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

Exhibit 99.1

Contact: James H. Foglesong

Chief Financial Officer

Phone: (219) 873-2608

Fax: (219) 874-9280

Date:  November 1, 2007

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces Increased Third Quarter Earnings

Michigan City, Indiana (NasdaqGM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the third quarter and nine months ended September 30, 2007.  Net income for the third quarter of 2007 was $2.270 million or $.70 per fully diluted share.  This compares to $1.968 million or $.61 per fully diluted share for the same quarter of the prior year.  Year-to-date net income was $6.130 million or $1.89 per fully diluted share compared to $5.251 million or $1.64 per fully diluted share for the same period of the prior year.  This represents a 15.3% increase in quarterly net income and a 16.7% increase for the first nine months when compared to the same prior year periods.

Craig M. Dwight, Horizon’s Chief Executive Officer stated, “Considering the challenging banking environment, we are pleased to report year-to-date earnings ahead of last year.  Horizon’s success is attributed to a total team effort with all business units working diligently to improve performance.  Regardless of the condition of the general banking sector and markets, Horizon expects and strives to achieve results better than the prior year.  Based on performance for the first nine months, Horizon is on pace to achieve record earnings for the eighth consecutive year.”

During the third quarter, Horizon reduced staff by 12 employees from among its various business lines.  Horizon has taken this cost cutting action based on current business conditions, the recommendations of external consultants and after review of third party independent benchmarking data.  A charge of approximately $94 thousand was taken in the third quarter of 2007 to cover severance costs related to this reduction in work force.  The ongoing annual cost savings from this reduction is estimated at $740 thousand.

Also during the third quarter of 2007, Horizon discontinued its Illinois indirect lending operation.  Horizon had intended to sell the Illinois loan production and retain the servicing income.  Efforts to market these loans were not as successful as originally anticipated due to the tightening of credit standards. As a result, approximately $14 million of indirect loans held for sale were moved to the permanent portfolio of installment loans.  Approximately $10 million of indirect loans remain classified as held for sale.  Sale of these loans is anticipated to occur in the fourth quarter.  A charge of approximately $35 thousand was taken in the third quarter for severance benefits for the employees in this division.  The ongoing annual cost reduction from this initiative is estimated to be approximately $264 thousand.

The reduction in annual compensation expense of the above items when combined with the closing of the mortgage wholesale operation during the second quarter will total approximately $1.5 million.

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Pg. 2 Cont.  Horizon Announces 3^rd Quarter Earnings

Net interest income for the quarter ended September 30, 2007 was $8.259 million, an increase of $447 thousand over the same quarter of the prior year.  This increase resulted from an increase in average earning assets from the same quarter of the prior year by $16.9 million and an improvement in net interest margin of five basis points to 3.01%.  The margin improvement came as a result of a shift in the mix of earning assets.  Higher yielding commercial and installment loans grew while mortgage loans remained level and the investment portfolio declined.  Also improving the margin was additional long-term debt, which has a lower rate of interest than the short term negotiated certificates of deposits these funds replaced.  Net interest income increased from the second quarter of the current year by $217 thousand due primarily to growth in earning assets.

For the first nine months of 2007, net interest income increased approximately $479 thousand from the same period of the prior year.  An increase of approximately $55 million in average assets was the main contributing factor.  Contributing to net interest income in the first nine months of 2006 was approximately $399 thousand of income, related to commercial loans that were acquired at a discount in the Alliance Bank acquisition and were paid in full during the period.  There was no such income in 2007.

Non-interest income increased $268 thousand or 9.4% from the third quarter of 2006 and has increased $1.711 million or 23.5% for the first nine months of 2007 over the same period of the prior year.  The main contributing factors were: (a) an increase in the gain on sale of loans, (b) an increase in fiduciary income, (c) an increase in cash surrender value in bank owned life insurance related to additional insurance added during January 2007, and (d) no losses from the sale of securities. There was no gain on the sale of mortgage servicing rights during this period. With respect to the gain on sale of loans, the company is now selling approximately 82% of its conventional mortgage loan production (excluding construction loans) compared to approximately 45% in the prior year.  Total loans sold during the first nine months of 2007 were $100 million compared to $66 million during the same period of the prior year. Fiduciary income increased due to an increase in assets under administration, additional income from the ESOP line of business and a fee increase implemented in January of 2007. Other non-interest income was down from 2006, due to a decline in fees related to brokering non-conforming mortgage loans.

Non-interest expense decreased $109 thousand or 1.4% from the third quarter of 2006 and increased $781 thousand or 3.4% for the first nine months.  After adjusting for the accrual of severance benefits in the third quarter, salary and benefit expense would have decreased from the third quarter of 2006 and did decrease by $224 thousand or 5.0% from the second quarter of 2007.  The staff reductions mentioned above is now having a favorable impact on salary and benefit expense.

On September 30, 2007, Horizon’s total assets were $1.194 billion, compared to $1.222 billion on December 31, 2006.  Cash and cash equivalents declined due to a large cash item deposited on the last day of 2006.  Investment securities decreased as maturities are being used to fund loan growth rather than being replaced.  Loans held for sale include both mortgages and the remaining indirect consumer loans discussed above.

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Pg. 3 Cont. Horizon Announces 3^rd Quarter Earnings

Loans have increased $9.5 million since December 31, 2006.  Growth in commercial and installment loans was offset by a decline of $60 million in mortgage warehouse loans.  Warehouse loans declined due to a slow down in the housing market, including sub-prime lending.  Commercial loans had strong growth, increasing over $10 million during the third quarter of 2007 for a total increase of $34.0 million since the previous year-end.  The majority of the growth came in commercial real estate loans.  Consumer loans increased due to indirect loans originated within Horizon’s normal market area, which are held in the portfolio as well as the indirect loans mentioned above that were moved to the permanent portfolio.

Since December 31, 2006, deposits declined, as a large deposit made by a local municipality at year-end 2006 was withdrawn in the normal course of business in early January 2007.  Total average deposits for the third quarter of 2007 increased from the second quarter by approximately $8.6 million.  Public fund certificates from local municipalities have become very competitive, and therefore, Horizon has let these short term certificates mature and alternatively has taken on approximately $20 million of brokered certificates of deposit with maturities of two to three years at a cost which is approximately 25 basis points lower than the local municipal certificates of deposit.  In addition to the lower cost, this provides a more stable, long-term source of funds.

Horizon’s allowance for loan losses at September 30, 2007 was $8.8 million, or 1.03% of gross loans, compared to $8.7 million or 1.04% at December 31, 2006.  Non-performing assets at September 30, 2007 were $2.6 million or 0.31% of gross loans, which is consistent with second quarter and December 31, 2006 ratios. The provision for loan losses was increased from the second quarter, partially to cover the indirect loans added to the portfolio.  Horizon considers the allowance for loan losses to be adequate to cover losses inherent in the loan portfolio as of September 30, 2007.

Stockholders' equity totaled $67.7 million at September 30, 2007 compared to $61.9 million at December 31, 2006. At September 30, 2007, the ratio of stockholders' equity to total assets was 5.67% compared to 5.06% at December 31, 2006.  Book value per common share at September 30, 2007 increased to $21.13 compared to $19.37 at December 31, 2006.

Other items

During the course of a periodic routine examination by the office of the Comptroller of the Currency (“OCC”) that commenced in February 2003, the examination personnel raised the issue of whether Horizon Bank’s mortgage warehouse loans should be treated as “other loans” rather than “home mortgage loans” for call report purposes.  The OCC has now determined that these loans must be treated as “other loans.” This will increase the risk-weighting of these loans from 50% to 100% and reduce Horizon Bank’s risk-based capital ratios.  Management believes that it has properly characterized the loans in its mortgage warehouse loan portfolio for risk-based capital purposes, and intends to formally challenge this decision by the OCC. After changing the classification of these loans, Horizon and Horizon Bank were still categorized as well capitalized at September 30, 2007.

Horizon began construction of a branch in Valparaiso, Indiana with completion scheduled for year-end 2007.  Construction will begin during the fourth quarter on a full service branch in Merrillville, Indiana which is scheduled to open in second quarter 2008.

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Pg. 4 Cont. Horizon Announces 3^rd Quarter Earnings

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 on the World Wide Web at www.accesshorizon.com.  Its common stock is traded on the NASDAQ Global 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

HORIZON BANCORP

Financial Highlights

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

	Three Months Ended:									Nine Months Ended:
	Sept. 30,			June 30,			Sept. 30,			Sept. 30,			Sept. 30,
	2007			2007			2006			2007			2006
End of period balances:
Total assets	$	1,194,246		$	1,192,283		$	1,159,189		$	1,194,246		$	1,159,189
Investment securities		230,631			224,541			239,869			230,631			239,869
Commercial loans		305,502			295,018			261,133			305,502			261,133
Mortgage warehouse loans		52,539			78,716			113,596			52,539			113,596
Real estate loans		217,716			219,161			220,387			217,716			220,387
Installment loans		277,552			256,506			234,075			277,552			234,075
Non-interest bearing deposit accounts		79,034			82,635			90,205			79,034			90,205
Interest bearing transaction accounts		333,069			347,493			328,665			333,069			328,665
Time deposits		383,741			390,816			396,316			383,741			396,316
Short-term borrowings		78,661			86,689			120,579			78,661			120,579
Long-term borrowings		215,802			185,864			128,969			215,802			128,969
Stockholder’s equity		67,666			63,172			59,490			67,666			59,490
Average balances :
Total assets	$	1,194,146		$	1,182,656		$	1,138,548		$	1,174,861		$	1,098,676
Investment securities		225,541			231,623			242,081			227,109			245,208
Commercial loans		301,255			287,522			263,559			287,342			267,269
Mortgage warehouse loans		61,170			80,222			100,669			75,900			91,278
Real estate loans		219,966			221,190			215,641			224,010			188,420
Installment loans		259,862			240,657			228,932			246,430			213,861
Non-interest bearing deposit accounts		78,073			76,670			79,558			76,288			78,459
Interest bearing transaction accounts		346,535			343,906			349,363			348,644			354,978
Time deposits		401,247			396,667			407,901			405,816			369,832
Short-term borrowings		70,574			84,897			64,819			74,675			65,553
Long-term borrowings		215,985			187,168			174,563			167,333			141,623
Stockholder’s equity		65,628			65,302			57,160			64,901			56,133
Per share data:
Basic earnings per share	$	0.71		$	0.63		$	0.62		$	1.92		$	1.66
Diluted earnings per share		0.70			0.62			0.61			1.89			1.64
Cash dividends declared per common share		0.15			0.15			0.14			0.44			0.42
Book value per common share		21.13			19.77			18.64			21.13			18.64
Market value - high		28.00			28.05			26.93			28.10			32.23
Market value - low		25.75			26.80			25.50			26.60			25.16
Basic average common shares outstanding		3,202,341			3,200,259			3,189,004			3,198,999			3,171,869
Diluted average common shares outstanding		3,242,919			3,243,537			3,211,777			3,241,991			3,209,940
Key ratios:
Return on average assets		0.76	%		0.68	%		0.69	%		0.70	%		0.64	%
Return on average equity		13.84			12.35			13.77			12.63			12.51
Net interest margin		3.01			3.00			2.96			2.98			3.08
Loan loss reserve to loans		1.03			1.02			1.05			1.03			1.05
Non-performing loans to loans		0.27			.27			0.17			0.27			0.17
Average equity to average assets		5.50			5.48			5.02			5.52			5.11
Bank only capital ratios:
Tier 1 capital to average assets		7.20	%		7.17	%		7.11	%		7.20	%		7.11	%
Tier 1 capital to risk weighted assets		9.76			9.86			10.28			9.76			10.28
Total capital to risk weighted assets		10.77			10.89			11.42			10.77			11.42

Horizon Bancorp and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	September 30,  2007 (Unaudited)			December 31, 2006
Assets
Cash and due from banks	$	19,785		$	52,311
Interest-bearing demand deposits		3			1
Federal funds sold		—			6,500
Cash and cash equivalents		19,788			58,812
Interest-bearing deposits		120			898
Investment securities, available for sale		230,631			243,078
Loans held for sale		17,931			13,103
Loans, net of allowance for loan losses of $8,823and $8,738		844,486			835,096
Premises and equipment		24,232			23,394
Federal Reserve and Federal Home Loan Bank stock		12,625			12,136
Goodwill		5,787			5,787
Other intangible assets		2,150			2,412
Interest receivable		6,354			6,094
Other assets		30,142			21,620
Total assets	$	1,194,246		$	1,222,430
Liabilities
Deposits
Noninterest bearing	$	79,034		$	81,949
Interest bearing		716,810			832,024
Total deposits		795,844			913,973
Short-term borrowings		78,661			83,842
Long-term borrowings		215,802			115,951
Subordinated debentures		27,837			40,209
Interest payable		2,409			1,771
Other liabilities		6,027			4,807
Total liabilities		1,126,580			1,160,553
Commitments and Contingent Liabilities
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, 5,010,406 and 4,998,106 shares		1,113			1,111
Additional paid-in capital		25,521			25,229
Retained earnings		59,460			54,196
Accumulated other comprehensive loss		(1,276	)		(1,507	)
Less treasury stock, at cost, 1,759,424 shares		(17,152	)		(17,152	)
Total stockholders’ equity		67,666			61,877
Total liabilities and stockholders’ equity	$	1,194,246		$	1,222,430

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
	2007 (Unaudited)		2006 (Unaudited)			2007 (Unaudited)		2006 (Unaudited)
Interest Income
Loans receivable	$	16,330	$	15,010		$	47,088	$	41,612
Investment securities
Taxable		1,979		1,870			6,017		6,096
Tax exempt		864		878			2,582		2,363
Total interest income		19,173		17,758			55,687		50,071
Interest Expense
Deposits		7,296		7,003			21,677		18,273
Federal funds purchased and short-term borrowings		684		594			2,319		1,584
Long-term borrowings		2,412		1,766			5,954		5,113
Subordinated debentures		522		583			1,800		1,643
Total interest expense		10,914		9,946			31,750		26,613
Net Interest Income		8,259		7,812			23,937		23,458
Provision for loan losses		550		120			1,140		725
Net Interest Income after Provision for Loan Losses		7,709		7,692			22,797		22,733
Other Income
Service charges on deposit accounts		896		833			2,515		2,297
Wire transfer fees		81		101			266		290
Fiduciary activities		905		758			2,600		2,231
Gain on sale of loans		658		459			1,808		1,087
Gain on sale of mortgage servicing rights		—		656			—		656
Increase in cash surrender value of Bank owned life insurance		233		122			696		348
Loss on sale of securities		—		(515	)		—		(764	)
Other income		357		448			1,098		1,127
Total other income		3,130		2,862			8,983		7,272
Other Expenses
Salaries and employee benefits		4,277		4,228			13,147		12,524
Net occupancy expenses		606		577			1,777		1,756
Data processing and equipment expenses		648		725			1,913		2,024
Professional fees		214		416			955		961
Outside services and consultants		254		294			730		832
Loan expense		273		281			820		769
Other expenses		1,471		1,331			4,230		3,925
Total other expenses		7,743		7,852			23,572		22,791
Income Before Income Tax		3,096		2,702			8,208		7,214
Income tax expense		826		734			2,078		1,963
Net Income	$	2,270	$	1,968		$	6,130	$	5,251
Basic Earnings Per Share	$	.71	$	.62		$	1.92	$	1.66
Diluted Earnings Per Share	$	.70	$	.61		$	1.89	$	1.64