Exhibit 99.1




Contact: Mark E. Secor
Chief Financial Officer
Phone: (219) 873-2611
Fax: (219) 874-9280
Date: October 23, 2019

FOR IMMEDIATE RELEASE

Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Michigan City, Indiana (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”) today announced its unaudited financial results for the three-month and nine-month periods ended September 30, 2019. All share data has been adjusted to reflect Horizon’s three-for-two stock split effective June 15, 2018.

SUMMARY:
Net income for the quarter ended September 30, 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $13.1 million, or $0.34 diluted earnings per share, for the quarter ended September 30, 2018. This represents the highest quarterly net income and diluted earnings per share in the Company’s history.
Core net income for the quarter ended September 30, 2019 increased 54.4% to $20.3 million, or $0.45 diluted earnings per share, compared to $13.2 million, or $0.34 diluted earnings per share, for the same period in 2018. This represents the highest quarterly core net income and core diluted earnings per share in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income.)
Net income for the first nine months of 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date net income and diluted earnings per share as of September 30th in the Company’s history.
Core net income for the first nine months of 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the first nine months of 2018. This represents the highest year-to-date core net income and core diluted earnings per share as of September 30th in the Company’s history. (See the “Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share” table on page 4 for a description of the elements of core net income.)
Net interest margin for the quarter ended September 30, 2019 was 3.82% compared to 3.73% and 3.67% for the quarters ended June 30, 2019 and September 30, 2018, respectively. The increase in net interest margin from the second quarter of 2019 and third quarter of 2018 reflects an increase in the yield of interest-earning assets as loans continue to reprice upwards and a decrease in cost of borrowings, along with a stabilization in deposit pricing.
Core net interest margin for the quarter ended September 30, 2019 was 3.67% compared to 3.61% and 3.59% for the quarters ended June 30, 2019 and September 30, 2018, respectively. (See the “Non-GAAP Reconciliation of Net Interest Margin” table on page 5 for a description of the elements of core net interest margin.)
Return on average assets was 1.60% for the third quarter of 2019 compared to 1.26% for the third quarter of 2018. Return on average assets was 1.33% for both the first nine months of 2019 and 2018.


Pg. 2 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings

Core return on average assets for the third quarter of 2019 was 1.58% compared to 1.27% for the third quarter of 2018. Core return on average assets was 1.44% for the first nine months of 2019 compared to 1.32% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)
Return on average equity was 12.72% for the third quarter of 2019 compared to 10.87% for the third quarter of 2018. Return on average equity was 10.88% for the first nine months of 2019 compared to 11.43% for the first nine months of 2018.
Core return on average equity for the third quarter of 2019 was 12.59% compared to 10.95% for the third quarter of 2018. Core return on average equity was 11.83% for the first nine months of 2019 compared to 11.41% for the first nine months of 2018. (See the “Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity” table on page 11 for the description of core return on average assets.)
Horizon’s tangible book value per share increased to $10.31 at September 30, 2019 compared to $9.91 and $9.04 at June 30, 2019 and September 30, 2018, respectively. This represents the highest tangible book value per share in the Company’s history.
On July 16, 2019, Horizon’s Board of Directors authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of September 30, 2019, Horizon had repurchased a total of 99,407 shares at an average price per share of $16.04.
Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019.
Craig Dwight, Chairman and CEO of Horizon, commented:  “Horizon’s 2019 third quarter and year-to-date performance resulted in record earnings and demonstrate that our long range strategic plan to improve efficiency through an increase in mass and scale is working. Third quarter 2019 earnings increased to $20.5 million, or $0.46 diluted earnings per share, when compared to prior year period earnings of $13.1 million, or $0.34 diluted earnings per share. Year-to-date earnings increased to $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the prior year period.”

Dwight added, “Horizon’s growth story continues with total assets now reaching approximately $5.2 billion at September 30, 2019. In addition to the loans acquired from our acquisition of Salin Bank and Trust Company during the first quarter of 2019, which totaled approximately $568.9 million, we continue to experience year-to-date loan growth of $118.3 million from the markets of Fort Wayne, Grand Rapids, Indianapolis and Kalamazoo.”

Dwight concluded, “Horizon continues to maximize operational leverage through an increase in mass and scale as evident by the decrease in our adjusted efficiency ratio. Horizon’s adjusted efficiency ratio, excluding merger expenses, loss on sale of investment securities and death benefit on bank owned life insurance decreased to 54.89% for the third quarter of 2019 compared to 57.62% for the second quarter of 2019 and 60.17% for the third quarter of 2018. In addition, annualized non-interest expense to average assets, excluding merger expenses, fell to 2.34% for the third quarter of 2019 compared to 2.39% for the second quarter of 2019 and 2.48% for the third quarter of 2018. Our team continues to leverage new technologies and develop operational efficiencies. In addition, Horizon consolidated its two Midland, Michigan full-service branches into one location on September 6, 2019 in our continued efforts to improve branch efficiencies.”



Pg. 3 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Income Statement Highlights

Net income for the third quarter of 2019 was $20.5 million, or $0.46 diluted earnings per share, compared to $16.6 million, or $0.37 diluted earnings per share, for the second quarter of 2019 and $13.1 million, or $0.34 diluted earnings per share, for the third quarter of 2018. Excluding acquisition-related expenses, loss on sale of investment securities and death benefit on bank owned life insurance (“core net income”), core net income for the third quarter of 2019 was $20.3 million, or $0.46 diluted earnings per share, compared to $17.6 million, or $0.39 diluted earnings per share, for the second quarter of 2019 and $13.2 million, or $0.34 diluted earnings per share, for the third quarter of 2018.

The increase in net income and diluted earnings per share from the second quarter of 2019 to the third quarter of 2019 reflects increases in net interest income of $1.9 million and non-interest income of $616,000, in addition to decreases in non-interest expense of $1.5 million and provision for loan losses of $520,000, offset by an increase in income tax expense of $699,000.

The increase in net income from the third quarter of 2018 when compared to the same period of 2019 reflects increases in net interest income of $9.7 million and non-interest income of $2.8 million, in addition to a decrease in provision for loan losses of $800,000, offset by increases in non-interest expense of $4.4 million and income tax expense of $1.4 million.

Net income for the nine months ended September 30, 2019 was $48.0 million, or $1.11 diluted earnings per share, compared to $40.0 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. Core net income for the nine months ended September 30, 2019 was $52.1 million, or $1.21 diluted earnings per share, compared to $39.9 million, or $1.04 diluted earnings per share, for the nine months ended September 30, 2018. This represents a 16.3% increase in core diluted earnings per share for the first nine months of 2019 compared to the same period in 2018.

The increase in net income when comparing the first nine months of 2019 to the prior year period reflects increases in net interest income of $18.5 million and non-interest income of $5.2 million, in addition to a decrease in provision for loan losses of $742,000, offset by increases in non-interest expense of $15.0 million and income tax expense of $1.5 million.





Pg. 4 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Non-GAAP Reconciliation of Net Income and Diluted Earnings per Share
 
(Dollars in Thousands, Except per Share Data, Unaudited)

 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30
   
June 30
   
September 30
   
September 30
   
September 30
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
Non-GAAP Reconciliation of Net Income
                             
Net income as reported
 
$
20,537
   
$
16,642
   
$
13,065
   
$
47,995
   
$
39,984
 
Merger expenses
   
-
     
1,532
     
-
     
5,650
     
-
 
Tax effect
   
-
     
(295
)
   
-
     
(987
)
   
-
 
Net income excluding merger expenses
   
20,537
     
17,879
     
13,065
     
52,658
     
39,984
 
                                         
Loss on sale of investment securities
   
-
     
100
     
122
     
85
     
111
 
Tax effect
   
-
     
(21
)
   
(25
)
   
(18
)
   
(23
)
Net income excluding loss on sale of investment securities
   
20,537
     
17,958
     
13,162
     
52,725
     
40,072
 
                                         
Death benefit on bank owned life insurance ("BOLI")
   
(213
)
   
(367
)
   
-
     
(580
)
   
(154
)
Net income excluding death benefit on BOLI
   
20,324
     
17,591
     
13,162
     
52,145
     
39,918
 
                                         
Core Net Income
 
$
20,324
   
$
17,591
   
$
13,162
   
$
52,145
   
$
39,918
 
                                         
                                         
Non-GAAP Reconciliation of Diluted Earnings per Share
                                       
Diluted earnings per share ("EPS") as reported
 
$
0.46
   
$
0.37
   
$
0.34
   
$
1.11
   
$
1.04
 
Merger expenses
   
-
     
0.03
     
-
     
0.13
     
-
 
Tax effect
   
-
     
-
     
-
     
(0.02
)
   
-
 
Diluted EPS excluding merger expenses
   
0.46
     
0.40
     
0.34
     
1.22
     
1.04
 
                                         
Loss on sale of investment securities
   
-
     
-
     
-
     
-
     
-
 
Tax effect
   
-
     
-
     
-
     
-
     
-
 
Diluted EPS excluding loss on sale of investment securities
   
0.46
     
0.40
     
0.34
     
1.22
     
1.04
 
                                         
Death benefit on BOLI
   
(0.01
)
   
(0.01
)
   
-
     
(0.01
)
   
-
 
Diluted EPS excluding death benefit on BOLI
   
0.45
     
0.39
     
0.34
     
1.21
     
1.04
 
                                         
Core Diluted EPS
 
$
0.45
   
$
0.39
   
$
0.34
   
$
1.21
   
$
1.04
 


Horizon’s net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.73% for the second quarter of 2019. The increase in net interest margin reflects an increase in the yield on interest-earning assets of six basis points as loans continued to reprice upwards along with an increase in commercial loan fees of $811,000 when compared to the second quarter of 2019. The cost of interest-bearing liabilities decreased by three basis points primarily from a decrease in the cost of borrowings. In addition, deposit pricing is reducing within the markets we serve in alignment with the recent decline in general market short-term interest rates.

Net interest margin increased to 3.82% for the third quarter of 2019 when compared to 3.67% for the third quarter of 2018. The increase in net interest margin was due to an increase in yield on interest-earning assets of 29 basis points, offset by an increase in the cost on interest-bearing liabilities of 22 basis points. The increase in the yield of interest-earning assets was primarily due to the increase in the yields on loans receivable of 34 basis points and non-taxable investment securities of 25 basis points. The increase in the yields on loans receivable was the result of loans repricing upwards along with an increase in commercial loan fees of $1.2 million when comparing the third quarter of 2019 to the third quarter of 2018. The cost of interest-bearing deposits increased by 33 basis points and was partially offset by a decrease in the cost on borrowings of 12 basis points.

Net interest margin decreased to 3.72% during the first nine months of 2019 when compared to 3.74% for the first nine months of 2018. This decrease reflects an increase in the cost of interest-bearing liabilities of 40 basis points, offset by an increase in the yield of interest-earning assets of 26 basis points. The increase in the cost of interest-bearing liabilities was due to an increase in the cost of interest-bearing deposits of 48 basis points and borrowings of 28 basis points. The increase in the yield of interest-earning assets was due to increases in the yields on loans receivable of 26 basis points, non-taxable investment securities of 37 basis points and taxable investment securities of 15 basis points.



Pg. 5 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Net interest margin, excluding acquisition-related purchase accounting adjustments (“core net interest margin”), was 3.67% for the third quarter of 2019 compared to 3.61% for the prior quarter and 3.59% for the third quarter of 2018. Interest income from acquisition-related purchase accounting adjustments was $1.7 million, $1.3 million and $789,000 for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. The increase in the core net interest margin during the third quarter of 2019 was due to a decrease of the cost on borrowings and an increase in the yield on earning assets from higher mortgage warehouse lending balances, loans continuing to reprice higher and the addition of acquired Salin loans.

Non-GAAP Reconciliation of Net Interest Margin
 
(Dollars in Thousands, Unaudited)

 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30
   
June 30
   
September 30
   
September 30
   
September 30
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
Non-GAAP Reconciliation of Net Interest Margin
                             
Net interest income as reported
 
$
43,463
   
$
41,529
   
$
33,772
   
$
119,272
   
$
100,733
 
                                         
Average interest-earning assets
   
4,623,985
     
4,566,674
     
3,717,139
     
4,376,841
     
3,610,277
 
                                         
Net interest income as a percentage of average interest-earning assets ("Net Interest Margin")
   
3.82
%
   
3.73
%
   
3.67
%
   
3.72
%
   
3.74
%
                                         
Acquisition-related purchase accounting adjustments ("PAUs")
 
$
(1,739
)
 
$
(1,299
)
 
$
(789
)
 
$
(4,548
)
 
$
(4,460
)
                                         
Core net interest income
 
$
41,724
   
$
40,230
   
$
32,983
   
$
114,724
   
$
96,273
 
                                         
Core net interest margin
   
3.67
%
   
3.61
%
   
3.59
%
   
3.58
%
   
3.58
%


Lending Activity

Total loans increased $653.3 million from $3.014 billion as of December 31, 2018 to $3.668 billion as of September 30, 2019. Excluding acquired loans, total loans increased $84.4 million during the first nine months of 2019 as consumer loans increased by $33.7 million and mortgage warehouse loans increased by $81.5 million, offset by a decrease in commercial loans of $28.2 million and residential mortgage loans of $2.7 million.

Loan Growth by Type, Excluding Acquired Loans
 
(Dollars in Thousands, Unaudited)
 
                               
   
September 30
   
December 31
   
Amount
Change
   
Acquired
Loans
   
Amount
Change
   
Percent
Change
 
   
2019
   
2018
 
Commercial
 
$
2,046,165
   
$
1,721,590
   
$
324,575
   
$
(352,798
)
 
$
(28,223
)
   
-1.6
%
Residential mortgage
   
796,497
     
668,141
     
128,356
     
(131,008
)
   
(2,652
)
   
-0.4
%
Consumer
   
668,332
     
549,481
     
118,851
     
(85,112
)
   
33,739
     
6.1
%
Subtotal
   
3,510,994
     
2,939,212
     
571,782
     
(568,918
)
   
2,864
     
0.1
%
Held for sale loans
   
1,060
     
1,038
     
22
     
-
     
22
     
2.1
%
Mortgage warehouse loans
   
155,631
     
74,120
     
81,511
     
-
     
81,511
     
110.0
%
Total loans
 
$
3,667,685
   
$
3,014,370
   
$
653,315
   
$
(568,918
)
 
$
84,397
     
2.8
%






Pg. 6 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


During the first nine months of 2019, Horizon Bank (the “Bank”) originated approximately $299.5 million of commercial loans, which is a 17% increase compared to the same period in 2018; however, only 56.5%, or $169.1 million, of these loan originations had been funded as of September 30, 2019. These originations were offset by commercial loan payoffs totaling approximately $226.0 million during the first nine months of 2019, which is a 69% increase in payoffs compared to the same period in 2018, as there was an increase in clients moving projects that had reached stabilization into the long-term, fixed rate conduit financing market and properties being sold. During the first nine months of 2018, the Bank originated approximately $256.5 million of commercial loans; however, only 56.2%, or $144.1 million, of these loan originations had been funded as of September 30, 2018. These originations were offset by commercial loan payoffs totaling approximately $134.1 million during the first nine months of 2018.

Residential mortgage lending activity for the three months ended September 30, 2019 generated $2.7 million in income from the gain on sale of mortgage loans, an increase of $624,000 from the second quarter of 2019 and $863,000 from the third quarter of 2018. Total origination volume for the third quarter of 2019, including loans placed into portfolio, totaled $121.1 million, representing an increase of 8.7% from the second quarter of 2019 and an increase of 20.4% from the third quarter of 2018. Total origination volume for the third quarter of 2019 of loans sold to the secondary market totaled $95.0 million, representing an increase of 56.7% from the second quarter of 2019 and an increase of 60.3% from the third quarter of 2018.

Revenue derived from Horizon’s residential mortgage and warehouse lending activities was 5.8% of Horizon’s total revenue for the nine months ended September 30, 2019, which is comparable to the same prior year period.

The provision for loan losses totaled $376,000 for the third quarter of 2019 compared to $896,000 for the second quarter of 2019 and $1.2 million for the third quarter of 2018.

The provision for loan losses totaled $1.6 million for the first nine months of 2019 compared to $2.4 million for the first nine months of 2018.

The ratio of the allowance for loan losses to total loans decreased to 0.49% as of September 30, 2019 from 0.59% at December 31, 2018. The decrease in the ratio of the allowance for loan losses to total loans is primarily due to increased loan balances from the Salin acquisition. The ratio of the allowance for loan losses to total loans, excluding loans with credit-related purchase accounting adjustments, was 0.65% as of September 30, 2019 compared to 0.72% as of December 31, 2018. Loan loss reserves plus credit-related loan discounts on acquired loans as a percentage of total loans was 1.07% as of September 30, 2019 compared to 0.98% as of December 31, 2018.



Pg. 7 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Non-GAAP Allowance for Loan and Lease Loss Detail
 
As of September 30, 2019
 
(Dollars in Thousands, Unaudited)
 
                                                 
   
Pre-discount
Loan Balance
   
Allowance
for Loan Losses
(ALLL)
   
Loan
Discount
   
ALLL
+
Loan Discount
   
Loans, net
   
ALLL/
Pre-discount
Loan Balance
   
Loan Discount/
Pre-discount
Loan Balance
   
ALLL+Loan Discount/
Pre-discount
Loan Balance
 
Horizon Legacy
 
$
2,779,961
   
$
17,946
     
N/A
   
$
17,946
   
$
2,762,015
     
0.65
%
   
0.00
%
   
0.65
%
Heartland
   
5,244
     
-
     
589
     
589
     
4,655
     
0.00
%
   
11.23
%
   
11.23
%
Summit
   
16,191
     
-
     
987
     
987
     
15,204
     
0.00
%
   
6.10
%
   
6.10
%
Peoples
   
71,941
     
-
     
1,669
     
1,669
     
70,272
     
0.00
%
   
2.32
%
   
2.32
%
Kosciusko
   
30,580
     
-
     
528
     
528
     
30,052
     
0.00
%
   
1.73
%
   
1.73
%
LaPorte
   
70,442
     
10
     
2,461
     
2,471
     
67,971
     
0.01
%
   
3.49
%
   
3.50
%
CNB
   
3,498
     
-
     
88
     
88
     
3,410
     
0.00
%
   
2.52
%
   
2.52
%
Lafayette
   
63,805
     
-
     
519
     
519
     
63,286
     
0.00
%
   
0.81
%
   
0.81
%
Wolverine
   
136,829
     
-
     
729
     
729
     
136,100
     
0.00
%
   
0.53
%
   
0.53
%
Salin
   
489,194
     
-
     
13,797
     
13,797
     
475,397
     
0.00
%
   
2.82
%
   
2.82
%
Total
 
$
3,667,685
   
$
17,956
   
$
21,367
   
$
39,323
   
$
3,628,362
     
0.49
%
   
0.58
%
   
1.07
%


As of September 30, 2019, non-performing loans totaled $19.2 million, which reflects a two basis point increase in non-performing loans to total loans, or a $4.0 million increase from $15.2 million in non-performing loans as of December 31, 2018. Compared to December 31, 2018, non-performing commercial loans increased by $1.3 million, non-performing real estate loans increased by $2.2 million and non-performing consumer loans increased by $485,000. Other real estate owned and repossessed assets totaled $4.0 million as of September 30, 2019 which is an increase of $2.0 million from December 31, 2018. The majority of this increase was due to other real estate owned properties acquired in the Salin transaction, including the closed branches, totaling $1.7 million.

As of September 30, 2019, substandard loans totaled $62.1 million, which is an increase of $14.4 million from June 30, 2019. This increase in substandard loans was primarily due to four unrelated relationships, each from a different industry, being downgraded during the quarter. We do not believe this increase to be an indication of the overall quality of our loan portfolio as evident by our steady non-performing loans to total loans ratio of 0.52% as of September 30, 2019 and other non-performing and substandard relationships showing improvement.

Expense Management

Total non-interest expense was $1.5 million lower in the third quarter of 2019 when compared to the second quarter of 2019. FDIC insurance, other expense, professional fees, and outside services and consultants decreased by $638,000, $572,000, $263,000 and $103,000, respectively. Offsetting these decreases was an increase in loan expense of $150,000. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense held steady at $30.1 million when comparing the third quarter of 2019 to the second quarter of 2019.



Pg. 8 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


   
Three Months Ended
             
   
September 30
   
June 30
             
   
2019
   
2019
   
Adjusted
 
Non-interest Expense
 
Actual
   
Merger
Expenses
   
Adjusted
   
Actual
   
Merger
Expenses
   
Adjusted
   
Amount
Change
   
Percent
Change
 
Salaries and employee benefits
 
$
16,948
   
$
-
   
$
16,948
   
$
16,951
   
$
(482
)
 
$
16,469
   
$
479
     
2.9
%
Net occupancy expenses
   
3,131
     
-
     
3,131
     
3,148
     
(75
)
   
3,073
     
58
     
1.9
%
Data processing
   
2,140
     
-
     
2,140
     
2,139
     
(68
)
   
2,071
     
69
     
3.3
%
Professional fees
   
335
     
-
     
335
     
598
     
(153
)
   
445
     
(110
)
   
-24.7
%
Outside services and consultants
   
1,552
     
-
     
1,552
     
1,655
     
(176
)
   
1,479
     
73
     
4.9
%
Loan expense
   
2,198
     
-
     
2,198
     
2,048
     
(2
)
   
2,046
     
152
     
7.4
%
FDIC deposit insurance
   
(273
)
   
-
     
(273
)
   
365
     
-
     
365
     
(638
)
   
-174.8
%
Other losses
   
90
     
-
     
90
     
169
     
(69
)
   
100
     
(10
)
   
-10.0
%
Other expenses
   
3,939
     
-
     
3,939
     
4,511
     
(507
)
   
4,004
     
(65
)
   
-1.6
%
Total non-interest expense
 
$
30,060
   
$
-
   
$
30,060
   
$
31,584
   
$
(1,532
)
 
$
30,052
   
$
8
     
0.0
%
Annualized Non-interest Exp. to Avg. Assets
   
2.34
%
           
2.34
%
   
2.51
%
           
2.39
%
               


Total non-interest expense was $4.4 million higher during the third quarter of 2019 compared to the same period of 2018. Salaries and employee benefits, other expense, net occupancy expense, loan expense, data processing and outside services and consultants increased $2.6 million, $836,000, $636,000, $476,000, $381,000 and $348,000, respectively. These increases were offset by a decrease of $669,000 in FDIC insurance and $102,000 in professional fees. FDIC insurance decreased due to assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded.

   
Three Months Ended
             
   
September 30
   
September 30
             
   
2019
   
2018
   
Adjusted
 
Non-interest Expense
 
Actual
   
Merger
Expenses
   
Adjusted
   
Actual
   
Merger
Expenses
   
Adjusted
   
Amount
Change
   
Percent
Change
 
Salaries and employee benefits
 
$
16,948
   
$
-
   
$
16,948
   
$
14,343
   
$
-
   
$
14,343
   
$
2,605
     
18.2
%
Net occupancy expenses
   
3,131
     
-
     
3,131
     
2,495
     
-
     
2,495
     
636
     
25.5
%
Data processing
   
2,140
     
-
     
2,140
     
1,759
     
-
     
1,759
     
381
     
21.7
%
Professional fees
   
335
     
-
     
335
     
437
     
-
     
437
     
(102
)
   
-23.3
%
Outside services and consultants
   
1,552
     
-
     
1,552
     
1,204
     
-
     
1,204
     
348
     
28.9
%
Loan expense
   
2,198
     
-
     
2,198
     
1,722
     
-
     
1,722
     
476
     
27.6
%
FDIC deposit insurance
   
(273
)
   
-
     
(273
)
   
396
     
-
     
396
     
(669
)
   
-168.9
%
Other losses
   
90
     
-
     
90
     
161
     
-
     
161
     
(71
)
   
-44.1
%
Other expenses
   
3,939
     
-
     
3,939
     
3,103
     
-
     
3,103
     
836
     
26.9
%
Total non-interest expense
 
$
30,060
   
$
-
   
$
30,060
   
$
25,620
   
$
-
   
$
25,620
   
$
4,440
     
17.3
%
Annualized Non-interest Exp. to Avg. Assets
   
2.34
%
           
2.34
%
   
2.48
%
           
2.48
%
               


Total non-interest expense was $15.0 million higher during the first nine months of 2019 when compared to the first nine months of 2018. Salaries and employee benefits, other expenses, outside services and consultants, loan expense, data processing and net occupancy increased $5.8 million, $3.1 million, $3.0 million, $1.7 million, $1.2 million and $1.1 million, respectively. Offsetting these increases was a decrease in FDIC insurance of $799,000 and other losses of $213,000. FDIC insurance decreased due to the assessment credits the Bank received during the third quarter of 2019 as the FDIC reserve is currently overfunded. Excluding merger expenses, total non-interest expense increased $9.3 million during the first nine months of 2019 when compared to the same period of 2018.


Pg. 9 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


   
Nine Months Ended
             
   
September 30
   
September 30
   
Adjusted
 
   
2019
   
2018
   
Amount
Change
   
Percent
Change
 
Non-interest Expense
 
Actual
   
Merger
Expenses
   
Adjusted
   
Actual
   
Merger
Expenses
   
Adjusted
 
Salaries and employee benefits
 
$
48,365
   
$
(484
)
 
$
47,881
   
$
42,525
   
$
-
   
$
42,525
   
$
5,356
     
12.6
%
Net occupancy expenses
   
9,051
     
(75
)
   
8,976
     
7,981
     
-
     
7,981
     
995
     
12.5
%
Data processing
   
6,245
     
(360
)
   
5,885
     
5,062
     
-
     
5,062
     
823
     
16.3
%
Professional fees
   
1,426
     
(392
)
   
1,034
     
1,314
     
-
     
1,314
     
(280
)
   
-21.3
%
Outside services and consultants
   
6,737
     
(2,466
)
   
4,271
     
3,735
     
-
     
3,735
     
536
     
14.4
%
Loan expense
   
6,195
     
(2
)
   
6,193
     
4,504
     
-
     
4,504
     
1,689
     
37.5
%
FDIC deposit insurance
   
252
     
-
     
252
     
1,051
     
-
     
1,051
     
(799
)
   
-76.0
%
Other losses
   
363
     
(71
)
   
292
     
576
     
-
     
576
     
(284
)
   
-49.3
%
Other expenses
   
12,748
     
(1,800
)
   
10,948
     
9,651
     
-
     
9,651
     
1,297
     
13.4
%
Total non-interest expense
 
$
91,382
   
$
(5,650
)
 
$
85,732
   
$
76,399
   
$
-
   
$
76,399
   
$
9,333
     
12.2
%
Annualized Non-interest Exp. to Avg. Assets
   
2.53
%
           
2.38
%
   
2.54
%
           
2.54
%
               


Annualized non-interest expense as a percent of average assets were 2.34%, 2.51% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets continue to decline and were 2.34%, 2.39% and 2.48% for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

Annualized non-interest expense as a percent of average assets were 2.53% and 2.54% for the first nine months of 2019 and 2018, respectively. Annualized non-interest expense, excluding merger expenses, as a percent of average assets were 2.38% and 2.54% for the first nine months of 2019 and 2018, respectively. Horizon’s strategy to build mass and scale continues to prove effective.

Income tax expense totaled $4.0 million for the third quarter of 2019, an increase of $699,000 when compared to the second quarter of 2019 and an increase of $1.4 million when compared to the third quarter of 2018. The increase in income tax expense from the second quarter of 2019 and the third quarter of 2018 was primarily due to increases in income before income taxes of $4.6 million and $8.9 million, respectively, when compared to the third quarter of 2019.

Income tax expense totaled $9.4 million for the first nine months of 2019, an increase of $1.5 million when compared to the first nine months of 2018. The increase in income tax expense from the first nine months of 2018 was primarily due to an increase in income before income taxes of $9.5 million when compared to the same period of 2019.


Pg. 10 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP.  Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, net interest margin, total loans and loan growth, the allowance for loan and lease losses, tangible stockholders’ equity, tangible book value per share, the return on average assets and the return on average equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them, to show the impact of such events as acquisition-related purchase accounting adjustments, among others we have identified in our reconciliations. Horizon believes that these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non-core items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure.  See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP figures identified herein and their most comparable GAAP measures.

Non-GAAP Reconciliation of Tangible Stockholders' Equity and Tangible Book Value per Share
 
(Dollars in Thousands Except per Share Data, Unaudited)
 
                               
   
September 30
   
June 30
   
March 31
   
December 31
   
September 30
 
   
2019
   
2019
   
2019
   
2018
   
2018
 
Total stockholders' equity
 
$
642,711
   
$
626,461
   
$
609,468
   
$
491,992
   
$
477,594
 
Less: Intangible assets
   
178,896
     
179,776
     
176,864
     
130,270
     
130,755
 
Total tangible stockholders' equity
 
$
463,815
   
$
446,685
   
$
432,604
   
$
361,722
   
$
346,839
 
                                         
Common shares outstanding
   
44,969,021
     
45,061,372
     
45,052,747
     
38,375,407
     
38,367,890
 
                                         
Tangible book value per common share
 
$
10.31
   
$
9.91
   
$
9.60
   
$
9.43
   
$
9.04
 



Non-GAAP Calculation and Reconciliation of Efficiency Ratio and Adjusted Efficiency Ratio
 
(Dollars in Thousands, Unaudited)

 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30
   
June 30
   
September 30
   
September 30
   
September 30
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
Non-GAAP Calculation of Efficiency Ratio
                             
Non-interest expense as reported
 
$
30,060
   
$
31,584
   
$
25,620
   
$
91,382
   
$
76,399
 
                                         
Net interest income as reported
   
43,463
     
41,529
     
33,772
     
119,272
     
100,733
 
                                         
Non-interest income as reported
   
11,514
     
10,898
     
8,686
     
31,124
     
25,936
 
                                         
Non-interest expense/(Net interest income + Non-interest income) ("Efficiency Ratio")
   
54.68
%
   
60.24
%
   
60.34
%
   
60.76
%
   
60.31
%
                                         
Non-GAAP Reconciliation of Adjusted Efficiency Ratio
                                       
Non-interest expense as reported
 
$
30,060
   
$
31,584
   
$
25,620
   
$
91,382
   
$
76,399
 
Merger expenses
   
-
     
(1,532
)
   
-
     
(5,650
)
   
-
 
Non-interest expense excluding merger expenses
   
30,060
     
30,052
     
25,620
     
85,732
     
76,399
 
                                         
Net interest income as reported
   
43,463
     
41,529
     
33,772
     
119,272
     
100,733
 
                                         
Non-interest income as reported
   
11,514
     
10,898
     
8,686
     
31,124
     
25,936
 
Loss on sale of investment securities
   
-
     
100
     
122
     
85
     
111
 
Death benefit on bank owned life insurance ("BOLI")
   
(213
)
   
(367
)
   
-
     
(580
)
   
(154
)
Non-interest income excluding loss on sale of investment securities and death benefit on BOLI
   
11,301
     
10,631
     
8,808
     
30,629
     
25,893
 
                                         
Adjusted efficiency ratio
   
54.89
%
   
57.62
%
   
60.17
%
   
57.19
%
   
60.33
%




Pg. 11 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings



Non-GAAP Reconciliation of Return on Average Assets and Return on Average Common Equity
 
(Dollars in Thousands, Unaudited)

 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30
   
June 30
   
September 30
   
September 30
   
September 30
 
   
2019
   
2019
   
2018
   
2019
   
2018
 
Non-GAAP Reconciliation of Return on Average Assets
                             
Average assets
 
$
5,107,259
   
$
5,047,365
   
$
4,105,096
   
$
4,823,601
   
$
4,021,811
 
                                         
Return on average assets ("ROAA") as reported
   
1.60
%
   
1.32
%
   
1.26
%
   
1.33
%
   
1.33
%
Merger expenses
   
0.00
%
   
0.12
%
   
0.00
%
   
0.16
%
   
0.00
%
Tax effect
   
0.00
%
   
-0.02
%
   
0.00
%
   
-0.03
%
   
0.00
%
ROAA excluding merger expenses
   
1.60
%
   
1.42
%
   
1.26
%
   
1.46
%
   
1.33
%
                                         
Loss on sale of investment securities
   
0.00
%
   
0.01
%
   
0.01
%
   
0.00
%
   
0.00
%
Tax effect
   
0.00
%
   
0.00
%
   
0.00
%
   
0.00
%
   
0.00
%
ROAA excluding loss on sale of investment securities
   
1.60
%
   
1.43
%
   
1.27
%
   
1.46
%
   
1.33
%
                                         
Death benefit on bank owned life insurance ("BOLI")
   
-0.02
%
   
-0.03
%
   
0.00
%
   
-0.02
%
   
-0.01
%
ROAA excluding death benefit on BOLI
   
1.58
%
   
1.40
%
   
1.27
%
   
1.44
%
   
1.32
%
                                         
Core ROAA
   
1.58
%
   
1.40
%
   
1.27
%
   
1.44
%
   
1.32
%
                                         
Non-GAAP Reconciliation of Return on Average Common Equity
                                       
Average Common Equity
 
$
640,770
   
$
622,028
   
$
476,959
   
$
589,766
   
$
467,867
 
                                         
Return on average common equity ("ROACE") as reported
   
12.72
%
   
10.73
%
   
10.87
%
   
10.88
%
   
11.43
%
Merger expenses
   
0.00
%
   
0.99
%
   
0.00
%
   
1.28
%
   
0.00
%
Tax effect
   
0.00
%
   
-0.19
%
   
0.00
%
   
-0.22
%
   
0.00
%
ROACE excluding merger expenses
   
12.72
%
   
11.53
%
   
10.87
%
   
11.94
%
   
11.43
%
                                         
Loss on sale of investment securities
   
0.00
%
   
0.06
%
   
0.10
%
   
0.02
%
   
0.03
%
Tax effect
   
0.00
%
   
-0.01
%
   
-0.02
%
   
0.00
%
   
-0.01
%
ROACE excluding loss on sale of investment securities
   
12.72
%
   
11.58
%
   
10.95
%
   
11.96
%
   
11.45
%
                                         
Death benefit on bank owned life insurance ("BOLI")
   
-0.13
%
   
-0.24
%
   
0.00
%
   
-0.13
%
   
-0.04
%
ROACE excluding death benefit on BOLI
   
12.59
%
   
11.34
%
   
10.95
%
   
11.83
%
   
11.41
%
                                         
Core ROACE
   
12.59
%
   
11.34
%
   
10.95
%
   
11.83
%
   
11.41
%


About Horizon Bancorp, Inc.

Horizon Bancorp, Inc. is an independent, commercial bank holding company serving northern and central Indiana, and southern and central Michigan through its commercial banking subsidiary, Horizon Bank. Horizon may be reached online at www.horizonbank.com. Its common stock is traded on the NASDAQ Global Select Market under the symbol HBNC.



Pg. 12 cont. Horizon Bancorp, Inc. Announces Record Quarterly and Year-to-Date Earnings


Forward Looking Statements

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 its Form 10-K.  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.



Contact:
Horizon Bancorp, Inc.
 
Mark E. Secor
 
Chief Financial Officer
 
(219) 873-2611
 
Fax: (219) 874-9280






#  #  #


HORIZON BANCORP, INC.
Financial Highlights
(Dollars in thousands except share and per share data and ratios, Unaudited)
 
   
September 30
   
June 30
   
March 31
   
December 31
   
September 30
 
   
2019
   
2019
   
2019
   
2018
   
2018
 
Balance sheet:
                             
Total assets
 
$
5,186,714
   
$
5,098,682
   
$
5,051,639
   
$
4,246,688
   
$
4,150,561
 
Investment securities
   
977,536
     
887,187
     
893,469
     
810,460
     
766,153
 
Commercial loans
   
2,046,165
     
2,062,623
     
2,089,579
     
1,721,590
     
1,698,582
 
Mortgage warehouse loans
   
155,631
     
133,428
     
71,944
     
74,120
     
71,422
 
Residential mortgage loans
   
796,497
     
814,065
     
819,824
     
668,141
     
651,250
 
Consumer loans
   
668,332
     
654,552
     
639,710
     
549,481
     
536,132
 
Earning assets
   
4,667,668
     
4,577,487
     
4,538,952
     
3,842,903
     
3,743,592
 
Non-interest bearing deposit accounts
   
756,707
     
810,350
     
811,768
     
642,129
     
621,475
 
Interest bearing transaction accounts
   
2,173,100
     
2,153,189
     
2,115,847
     
1,684,336
     
1,605,825
 
Time deposits
   
986,150
     
967,236
     
960,408
     
812,911
     
901,254
 
Borrowings
   
516,591
     
436,233
     
457,788
     
550,384
     
477,719
 
Subordinated debentures
   
56,250
     
56,194
     
55,310
     
37,837
     
37,791
 
Total stockholders' equity
   
642,711
     
626,461
     
609,468
     
491,992