Horizon Bancorp Announces Record Earnings for 2011

MICHIGAN CITY, Ind.--(BUSINESS WIRE)-- Horizon Bancorp (NASDAQ: HBNC) today announced its unaudited financial results for the three and twelve month periods ended December 31, 2011. All share data has been adjusted to reflect Horizon's three-for-two stock split paid on December 9, 2011.

SUMMARY:

• Fourth quarter 2011 net income was $3.5 million or $.68 diluted earnings per share, a 23% increase in net income from the same period in 2010 and the highest quarterly net income and diluted earnings per share in the Company's history.
• For the twelve months ending 2011, net income was $12.8 million or $2.27 diluted earnings per share, a 22% increase in net income from 2010 and the highest annual net income and diluted earnings per share in the Company's history.
• This represents the Company's 12th consecutive year of record annual earnings.
• Total loans increased $57.4 million during the quarter and $100.3 million during the year to $983.2 million at December 31, 2011.
• Total assets grew to a record $1.55 billion at December 31, 2011 compared to $1.49 billion at September 30, 2011 and $1.40 billion at December 31, 2010.
• Net interest income, after provisions for loan losses, for the twelve months of 2011 was $42.8 million compared with $36.1 million for the same period in the prior year.
• The provision for loan losses decreased to $5.3 million for the twelve months of 2011 compared to $11.6 million for the same period in 2010. Fourth quarter 2011 provision for loan losses was $838,000 compared with $2.67 million in fourth quarter 2010.
• Return on average common equity was 11.20% for 2011.
• During the fourth quarter of 2012 the Company announced a 3-for-2 stock split and shares were issued for the split on December 9, 2011.
• The Company increased its cash dividend in 2011 and paid its 104th consecutive quarterly dividend to shareholders.
• Horizon's tangible book value per share rose to $20.37 compared with $17.36 (split adjusted) at the end of 2010.
• In 2011 the Company redeemed all its preferred shares issued to the U.S. Treasury Department under its TARP Capital Purchase Program ("CPP").
• Horizon's capital ratios, including Tier 1 Capital to total risk weighted assets of 11.89% as of December 31, 2011, continue to be well above the regulatory standards for well-capitalized banks.

Craig M. Dwight, President and CEO, stated: "Achieving record assets and net income and concurrently growing loans and deposits and reducing Horizon's loan loss provision in a recessionary economy was a gratifying accomplishment. Horizon's balanced business model proved its value in 2011. For example, our consumer lending was stable compared with 2010; however, our mortgage and mortgage warehouse lending enabled Horizon to capture the benefits of strong nationwide new mortgage and refinancing activity and a pick-up in business activity. The counter-cyclical structure of our revenue model enables us to achieve balanced revenue and growth. Year-over-year, the Bank has increased return on average equity and return on average assets."

"A key goal in 2011 was to build core deposits to help maintain a low cost of funding. We ended 2011 with $1.01 billion in total deposits compared with $985.5 million in 2010, and we accomplished this growth even as we reduced higher-priced time deposits."

Dwight added that Horizon continues to make strategic investments in people and activities that directly support net income generation, including adding four mortgage loan production staff members in Portage, Michigan office. He also noted the bank intends to open new full service branches in Valparaiso, Indiana and Portage, Michigan during first quarter 2012.

"There are opportunities to expand in our existing markets and enter new markets in which community banks are under-represented," explained Dwight. "Additionally, our strong capital position and success generating loan and deposit growth supports our ability to consider community bank or branch acquisitions in the highly competitive and fragmented Indiana and Southwest Michigan markets."

Performance Highlights

Net income for the fourth quarter of 2011 was $3.5 million or $.68 diluted earnings per share, up 22.7% compared to $2.9 million or $.50 diluted earnings per share in the fourth quarter of 2010. Diluted earnings per share were reduced by $0.01 and $0.26, respectively, for the three and twelve months ending December 31, 2011, compared to reductions of $0.07 and $0.28, respectively, for the three and twelve months ending December 31, 2010. The reduction in the fourth quarter of 2011 resulted from the repayment of CPP capital during the third quarter of 2011 and replacing the remaining $12.5 million with the Small Business Lending Fund capital.

Net income for the year ending 2011 rose 22.4% to $12.8 million or $2.27 diluted earnings per share, compared with $10.5 million or $1.81 diluted earnings per share in 2010. These results were the highest level of net income for a single quarter and for a year in the Company's 138-year history.

The net interest margin increased to 3.95% in the fourth quarter of 2011 from 3.76% for the three-month period ending September 30, 2011. This increase in the fourth quarter of 2011 primarily reflected an increase in average mortgage warehouse loan volume and balances, which were funded by an increase in average short-term borrowing, resulting in an expanded interest rate spread on interest earning assets. Borrowings in the fourth quarter of 2011 increased by $34.0 million from September 30, 2011, all in short-term instruments primarily to fund the increase in mortgage warehouse lending.

Residential mortgage loan activity during the fourth quarter of 2011 generated $2.5 million in income from the gain on sale of mortgage loans; an increase of $454,000 from the same period in 2010.

Lending Activity

Total loans increased by $100.3 million from $882.9 million at December 31, 2010 to $983.2 million at December 31, 2011. Commercial loans increased by $22.4 million, mortgage warehouse loans increased by $84.6 million, residential mortgage loans decreased by $5.3 million, and consumer loans decreased by $1.3 million.

Dwight explained, "The number of retail households served by Horizon grew in 2011, and we believe this provides opportunities to grow the number of products and services utilized by these customers in the future. We were particularly encouraged by an increase in commercial lending, which we believe indicates our ability to build and win banking relationships with small businesses, which is a significant focus. Our focus on increasing our relationships with small businesses also contributed to an increase in our total direct deposit accounts at year-end compared with 2010."

The provision for loan losses was $838,000 for the fourth quarter of 2011, which was approximately $1.8 million less than the provision for the same period of the prior year. The 2011 fourth-quarter provision was $726,000 less than the 2011 third quarter provision. The lower provision for loan losses was primarily related to a decrease in non-performing loans in the fourth quarter.

The ratio of allowance for loan losses to total loans decreased to 1.89% as of December 31, 2011 from 2.11% as of December 31, 2010. The decrease in the ratio was due to an overall increase in total loan balances as the total balance for allowance for loan losses decreased from $19.1 million to $18.9 million for year-ends 2010 and 2011 respectively.

Non-performing loans totaled $20.1 million on December 31, 2011, down from $23.6 million on September 30, 2011, and from $21.4 million on December 31, 2010. As a percentage of total loans, non-performing loans were 2.02% on December 31, 2011, down from 2.52% on September 30, 2011, and 2.38% on December 31, 2010.

Dwight added, "The continued decline in our need to reserve for loan losses and a 44% decline in loans 30 to 89 days delinquent at year-end 2011 as compared with 2010 demonstrate Horizon's ability to effectively manage risk and a general improvement in borrowers' economic circumstances. Horizon's strategy of maintaining a broad and diversified loan portfolio has enabled us to minimize exposure to large credits."

The decrease of non-performing loans in the fourth quarter of 2011 from the prior quarter was primarily due to the payoff of a $4.3 million non-performing commercial loan secured by a hotel property during the fourth quarter. As a result, non-performing commercial loans declined from $12.1 million on September 30, 2011 to $8.0 million on December 31, 2011. Non-performing mortgage loans increased from $7.2 million on September 30, 2011 to $8.5 million on December 31, 2011. Non-performing consumer loans declined from $4.3 million on September 30, 2011 to $3.7 million on December 31, 2011.

Real estate and consumer non-performing loans in bankruptcy on December 31, 2011 totaled $1.5 million and $2.0 million, respectively. This compares to $1.5 million and $1.9 million respectively, on September 30, 2011. These loans are not considered troubled debt restructures (TDR's) while they are going through bankruptcy, a process that can take six to eighteen months. The Company's experience with loans in bankruptcy has demonstrated that some debtors continue to make payments during the bankruptcy process, many reaffirm their obligation to Horizon when they come out of bankruptcy, and some loans are discharged or restructured by the court. The Company has been accumulating historical data on the performance of loans going through the bankruptcy process and utilizes that data in the calculation of the allowance for loan losses. Recently, the trend has improved with fewer loans in the bankruptcy process. There were four non-performing loans, totaling $435,000, to commercial borrowers in bankruptcy on December 31, 2011.

TDR's are also included in the non-performing loans total. TDR's totaled $5.7 million on both December 31, 2011 and September 30, 2011. Of these, $3.8 million were mortgage loans, $1.1 million were commercial loans, and $883,000 were consumer loans. In addition, $3.5 million of TDR's were accruing interest as of December 31, 2011, compared to $4.0 million accruing interest at September 30, 2011.

Non-accrual loans, excluding non-accrual TDR's, were $14.4 million on December 31, 2011, down from $17.8 million on September 30, 2011 and $16.7 million on December 31, 2010. The decrease in the most recent quarter was primarily due to the aforementioned payoff of a commercial loan with a $4.3 million balance on September 30, 2011. Non-accrual commercial loans were the largest component at $6.9 million. Non-accrual commercial loans secured by retail income properties, the largest concentration, totaled $3.2 million. Loans 90 days delinquent but still on accrual totaled $37,000 on December 31, 2011, down from $97,000 on September 30, 2011, and $358,000 on December 31, 2010. Horizon's policy is to place loans over 90 days delinquent on non-accrual unless they are in the process of collection and a full recovery is expected.

Other Real Estate Owned (OREO) totaled $2.8 million on December 31, 2011, down from $3.6 million on September 30, 2011, but up from $2.7 million on December 31, 2010. During the quarter four properties with a book value of $222,000 as of September 30, 2011 were sold. Another four with a book value of $218,000 were transferred into OREO. Eighteen properties were sold with additional loss or written down by a total of $735,000 during the fourth quarter. On December 31, 2011, OREO was comprised of 26 properties. Of these, four totaling $1.1 million were commercial and 22 totaling $1.7 million were residential real estate. In addition, Horizon currently has offers to purchase on approximately $1.8 million of its $2.8 million in OREO properties.

Expense Management

Total non-interest expenses were $1.5 million higher in the fourth quarter of 2011 compared to the fourth quarter of 2010 and $3.6 million higher for the twelve months ended December 31, 2011 compared to the same period in the prior year. Salaries and employee benefits decreased $154,000 compared to the same quarter in 2010 and increased $785,000 compared to the same twelve-month period of 2010. This twelve-month increase is primarily the result of additional payroll expense from the consolidation of the American Trust & Savings Bank transaction that closed at the end of the second quarter of 2010; expansion into Portage, Michigan, and annual merit pay increases. In the fourth quarter of 2011 other losses included $598,000 in OREO write downs and $370,000 from write downs on two bank-owned properties from branches that were closed in 2010. Horizon currently has offers to purchase both branches.

Dwight concluded: "We are constantly striving to operate as efficiently as possible and to generate greater productivity from our people and physical resources. We reward performance, which is a key reason we believe Horizon Bank is perceived as a great place to work. In 2011, we fully integrated American Trust & Savings Bank, retaining more than 90% of its customers and we met our goal of a payback on our initial cash investment within a year of the acquisition."

"We believe that excellent opportunities remain for Horizon to grow, so we will continue to make investments that support revenue generation. We are well-positioned to pursue quality loans and deposits throughout our markets."

Horizon Bancorp is a locally owned, independent, commercial bank holding company serving Northern Indiana and Southwest Michigan. Horizon also offers mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached online at . Its common stock is traded on the NASDAQ Global Market under the symbol HBNC.

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon. For these statements, Horizon claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Horizon's reports filed with the Securities and Exchange Commission, including those described in "Item 1A Risk Factors" of Part I of Horizon's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and in Item 1A "Risk Factors" of Part II of Horizon's Form 10-Q for the quarter ended September 30, 2011. 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.

HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
		December 31				September 30				June 30				March 31				December 31
		2011				2011				2011				2011				2010
Balance sheet:
Total assets		$	1,547,162			$	1,490,810			$	1,413,737			$	1,382,390			$	1,400,919
Investment securities			438,145				441,334				460,449				445,988				391,939
Commercial loans			352,376				345,366				338,439				335,758				330,018
Mortgage warehouse loans			208,299				151,111				75,057				49,034				123,743
Residential mortgage loans			157,141				165,429				163,803				164,240				162,435
Consumer loans			265,377				263,934				261,971				260,525				266,681
Earning assets			1,447,818				1,391,864				1,316,452				1,274,171				1,307,313
Non-interest bearing deposit accounts			130,673				121,483				113,747				111,155				107,606
Interest bearing transaction accounts			538,083				551,597				567,456				531,250				508,953
Time deposits			341,109				316,669				339,073				359,004				368,939
Borrowings			370,111				336,095				230,141				224,358				260,741
Subordinated debentures			30,676				30,653				30,630				30,607				30,584
Common stockholders' equity			108,965				106,180				103,206				97,802				94,066
Total stockholders' equity			121,465				118,680				121,507				116,060				112,283
Income statement:		Three months ended
Net interest income		$	13,592			$	11,991			$	11,463			$	11,067			$	13,075
Provision for loan losses			838				1,564				1,332				1,548				2,664
Other income			4,999				6,538				4,448				4,314				4,961
Other expenses			13,089				12,313				10,487				10,258				11,576
Income tax expense			1,142				1,235				999				810				926
Net income			3,522				3,417				3,093				2,765				2,870
Preferred stock dividend			(63	)			(710	)			(277	)			(276	)			(349	)
Net income available to common shareholders		$	3,459			$	2,707			$	2,816			$	2,489			$	2,521
Per share data:
Basic earnings per share		$	0.70			$	0.55			$	0.57			$	0.51			$	0.51
Diluted earnings per share			0.68				0.53				0.55				0.49				0.50
Cash dividends declared per common share			0.12				0.12				0.11				0.11				0.11
Book value per common share			22.02				21.47				20.88				19.84				19.12
Tangible book value per common share			20.37				19.79				19.17				18.11				17.36
Market value - high			17.95				18.90				18.61				19.46				17.99
Market value - low		$	16.23			$	17.31			$	17.67			$	17.47			$	14.59
Weighted average shares outstanding - Basic			4,947,696				4,942,695				4,937,750				4,924,715				4,920,497
Weighted average shares outstanding - Diluted			5,050,701				5,064,380				5,065,454				5,074,763				5,043,177
Key ratios:
Return on average assets			0.93	%			0.96	%			0.89	%			0.80	%			0.79	%
Return on average common stockholders' equity			12.74				10.14				11.25				10.55				10.22
Net interest margin			3.95				3.76				3.67				3.57				4.01
Loan loss reserve to total loans			1.89				2.04				2.20				2.34				2.11
Non-performing loans to loans			2.02				2.52				2.44				2.71				2.38
Average equity to average assets			7.96				8.60				8.51				8.14				8.22
Bank only capital ratios:
Tier 1 capital to average assets			8.52				8.89				9.03				8.83				8.60
Tier 1 capital to risk weighted assets			11.89				12.33				13.62				13.56				12.70
Total capital to risk weighted assets			13.14				13.58				14.88				14.79				13.96
Loan data:
30 to 89 days delinquent		$	3,282			$	4,240			$	4,903			$	6,948			$	5,907
90 days and greater delinquent - accruing interest		$	37			$	97			$	55			$	57			$	358
Trouble debt restructures - accruing interest			3,540				4,042				4,227				4,014				4,119
Trouble debt restructures - non-accrual			2,198				1,673				1,912				682				278
Non-accrual loans			14,368				17,799				14,430				17,359				16,673
Total non-performing loans		$	20,143			$	23,611			$	20,624			$	22,112			$	21,428

HORIZON BANCORP
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
		December 31				December 31
		2011				2010
Balance sheet:
Total assets		$	1,547,162			$	1,400,919
Investment securities			438,145				391,939
Commercial loans			352,376				330,018
Mortgage warehouse loans			208,299				123,743
Residential mortgage loans			157,141				162,435
Consumer loans			265,377				266,681
Earning assets			1,447,818				1,307,313
Non-interest bearing deposit accounts			130,673				107,606
Interest bearing transaction accounts			538,083				508,953
Time deposits			341,109				368,939
Borrowings			370,111				260,741
Subordinated debentures			30,676				30,584
Common stockholders' equity			108,965				94,066
Total stockholders' equity			121,465				112,283
Income statement:		Twelve months ended
Net interest income		$	48,113			$	47,616
Provision for loan losses			5,282				11,554
Other income			20,299				19,906
Other expenses			46,147				42,571
Income tax expense			4,186				2,942
Net income			12,797				10,455
Preferred stock dividend			(1,325	)			(1,406	)
Net income available to common shareholders		$	11,472			$	9,049
Per share data:
Basic earnings per share		$	2.32			$	1.84
Diluted earnings per share			2.27				1.81
Cash dividends declared per common share			0.47				0.45
Book value per common share			22.02				19.12
Tangible book value per common share			20.37				17.36
Market value - high			19.46				17.99
Market value - low		$	16.23			$	10.96
Weighted average shares outstanding - Basic			4,938,172				4,915,604
Weighted average shares outstanding - Diluted			5,058,929				5,001,897
Key ratios:
Return on average assets			0.90	%			0.75	%
Return on average common stockholders' equity			11.20				9.56
Net interest margin			3.74				3.80
Loan loss reserve to total loans			1.89				2.11
Non-performing loans to loans			2.02				2.38
Average equity to average assets			8.30				8.47
Bank only capital ratios:
Tier 1 capital to average assets			8.52				8.60
Tier 1 capital to risk weighted assets			11.89				12.70
Total capital to risk weighted assets			13.14				13.96
Loan data:
30 to 89 days delinquent		$	3,282			$	5,907
90 days and greater delinquent - accruing interest		$	37			$	358
Trouble debt restructures - accruing interest			3,540				4,119
Trouble debt restructures - non-accrual			2,198				278
Non-accrual loans			14,368				16,673
Total non-performing loans		$	20,143			$	21,428

HORIZON BANCORP
Allocation of the Allowance for Loan and Lease Losses
(Dollars in Thousands, Unaudited)
		December 31			September 30			June 30			March 31			December 31
		2011			2011			2011			2011			2010
Commercial		$	8,017		$	8,151		$	7,078		$	8,609		$	7,554
Real estate			2,472			2,457			1,710			2,357			2,379
Mortgage warehousing			1,695			1,477			1,516			1,421			1,435
Consumer			6,698			7,025			8,282			6,703			7,696
Unallocated			-			-			-			-			-
Total		$	18,882		$	19,110		$	18,586		$	19,090		$	19,064
Net Charge-offs
(Dollars in Thousands, Unaudited)
		Three months ended
		December 31			September 30			June 30			March 31			December 31
		2011			2011			2011			2011			2010
Commercial		$	111		$	269		$	366		$	59		$	426
Real estate			118			86			659			82			128
Mortgage warehousing			-			-			-			-			-
Consumer			837			685			811			1,380			1,076
Total		$	1,066		$	1,040		$	1,836		$	1,521		$	1,630
Total Non-performing Loans
(Dollars in Thousands, Unaudited)
		December 31			September 30			June 30			March 31			December 31
		2011			2011			2011			2011			2010
Commercial		$	7,958		$	12,094		$	9,613		$	9,428		$	8,082
Real estate			8,496			7,201			6,983			8,744			9,326
Mortgage warehousing			-			-			-			-			-
Consumer			3,689			4,316			4,028			3,940			4,020
Total		$	20,143		$	23,611		$	20,624		$	22,112		$	21,428
Other Real Estate Owned and Repossessed Assets
(Dollars in Thousands, Unaudited)
		December 31			September 30			June 30			March 31			December 31
		2011			2011			2011			2011			2010
Commercial		$	1,092		$	1,087		$	1,414		$	1,443		$	1,622
Real estate			1,708			2,478			2,679			839			1,042
Mortgage warehousing			-			-			-			-			-
Consumer			49			90			16			8			-
Total		$	2,849		$	3,655		$	4,109		$	2,290		$	2,664

HORIZON BANCORP
Loan Portfolio Detail
						Non-			Percent			Specific				Percent of
		Loan				Performing			of			Reserves on Non -				Non-performing
December 31, 2011 (Unaudited)		Balance				Loans			Loans			Performing Loans				Loans
Owner occupied real estate		$	131,923			$	2,515		1.91	%		$	770			30.62	%
Non owner occupied real estate			142,363				4,122		2.90	%			1,239			30.06	%
Residential development			12,313				90		0.73	%			-			0.00	%
Commercial and industrial			65,777				1,231		1.87	%			428			34.77	%
Total commercial			352,376				7,958		2.26	%			2,437			30.62	%
Residential mortgage (1)			165,050				8,060		4.88	%			980			12.16	%
Residential construction			6,181				436		7.05	%			62			14.22	%
Mortgage warehouse			208,299				-		0.00	%			-			0.00	%
Total real estate			379,530				8,496		2.24	%			1,042			12.26	%
Direct installment			24,873				276		1.11	%			132			47.83	%
Indirect installment			127,695				956		0.75	%			8			0.84	%
Home equity			112,809				2,457		2.18	%			995			40.50	%
Total consumer			265,377				3,689		1.39	%			1,135			30.77	%
Total loans			997,283				20,143		2.02	%			4,614			22.91	%
Allowance for loan losses			(18,882	)
Net loans		$	978,401			$	20,143		2.06	%		$	4,614
(1) Residential mortgage total includes Held for Sale mortgage loans
						Non-			Percent			Specific				Percent of
		Loan				Performing			of			Reserves on Non -				Non-performing
December 31, 2010		Balance				Loans			Loans			Performing Loans				Loans
Owner occupied real estate		$	125,909			$	1,042		0.83	%		$	385			36.95	%
Non owner occupied real estate			137,073				6,329		4.62	%			665			10.51	%
Residential development			8,694				266		3.06	%			142			53.38	%
Commercial and industrial			58,342				445		0.76	%			265			59.55	%
Total commercial			330,018				8,082		2.45	%			1,457			18.03	%
Residential mortgage (1)			173,800				9,326		5.37	%			969			10.39	%
Residential construction			7,468				-		0.00	%			-			0.00	%
Mortgage warehouse			123,743				-		0.00	%			-			0.00	%
Total real estate			305,011				9,326		3.06	%			969			10.39	%
Direct installment			25,058				287		1.15	%			976			340.07	%
Indirect installment			128,129				1,431		1.12	%			-			0.00	%
Home equity			113,494				2,302		2.03	%			-			0.00	%
Total consumer			266,681				4,020		1.51	%			976			24.28	%
Total loans			901,710				21,428		2.38	%			3,402			15.88	%
Allowance for loan losses			(19,064	)
Net loans		$	882,646			$	21,428		2.43	%		$	3,402
(1) Residential mortgage total includes Held for Sale mortgage loans

HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
		Three Months Ended										Three Months Ended
		December 31, 2011										December 31, 2010
		Average							Average			Average							Average
		Balance				Interest			Rate			Balance				Interest			Rate
ASSETS
Interest-earning assets
Federal funds sold		$	2,084			$	1		0.19	%		$	5,039			$	3		0.24	%
Interest-earning deposits			2,591				1		0.15	%			7,114				3		0.17	%
Investment securities - taxable			340,407				2,371		2.76	%			293,537				2,205		2.98	%
Investment securities - non-taxable (1)			111,344				1,007		5.28	%			109,234				1,010		5.48	%
Loans receivable (2)			957,651				14,080		5.84	%			931,380				14,455		6.17	%
Total interest-earning assets (1)			1,414,077				17,460		5.04	%			1,346,304				17,676		5.36	%
Noninterest-earning assets
Cash and due from banks			16,065										16,052
Allowance for loan losses			(19,208	)									(18,342	)
Other assets			99,631										99,727
		$	1,510,565									$	1,443,741
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	882,213			$	1,836		0.83	%		$	901,884			$	2,473		1.09	%
Borrowings			331,769				1,574		1.88	%			264,173				1,669		2.51	%
Subordinated debentures			31,446				458		5.78	%			34,946				459		5.21	%
Total interest-bearing liabilities			1,245,428				3,868		1.23	%			1,201,003				4,601		1.52	%
Noninterest-bearing liabilities
Demand deposits			131,523										111,140
Accrued interest payable and
other liabilities			13,372										12,960
Shareholders' equity			120,242										118,638
		$	1,510,565									$	1,443,741
Net interest income/spread						$	13,592		3.80	%						$	13,075		3.84	%
Net interest income as a percent
of average interest earning assets (1)									3.95	%									4.01	%

(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.

HORIZON BANCORP AND SUBSIDIARIES
Average Balance Sheets
(Dollar Amounts in Thousands, Unaudited)
		Twelve Months Ended										Twelve Months Ended
		December 31, 2011										December 31, 2010
		Average							Average			Average							Average
		Balance				Interest			Rate			Balance				Interest			Rate
ASSETS
Interest-earning assets
Federal funds sold		$	20,307			$	49		0.24	%		$	23,917			$	53		0.22	%
Interest-earning deposits			7,262				2		0.03	%			8,684				17		0.20	%
Investment securities - taxable			332,551				10,150		3.05	%			282,507				9,535		3.38	%
Investment securities - non-taxable (1)			111,934				4,073		5.20	%			108,809				4,148		5.45	%
Loans receivable (2)			862,498				50,340		5.84	%			878,181				54,738		6.24	%
Total interest-earning assets (1)			1,334,552				64,614		4.98	%			1,302,098				68,491		5.40	%
Noninterest-earning assets
Cash and due from banks			15,834										15,341
Allowance for loan losses			(19,047	)									(17,058	)
Other assets			98,069										93,671
		$	1,429,408									$	1,394,052
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits		$	887,687			$	8,346		0.94	%		$	871,526			$	10,711		1.23	%
Borrowings			261,255				6,334		2.42	%			264,293				8,476		3.21	%
Subordinated debentures			31,446				1,821		5.79	%			32,005				1,688		5.27	%
Total interest-bearing liabilities			1,180,388				16,501		1.40	%			1,167,824				20,875		1.79	%
Noninterest-bearing liabilities
Demand deposits			119,504										97,665
Accrued interest payable and
other liabilities			10,841										10,466
Shareholders' equity			118,675										118,097
		$	1,429,408									$	1,394,052
Net interest income/spread						$	48,113		3.58	%						$	47,616		3.61	%
Net interest income as a percent
of average interest earning assets (1)									3.74	%									3.80	%

(3)		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.
(4)		Includes fees on loans. The inclusion of loan fees does not have a material effect on the average interest rate.

HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
		December 31			December 31
		2011			2010
		(Unaudited)
Assets
Cash and due from banks		$	20,447		$	15,683
Investment securities, available for sale			431,045			382,344
Investment securities, held to maturity			7,100			9,595
Loans held for sale			14,090			18,833
Loans, net of allowance for loan losses of $18,882 and $19,064			964,311			863,813
Premises and equipment			34,665			34,194
Federal Reserve and Federal Home Loan Bank stock			12,390			13,664
Goodwill			5,910			5,910
Other intangible assets			2,292			2,741
Interest receivable			6,671			6,519
Cash value life insurance			30,190			27,195
Other assets			18,051			20,428
Total assets		$	1,547,162		$	1,400,919
Liabilities
Deposits
Non-interest bearing		$	130,673		$	107,606
Interest bearing			879,192			877,892
Total deposits			1,009,865			985,498
Borrowings			370,111			260,741
Subordinated debentures			30,676			30,584
Interest payable			596			781
Other liabilities			14,449			11,032
Total liabilities			1,425,697			1,288,636
Commitments and contingent liabilities
Stockholders' Equity
Preferred stock, $.01 par value, $1,000 liquidation value
Authorized, 1,000,000 Series A shares
Issued 0 and 18,750 shares			-			18,217
Preferred stock, $.01 par value, $1,000 liquidation value
Authorized, 1,000,000 Series B shares
Issued 12,500 and 0 shares			12,500			-
Common stock, $.1481 stated value
Authorized, 22,500,000 shares
Issued, 4,967,720 and 4,950,989 shares			1,126			1,122
Additional paid-in capital			10,610			10,356
Retained earnings			89,387			80,240
Accumulated other comprehensive income			7,842			2,348
Total stockholders' equity			121,465			112,283
Total liabilities and stockholders' equity		$	1,547,162		$	1,400,919

HORIZON BANCORP AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Dollar Amounts in Thousands, Except Per Share Data)
		Three Months Ended December 31								Twelve Months Ended December 31
		2011				2010				2011				2010
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Interest Income
Loans receivable		$	14,080			$	14,455			$	50,340			$	54,738
Investment securities
Taxable			2,373				2,211				10,201				9,605
Tax exempt			1,007				1,010				4,073				4,148
Total interest income			17,460				17,676				64,614				68,491
Interest Expense
Deposits			1,836				2,473				8,346				10,711
Borrowed funds			1,574				1,669				6,334				8,476
Subordinated debentures			458				459				1,821				1,688
Total interest expense			3,868				4,601				16,501				20,875
Net Interest Income			13,592				13,075				48,113				47,616
Provision for loan losses			838				2,664				5,282				11,554
Net Interest Income after Provision for Loan Losses			12,754				10,411				42,831				36,062
Other Income
Service charges on deposit accounts			742				857				3,164				3,607
Wire transfer fees			207				220				619				756
Interchange fees			689				584				2,594				2,247
Fiduciary activities			1,072				1,043				3,983				3,979
Gain on sale of securities			23				66				1,777				533
Gain on sale of mortgage loans			2,463				2,009				6,449				7,538
Mortgage servicing income net of impairment			(424	)			(202	)			267				(565	)
Increase in cash surrender value of bank owned life insurance			230				204				891				803
Death benefit on officer life insurance			-				-				453				-
Other income			(3	)			180				102				1,008
Total other income			4,999				4,961				20,299				19,906
Other Expenses
Salaries and employee benefits			5,963				6,117				22,875				22,090
Net occupancy expenses			1,091				1,118				4,267				4,195
Data processing			556				451				2,006				1,925
Professional fees			458				283				1,497				1,701
Outside services and consultants			520				531				1,741				1,694
Loan expense			1,310				832				3,586				3,208
FDIC insurance expense			276				416				1,220				1,635
Other losses			1,018				324				2,383				504
Other expenses			1,897				1,504				6,572				5,619
Total other expenses			13,089				11,576				46,147				42,571
Income Before Income Tax			4,664				3,796				16,983				13,397
Income tax expense			1,142				926				4,186				2,942
Net Income			3,522				2,870				12,797				10,455
Preferred stock dividend and discount accretion			(63	)			(349	)			(1,325	)			(1,406	)
Net Income Available to Common Shareholders		$	3,459			$	2,521			$	11,472			$	9,049
Basic Earnings Per Share		$	0.70			$	0.51			$	2.32			$	1.84
Diluted Earnings Per Share			0.68				0.50				2.27				1.81

Horizon Bancorp
Mark E. Secor
Chief Financial Officer
[phone]
Fax: [phone]

Source: Horizon Bancorp