Horizon Bancorp (HBNC) 8-K Horizon Bancorp Announces Third Quarter Earnings

Exhibit 99.1

Contact: James H. Foglesong

Chief Financial Officer

Phone: (219) 873-2608

Fax: (219) 874-9280

Date: October 26, 2006

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces Third Quarter Earnings

Michigan City, Indiana (October 26, 2006) - Horizon Bancorp today announced its unaudited financial results for the quarter and nine months ended September 30, 2006. Net income for the third quarter of 2006 was $1.968 million or $.61 per fully diluted share. This compares to $2.028 million or $.64 per fully diluted share for the same quarter of the prior year and $1.834 million or $.57 per fully diluted share for the second quarter of 2006. Year to date net income was $5.251 million or $1.64 per fully diluted share compared to $5.011 million or $1.59 per fully diluted share for the same period of the prior year. This represents a 3.0% decrease in quarterly net income and a 4.8% increase for the first nine months when compared to the same prior year periods.

Craig M. Dwight, President and Chief Executive Officer stated, “We are pleased with year to date earnings ahead of prior year, considering the flat yield curve, a decline in mortgage activity and charges related to investment portfolio restructuring. Horizon is positioning itself well for 2007 with the changes we’ve made to our investment portfolio, the addition of the mortgage wholesale line of business, and our continued branch expansion. In addition, several bank acquisitions in our market place will provide increased opportunities for Horizon as we continue to position our Company as the key provider of sensible advice in our trade area.”“”

Net interest income for the quarter ended September 30, 2006 was $7.812 million, a decrease of $736 thousand or 8.6% over the same period of the prior year. This decrease was the result of a decline in the net interest margin from 3.36% for the third quarter of 2005 to 2.96% for 2006. Partially mitigating the margin decline was growth in average earning assets of $110 million or 11.0%. The margin decline was caused by competitive rate pressure on core deposits and a greater reliance on non-core deposits and borrowed funds to support asset growth. For the first nine months of 2006, net interest income was $23.458 million compared to $22.580 million for the same period of the prior year, an increase of 3.9%. The increase relates to growth in average assets, much of which resulted from the acquisition of Alliance Bank, which was completed on June 10, 2005. Average earning assets increased by $101 million or 11.2%. For the nine months ended September 30, 2006, the net interest margin declined by 20 basis points to 3.08%. The margin decline was caused by the reasons stated above for the third quarter.

Non-interest income increased $359 thousand or 14.3% from the third quarter of 2005 and has increased $18 thousand for the first nine months. The main contributing factors to the third quarter increase was: (a) a gain on the sale of mortgage servicing rights of $656 thousand. During the quarter, Horizon sold substantially all of its mortgage servicing rights with a book value of $803 thousand. The sale will allow Horizon to better focus on its core lending activities. (b) a loss on the

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Pg. 2 cont. Horizon Bank 3^rd Quarter Earnings

sale of investment securities of $515 thousand. A total of $21.6 million of securities were sold, including $1.6 million of tax-exempt municipals. These securities had an average yield of approximately 3.35%. The proceeds from the sale were reinvested in securities with a yield of approximately 5.75%. This sale will have a negative after tax impact on 2006 of approximately $258 thousand but will positively impact 2007 by approximately $301 thousand. This makes a total of approximately $91.5 million of investment securities which have been sold during the year resulting in a loss of $764 thousand. The funds have been reinvested in higher yielding securities or used to reduce short-term debt. (c) Income from Fiduciary activities increased $267 thousand due to the additional ESOP trustee line of business and an increase of $45 million in assets under management from September 30, 2005. Year to date service charge income increased due to the placing of Alliance checking accounts on the overdraft protection program. Gain on sale of loans is down from 2005 due to a decline in the amount of mortgage loans caused by the general slow down in residential mortgage activity. Also affecting year-to-date income compared to 2005 was approximately $160 thousand in pre-tax income from the sale of the retail property and casualty insurance lines of Horizon Insurance Services, Inc, in the first quarter of 2005.

Non-interest expense increased $64 thousand or less than one per cent from the third quarter of 2005 and $1.052 million or 4.8% for the first nine months. This increase relates primarily to additional on-going expenses related to the Alliance Bank acquisition, which closed in June of 2005, including core deposit intangible amortization of approximately $277 thousand. Also, expenses related to the newly established mortgage wholesale operation total $274 thousand.

On September 30, 2006, Horizon’s total assets were $1.159 billion, compared to $1.128 billion on December 31, 2005. Cash and cash equivalents declined due to a large cash item deposited on the last day of 2005. Investment securities decreased due to the above mentioned security sale activities. Loans have increased $97 million or 13.4% since December 31, 2005. Growth came in all loan categories except commercial where unanticipated payoffs caused a decline in commercial loans outstanding. Deposits declined, as a large deposit made by a local municipality at year-end 2005 was withdrawn in their normal course of business in early January 2006. Total average deposits for the third quarter of 2006 increased $56 million or 7.2% from the first quarter of 2006. Growth came in certificates of deposit, both consumer and negotiated. This was partially offset by a decline in public fund money market accounts.

Horizon’s allowance for loan losses at September 30, 2006 was $8.8 million, or 1.05% of gross loans, compared to $8.4 million or 1.14% at December 31, 2005. Non-performing assets at September 30, 2006 were $1.4 million, or 0.17% of gross loans, compared to $2.1 million or .28% at December 31, 2005. The decrease in non-performing assets occurred across all lending categories. Year to date net charge-offs for the nine months ended September 30, 2006 totaled $283 thousand compared to $431 for the same period of the prior year.

Stockholders' equity totaled $59.5 million at September 30, 2006 compared to $53.5 million at December 31, 2005. At September 30, 2006, the ratio of stockholders' equity to total assets was 5.13% compared to 4.75% at December 31, 2005. Book value per common share at September 30, 2006 increased to $18.64 compared to $17.01 at December 31, 2005. The increase in stockholders' equity during the year was the result of net income, the issuance of new shares for the exercise of stock options and improvement in the market value of investment securities available for sale, offset by dividends declared and the purchase of treasury stock.

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Pg. 3 cont. Horizon Bank 3rd Quarter Earnings

Other Items

On October 2, 2006, Jeffry J. Trad was appointed President of Horizon Trust & Investment Management, N.A., the trust subsidiary of Horizon Bank, N.A. Mr. Trad joined Horizon Trust & Investment Management in 2003 and has over 15 years experience in investment management and trust services.

Horizon will soon begin construction of a branch in Benton Township, Michigan. This branch is scheduled to open during the first or second quarter of 2007.

Horizon is pursuing the purchase of land in Valparaiso, Indiana for the purpose of constructing a new branch. The target date for land acquisition is by year-end and construction of the branch is to be completed in the 2^nd or 3^rd quarters of 2007.

Horizon Bancorp is a locally owned, independent, bank holding company serving northern Indiana and southwest Michigan. Horizon offers banking, investment and trust services from offices located in Michigan City, LaPorte, Wanatah, Chesterton, Portage, Valparaiso, Elkhart, South Bend and Merrillville, Indiana, and Harbert, New Buffalo, St. Joseph and Three Oaks, Michigan and provides mortgage-banking services throughout the Midwest. Horizon Bancorp may be reached on the World Wide Web at www.accesshorizon.com. Its common stock is traded on the NASDAQ Capital Market under the symbol HBNC.

Statements in this press release which express “belief,” “intention,” “expectation,” and similar expressions, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, such management. Such statements are inherently uncertain and there can be no

assurance that the underlying assumptions will prove to be accurate. Actual results could differ materially from those contemplated by the forward-looking statements. Any forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Contact:	Horizon Bancorp
	James H. Foglesong
	Chief Financial Officer
	(219) 873 - 2608
	Fax: (219) 874-9280

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HORIZON BANCORP

Financial Highlights

(Unaudited - dollars in thousands except share and per share data and ratios)

	Three Months Ended:									Nine Months Ended:
	September 30,			June 30,			September 30,			September 30,			September 30,
	2006			2006			2005			2006			2005
End of period balances:
Total assets	$	1,159,189		$	1,131,141		$	1,084,319		$	1,159,189		$	1,084,319
Investment securities		239,869			242,262			282,884			239,869			282,884
Commercial loans		261,133			266,999			267,369			261,133			267,369
Mortgage warehouse loans		113,596			106,432			108,582			113,596			108,582
Real estate loans		220,387			198,728			146,111			220,387			146,111
Installment loans		234,075			222,885			197,065			234,075			197,065
Non-interest bearing deposit accounts		90,205			86,427			86,311			90,205			86,311
Interest bearing transaction accounts		328,665			423,335			354,926			328,665			354,926
Time deposits		396,316			330,353			343,846			396,316			343,846
Short-term borrowings		120,579			48,988			72,109			120,579			72,109
Long-term borrowings		128,969			153,027			137,626			128,969			137,626
Stockholder’s equity		59,490			54,627			54,154			59,490			54,154
Average balances :
Total assets	$	1,138,548		$	1,090,753		$	1,085,623		$	1,098,676		$	966,424
Investment securities		242,081			240,106			288,645			245,208			290,241
Commercial loans		263,559			265,044			262,962			267,269			224,264
Mortgage warehouse loans		100,669			93,741			118,804			91,278			105,987
Real estate loans		215,641			187,471			140,270			188,420			113,997
Installment loans		228,932			211,489			190,174			213,861			164,560
Non-interest bearing deposit accounts		79,558			79,074			81,106			78,459			70,272
Interest bearing transaction accounts		349,363			345,603			317,774			354,978			306,256
Time deposits		407,901			369,805			347,136			369,832			311,360
Short-term borrowings		64,819			55,142			76,809			65,553			68,220
Long-term borrowings		174,563			158,316			126,783			141,623			129,333
Stockholder’s equity		57,160			55,736			53,840			56,133			50,968
Per share data:
Basic earnings per share	$	0.62		$	.58		$	0.66		$	1.66		$	1.64
Diluted earnings per share		0.61			.57			0.64			1.64			1.59
Cash dividends declared per common share		0.14			.14			0.13			0.42			0.39
Book value per common share		18.64			17.15			17.16			18.64			17.16
Market value - high		26.93			31.00			28.26			32.23			31.51
Market value - low		25.50			25.16			26.55			25.16			24.20
Basic average common shares outstanding		3,189,004			3,183,870			3,074,705			3,171,869			3,052,821
Diluted average common shares outstanding		3,211,777			3,209,294			3,165,847			3,209,940			3,154,808
Key ratios:
Return on average assets		0.69	%		0.67	%		0.75	%		0.64	%		0.69	%
Return on average equity		13.77			13.16			14.98			12.51			12.78
Net interest margin		2.96			3.11			3.36			3.08			3.28
Loan loss reserve to loans		1.05			1.13			1.18			1.05			1.18
Non-performing loans to loans		0.17			0.17			0.33			0.17			0.33
Average equity to average assets		5.02			5.11			4.96			5.11			5.27
Bank only capital ratios:
Tier 1 capital to average assets		7.11	%		7.24	%		7.03	%		7.11	%		7.03	%
Tier 1 capital to risk weighted assets		10.28			10.40			10.81			10.28			10.81
Total capital to risk weighted assets		11.42			11.57			12.01			11.42			12.01

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	September 30, 2006 (Unaudited)			December 31, 2005
Assets
Cash and due from banks	$	21,673		$	39,163
Interest-bearing demand deposits		104			87
Cash and cash equivalents		21,777			39,250
Interest-bearing deposits		128			15,735
Investment securities, available for sale		239,869			275,177
Loans held for sale		6,169			2,440
Loans, net of allowance for loan losses of $8,810and $8,368		820,381			724,366
Premises and equipment		22,891			21,425
Federal Reserve and Federal Home Loan Bank stock		12,457			12,983
Goodwill		5,787			5,787
Other intangible assets		2,503			2,780
Interest receivable		5,655			5,813
Other assets		21,572			22,119
Total assets	$	1,159,189		$	1,127,875
Liabilities
Deposits
Noninterest bearing	$	90,205		$	148,127
Interest bearing		724,981			707,439
Total deposits		815,186			855,566
Short-term borrowings		120,579			50,024
Long-term borrowings		128,969			133,609
Subordinated debentures		27,837			27,837
Interest payable		1,904			1,663
Other liabilities		5,224			5,646
Total liabilities		1,099,699			1,074,345
Stockholders’ Equity
Preferred stock, no par value
Authorized, 1,000,000 shares
No shares issued
Common stock, $.2222 stated value
Authorized, 22,500,000 shares
Issued, 4,995,906 and 4,852,751 shares		1,110			1,092
Additional paid-in capital		25,135			24,552
Retained earnings		52,417			48,523
Restricted stock, unearned compensation		-			(760	)
Accumulated other comprehensive income (loss)		(2,020	)		(2,853	)
Less treasury stock, at cost, 1,759,424 and 1,755,158 shares		(17,152	)		(17,024	)
Total stockholders’ equity		59,490			53,530
Total liabilities and stockholders’ equity	$	1,159,189		$	1,127,875

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended September 30					Nine Months Ended September 30
	2006 (Unaudited)			2005 (Unaudited)		2006 (Unaudited)			2005 (Unaudited)
Interest Income
Loans receivable	$	15,010		$	12,662	$	41,612		$	31,716
Investment securities
Taxable		1,870			2,469		6,096			7,295
Tax exempt		878			610		2,363			1,760
Total interest income		17,758			15,741		50,071			40,771
Interest Expense
Deposits		7,003			4,375		18,273			11,348
Federal funds purchased and short-term borrowings		594			578		1,584			1,405
Long-term borrowings		1,766			1,465		5,113			4,362
Subordinated debentures		583			415		1,643			1,076
Total interest expense		9,946			7,193		26,613			18,191
Net Interest Income		7,812			8,548		23,458			22,580
Provision for loan losses		120			360		725			1,071
Net Interest Income after Provision for Loan Losses		7,692			8,188		22,733			21,509
Other Income
Service charges on deposit accounts		833			766		2,297			1,887
Wire transfer fees		101			120		290			326
Fiduciary activities		758			645		2,231			1,964
Commission income from insurance agency		-0-			-0-		-0-			46
Gain on sale of loans		459			474		1,087			1,341
Gain on sale of mortgage servicing rights		656			-0-		656			-0-
Increase in cash surrender value of Bank owned life insurance		122			125		348			361
Loss on sale of securities		(515	)		-0-		(764	)		-0-
Other income		448			373		1127			1,329
Total other income		2,862			2,503		7,272			7,254
Other Expenses
Salaries and employee benefits		4,228			4,221		12,524			12,471
Net occupancy expenses		577			605		1,756			1,612
Data processing and equipment expenses		725			704		2,024			1,736
Other expenses		2,322			2,258		6,487			5,920
Total other expenses		7,852			7,788		22,791			21,739
Income Before Income Tax		2,702			2,903		7,214			7,024
Income tax expense		734			875		1,963			2,013
Net Income	$	1,968		$	2,028	$	5,251		$	5,011
Basic Earnings Per Share	$	.62		$	.66	$	1.66		$	1.64
Diluted Earnings Per Share	$	.61		$	.64	$	1.64		$	1.59