | 175,805 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 125 |
Net interest income excluding prepayment penalties on borrowings |  | 48,782 |  |  | 51,861 |  |  | 52,044 |  |  | 46,831 |  |  | 48,477 |  |  | 199,518 |  |  | 175,930 |
Non–interest income as reported |  | 10,674 |  |  | 10,188 |  |  | 12,434 |  |  | 14,155 |  |  | 12,828 |  |  | 47,451 |  |  | 57,952 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,329) |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (914) |
Death benefit on BOLI |  | — |  |  | — |  |  | (644) |  |  | — |  |  | — |  |  | (644) |  |  | (783) |
Non–interest income excluding (gain) / loss on sale of investment securities and death benefit on BOLI |  | $ | 10,674 |  |  | $ | 10,188 |  |  | $ | 11,790 |  |  | $ | 14,155 |  |  | $ | 12,828 |  |  | $ | 46,807 |  |  | $ | 53,926 |
Adjusted efficiency ratio |  | 60.06 | % |  | 59.33 | % |  | 55.46 | % |  | 57.83 | % |  | 57.23 | % |  | 58.13 | % |  | 56.37 | %

28

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Return on Average Assets
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Average assets |  | $ | 7,718,366 |  |  | $ | 7,635,102 |  |  | $ | 7,476,238 |  |  | $ | 7,319,675 |  |  | $ | 7,461,343 |  |  | $ | 7,533,915 |  |  | $ | 6,514,251 |
Return on average assets (“ROAA”) as reported |  | 1.09 | % |  | 1.24 | % |  | 1.33 | % |  | 1.31 | % |  | 1.14 | % |  | 1.24 | % |  | 1.34 | %
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.05 |  |  | — |  |  | 0.03 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |  |  | — |  |  | (0.01) |
ROAA excluding acquisition expenses |  | 1.09 |  |  | 1.24 |  |  | 1.33 |  |  | 1.31 |  |  | 1.18 |  |  | 1.24 |  |  | 1.36 |
Credit loss expense acquired loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.03 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |
ROAA excluding credit loss expense on acquired loans |  | 1.09 |  |  | 1.24 |  |  | 1.33 |  |  | 1.31 |  |  | 1.18 |  |  | 1.24 |  |  | 1.38 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.04) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.01 |
ROAA excluding gain on sale of ESOP trustee accounts |  | 1.09 |  |  | 1.24 |  |  | 1.33 |  |  | 1.31 |  |  | 1.18 |  |  | 1.24 |  |  | 1.35 |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.10 |  |  | — |  |  | 0.03 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.02) |  |  | — |  |  | — |
ROAA excluding ESOP settlement expenses |  | 1.09 |  |  | 1.24 |  |  | 1.33 |  |  | 1.31 |  |  | 1.26 |  |  | 1.24 |  |  | 1.38 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
ROAA excluding (gain) / loss on sale of investment securities |  | 1.09 |  |  | 1.24 |  |  | 1.33 |  |  | 1.31 |  |  | 1.26 |  |  | 1.24 |  |  | 1.37 |
Death benefit on BOLI |  | — |  |  | — |  |  | (0.03) |  |  | — |  |  | — |  |  | (0.01) |  |  | (0.01) |
ROAA excluding death benefit on BOLI |  | 1.09 |  |  | 1.24 |  |  | 1.30 |  |  | 1.31 |  |  | 1.26 |  |  | 1.23 |  |  | 1.36 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
ROAA excluding prepayment penalties on borrowings |  | 1.09 |  |  | 1.24 |  |  | 1.30 |  |  | 1.31 |  |  | 1.26 |  |  | 1.23 |  |  | 1.36 |
Adjusted ROAA |  | 1.09 | % |  | 1.24 | % |  | 1.30 | % |  | 1.31 | % |  | 1.26 | % |  | 1.23 | % |  | 1.36 | %

29

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Return on Average Common Equity
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Average common equity |  | $ | 660,188 |  |  | $ | 680,376 |  |  | $ | 677,299 |  |  | $ | 716,341 |  |  | $ | 719,643 |  |  | $ | 683,630 |  |  | $ | 712,122 |
Return on average common equity (“ROACE”) as reported |  | 12.72 | % |  | 13.89 | % |  | 14.72 | % |  | 13.34 | % |  | 11.81 | % |  | 13.66 | % |  | 12.23 | %
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.49 |  |  | — |  |  | 0.27 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.10) |  |  | — |  |  | (0.06) |
ROACE excluding acquisition expenses |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 12.20 |  |  | 13.66 |  |  | 12.44 |
Credit loss expense acquired loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.29 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.06) |
ROACE excluding credit loss expense acquired loans |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 12.20 |  |  | 13.66 |  |  | 12.67 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.33) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.07 |
ROACE excluding gain on sale of ESOP trustee accounts |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 12.20 |  |  | 13.66 |  |  | 12.41 |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 1.05 |  |  | — |  |  | 0.27 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.17) |  |  | — |  |  | (0.04) |
ROACE excluding ESOP settlement expenses |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 13.08 |  |  | 13.66 |  |  | 12.64 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.13) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.03 |
ROACE excluding (gain) / loss on sale of investment securities |  | 12.72 |  |  | 13.89 |  |  | 14.72 |  |  | 13.34 |  |  | 13.08 |  |  | 13.66 |  |  | 12.54 |
Death benefit on BOLI |  | — |  |  | — |  |  | (0.38) |  |  | — |  |  | — |  |  | (0.09) |  |  | (0.11) |
ROACE excluding death benefit on BOLI |  | 12.72 |  |  | 13.89 |  |  | 14.34 |  |  | 13.34 |  |  | 13.08 |  |  | 13.57 |  |  | 12.43 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.02 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
ROACE excluding prepayment penalties on borrowings |  | 12.72 | % |  | 13.89 | % |  | 14.34 | % |  | 13.34 | % |  | 13.08 | % |  | 13.57 | % |  | 12.45 | %
Adjusted ROACE |  | 12.72 | % |  | 13.89 | % |  | 14.34 | % |  | 13.34 | % |  | 13.08 | % |  | 13.57 | % |  | 12.45 | %

30

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results

Non–GAAP Reconciliation of Return on Average Tangible Equity
(Dollars in Thousands, Unaudited)
|  | Three Months Ended |  | Twelve Months Ended
|  | December 31, |  | September 30, |  | June 30, |  | March 31, |  | December 31, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2022 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Average tangible equity |  | $ | 660,188 |  |  | $ | 680,376 |  |  | $ | 677,299 |  |  | $ | 716,341 |  |  | $ | 719,643 |  |  | $ | 683,630 |  |  | $ | 712,122 |
Less: Average intangible assets |  | 173,050 |  |  | 173,546 |  |  | 175,321 |  |  | 176,356 |  |  | 179,594 |  |  | 174,003 |  |  | 175,811 |
Average tangible equity |  | $ | 487,138 |  |  | $ | 506,830 |  |  | $ | 501,978 |  |  | $ | 539,985 |  |  | $ | 540,049 |  |  | $ | 509,627 |  |  | $ | 536,311 |
Return on average tangible equity (“ROATE”) as reported |  | 17.24 | % |  | 18.65 | % |  | 19.86 | % |  | 17.70 | % |  | 15.74 | % |  | 18.33 | % |  | 16.24 | %
Acquisition expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.65 |  |  | — |  |  | 0.36 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.14) |  |  | — |  |  | (0.08) |
ROATE excluding acquisition expenses |  | 17.24 |  |  | 18.65 |  |  | 19.86 |  |  | 17.70 |  |  | 16.25 |  |  | 18.33 |  |  | 16.52 |
Credit loss expense acquired loans |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.38 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.08) |
ROATE excluding credit loss expense acquired loans |  | 17.24 |  |  | 18.65 |  |  | 19.86 |  |  | 17.70 |  |  | 16.25 |  |  | 18.33 |  |  | 16.82 |
Gain on sale of ESOP trustee accounts |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.43) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.10 |
ROATE excluding gain on sale of ESOP trustee accounts |  | 17.24 |  |  | 18.65 |  |  | 19.86 |  |  | 17.70 |  |  | 16.25 |  |  | 18.33 |  |  | 16.49 |
ESOP settlement expenses |  | — |  |  | — |  |  | — |  |  | — |  |  | 1.40 |  |  | — |  |  | 0.35 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.23) |  |  | — |  |  | (0.06) |
ROATE excluding ESOP settlement expenses |  | 17.24 |  |  | 18.65 |  |  | 19.86 |  |  | 17.70 |  |  | 17.42 |  |  | 18.33 |  |  | 16.78 |
(Gain) / loss on sale of investment securities |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.17) |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.04 |
ROATE excluding (gain) / loss on sale of investment securities |  | 17.24 |  |  | 18.65 |  |  | 19.86 |  |  | 17.70 |  |  | 17.42 |  |  | 18.33 |  |  | 16.65 |
Death benefit on BOLI |  | — |  |  | — |  |  | (0.51) |  |  | — |  |  | — |  |  | (0.13) |  |  | (0.15) |
ROATE excluding death benefit on BOLI |  | 17.24 |  |  | 18.65 |  |  | 19.35 |  |  | 17.70 |  |  | 17.42 |  |  | 18.20 |  |  | 16.50 |
Prepayment penalties on borrowings |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.02 |
Tax effect |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (0.01) |
ROATE excluding prepayment penalties on borrowings |  | 17.24 | % |  | 18.65 | % |  | 19.35 | % |  | 17.70 | % |  | 17.42 | % |  | 18.20 | % |  | 16.51 | %
Adjusted ROATE |  | 17.24 | % |  | 18.65 | % |  | 19.35 | % |  | 17.70 | % |  | 17.42 | % |  | 18.20 | % |  | 16.51 | %

31

Horizon Bancorp, Inc. Announces Record Earnings for 2022 and Fourth Quarter Results
Earnings Conference Call
As previously announced, Horizon will host a conference call to review its fourth quarter and full year 2022 financial results and operating performance.
Participants may access the live conference call on January 26, 2023 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833–974–2379 from the United States, 866–450–4696 from Canada or 1–412–317–5772 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 February 2, 2023. The replay may be accessed by dialing 877–344–7529 from the United States, 855–669–9658 from Canada or 1–412–317–0088 from other international locations, and entering the access code 9666758.
About Horizon Bancorp, Inc.
Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $7.9 billion–asset bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon's retail offerings include prime residential, indirect auto, and other secured consumer lending to in–market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in–market business banking and treasury management services, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana's Michigan City, is available at horizonbank.com and investor.horizonbank.com.
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