Horizon Bancorp (HBNC) 8-K Horizon Bancorp Announces a Profitable Second Quarter and Year to Date Results

Exhibit 99.1

Contact: Mark E. Secor

Chief Financial Officer

Phone: (219) 873-2611

Fax: (219) 874-9280

Date:  July 22, 2009

FOR IMMEDIATE RELEASE

Horizon Bancorp Announces a Profitable Second Quarter and Year to Date Results

Michigan City, Indiana (NASDAQ GM: HBNC) – Horizon Bancorp today announced its unaudited financial results for the three and six months ended June 30, 2009.

SUMMARY:

·   Horizon’s second quarter 2009 net income was $2.1 million or $0.52 diluted earnings per share.

·   Horizon’s net income for the six months ended June 30, 2009 was $4.7 million or $1.22 diluted earnings per share.

·   Net interest margin contracted during the second quarter as Horizon elected to keep higher money market deposits on its balance sheet as a precaution against future cash needs.  The cash balances have returned to normal levels during the month of June.

·   Horizon continued to experience high residential mortgage refinance volumes through the second quarter.

·   Horizon’s quarterly provision to the loan and lease loss reserve increased by approximately $100,000 from the first quarter of 2009

·   Horizon’s non-performing loans increased to approximately $13.5 million as of June 30, 2009 from $10.5 million at the end of the first quarter.

·   Horizon’s non-performing loans to total loans ratio as of June 30, 2009 is 1.49%, which compares favorably to National and State of Indiana peer averages.1

·   Like all FDIC insured financial institutions, Horizon’s special assessment (based on its asset size) was $663,000 in the second quarter of 2009.

·   Horizon’s capital ratios continue to be maintained above the regulatory standards for well-capitalized banks.

·   Horizon opened its 19th branch on June 8, 2009 in Munster, Indiana.

·   Horizon held its annual shareholders’ meeting on Thursday, May 7, 2009.  Shareholders approved all matters as presented.

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1 National peer group: Consists of all insured commercial banks having assets between $1 Billion and $3 Billion as reported by the Uniform Bank Performance Report as of March 31, 2009.  Indiana peer group: Consists of 22 publicly traded banks all headquartered in the State of Indiana as reported by the Uniform Bank Performance Reports as of March 31, 2009.

Pg. 2 cont. Horizon Announces 2nd Quarter Earnings

“We continue to be proud of Horizon’s year-to-date performance given the economic challenges confronting the banking industry,” said Craig M. Dwight, Chief Executive Officer of Horizon Bancorp.  In addition, he commented, “Horizon has increased staff to focus on resolution of problem loans and to assist our customers to mitigate the potential for foreclosure.  As a community bank we are proud of our record of working with customers during challenging times.”

Performance Highlights:

Net income for the second quarter of 2009 was $2.1 million or $.52 diluted earnings per share.  This compares to $3.0 million or $.92 diluted earnings per share for the same quarter of the prior year.  Net income for the six months ended June 30, 2009 was $4.7 million or $1.22 diluted earnings per share.  This compares to $5.5 million or $1.70 diluted earnings per share for the same period of the prior year.

Diluted earnings per share were reduced by $.11 per share for the three months and $.21 per share for the six months ending June 30, 2009 resulting from the preferred stock dividends and the accretion of the discount on the preferred stock.  The preferred stock was issued in the fourth quarter of 2008 and therefore did not impact the three or six month periods ending June 30, 2008.

Net interest income increased $1.9 million for the three months and $4.4 million, for the six months ending June 30, 2009 due to an increase in interest earning assets and an increase in the net interest margin. The net interest margin was 3.65% for the six months ending June 30, 2009 compared to 3.24% in the prior year for the same period.  The second quarter net interest margin decreased to 3.51% from 3.78% for the first quarter primarily due to management’s decision to maintain higher liquidity levels and retain a higher balance in cash and cash equivalents generated from local money market deposits.  Cash and cash equivalents were back to more historical levels by June 30, 2009.

The improvement in year-to-date net interest income over the same period of the prior year is a result of Horizon’s ability to reduce the cost of interest bearing liabilities more than the reduction in the yields experienced on the interest earning assets.  In addition, interest rate floors on over 50.0% of the Company’s adjustable rate loans have helped in maintaining the yield on the interest earning assets.

The provision for loan losses was approximately $3.3 million for three months ending June 30, 2009 compared to $1.5 million for the same period the prior year.  The second quarter provision is similar to the $3.2 million reserve taken in the first quarter of 2009.  Consumer loan charge-offs continue to drive the need for higher quarterly provision for loan losses and appear to be stabilizing as the rate of growth has slowed.

Non-performing loans increased to $13.5 million at June 30, 2009 from $10.5 million at the end of the previous quarter.  This increase was primarily in commercial, commercial real estate and residential real estate loans.  We attribute the growth to economic conditions contributing to reduced business revenues and related increase in consumer bankruptcies.

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Pg. 3 cont. Horizon Announces 2nd Quarter Earnings

The residential mortgage loan activity continued to be strong through the second quarter as evidenced by volumes higher than prior year in both the conventional residential mortgage and mortgage warehouse business lines.  The conventional residential mortgage refinancing activity has increased the gain on sale of loans by $2.1 million for the six months ending June 30, 2009 when compared to the same period in the prior year.

The primary cost to originate residential mortgage loans is the commissions paid to mortgage originators and this accounted for most of the increase in salary and benefits, which was $1.2 million higher for the six months ended June 30, 2009 when compared to the same period in the prior year.

In the second quarter of 2008 the Company recorded non-interest income from a death benefit on officer life insurance totaling $538,000, which was tax-free income.  This additional income (which was included in the results from 2008) should be considered when comparing the results to 2009.

During the second quarter of 2009 a special FDIC assessment was required in addition to the higher assessment rates that were already in place.  The Company estimated and recorded an additional FDIC expense in the second quarter of $663,000.  For the three and six months ended June 30, 2009 the Company’s FDIC expense was $1.1 million and $1.4 million compared to $142,000 and $258,000 for the same periods in the prior year.

Other items

Horizon held its annual shareholders’ meeting on Thursday, May 7, 2009.  The following incumbent directors were re-elected to three-year terms: Robert C. Dabagia, Lawrence E. Burnell, Peter L. Pairitz, and Spero W. Valavanis.  In addition, the shareholders ratified BKD as Horizon’s independent auditors and approved a non-binding vote in support of Horizon’s executive compensation.

Horizon opened its 19th full service office on June 8, 2009.  The branch is located at 10429 Calumet Avenue, Munster, Indiana 46321.  This is Horizon’s second full service branch location in Lake County.

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.

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Pg. 4 cont. Horizon Announces 2nd Quarter Earnings

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
	Mark E. Secor
	Chief Financial Officer
	(219) 873-2611
	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
	June 30,			March 31,			December 31,			September 30,			June 30,
	2009			2009			2008			2008			2008
Balance sheet:
Total assets	$	1,343,296		$	1,442,851		$	1,306,857		$	1,188,631		$	1,194,447
Short term investments		10,418			6,444			2,679			1,186			1,378
Investment securities		331,941			327,289			303,268			230,837			252,791
Commercial loans		313,857			313,840			310,842			304,997			303,179
Mortgage warehouse loans		163,083			186,058			123,287			101,992			82,865
Real estate loans		146,096			160,478			167,766			168,058			168,940
Installment loans		272,394			273,728			280,072			282,900			283,430
Earning assets		1,260,807			1,288,214			1,206,494			1,107,429			1,115,241
Non-interest bearing deposit accounts		83,940			81,000			83,642			86,093			81,212
Interest bearing transaction accounts		388,954			489,699			428,931			334,121			349,767
Time deposits		375,256			406,790			328,596			329,208			361,307
Borrowings		349,499			320,956			324,383			328,442			293,423
Long-term borrowings		27,837			27,837			27,837			27,837			27,837
Common stockholders' equity		82,965			82,236			79,196			75,072			73,613
Total stockholders’ equity		107,194			106,427			103,350			75,072			73,613
Income statement:
Net interest income	$	11,263		$	11,416		$	9,689		$	9,403		$	9,335
Provision for loan losses		3,290			3,197			2,163			3,137			1,490
Other income		4,516			4,494			3,369			3,351			3,898
Other expenses		9,928			9,397			8,230			8,283			8,239
Income tax expense		497			681			543			2			514
Net income		2,064			2,635			2,122			1,332			2,990
Preferred stock dividend		(350	)		(350	)		-			-			-
Net income available to shareholders		1,714			2,285			2,122			1,332			2,990
Per share data:
Basic earnings per share	$	0.53		$	0.71		$	0.64		$	0.42		$	0.93
Diluted earnings per share		0.52			0.70			0.64			0.41			0.92
Cash dividends declared per common share		0.17			0.17			0.17			0.17			0.17
Book value per common share		25.85			25.62			24.68			23.39			22.94
Market value - high		19.45			13.21			24.52			25.73			23.89
Market value - low	$	11.00		$	10.50		$	12.29		$	16.36		$	17.56
Basic common shares outstanding		3,209,482			3,209,482			3,209,482			3,209,482			3,208,419
Diluted  common shares outstanding		3,270,178			3,250,424			3,246,664			3,255,409			3,238,331
Key ratios:
Return on average assets		0.59	%		0.79	%		0.71	%		0.45	%		1.01	%
Return on average common stockholders' equity		8.01			11.18			10.49			6.97			15.68
Net interest margin		3.51			3.78			3.57			3.45			3.40
Loan loss reserve to loans		1.40			1.23			1.29			1.22			1.16
Non-performing loans to loans		1.49			1.11			0.89			0.77			0.67
Average equity to average assets		7.80			7.94			6.65			6.45			6.44
Bank only capital ratios:
Tier 1 capital to average assets		8.15			8.51			9.44			7.64			7.54
Tier 1 capital to risk weighted assets		11.88			11.45			11.89			10.04			10.12
Total capital to risk weighted assets		13.13			12.61			13.11			11.22			11.23

HORIZON BANCORP

Financial Highlights

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

	Six months ended
	June 30,			June 30,
	2009			2008
Balance sheet:
Total assets	$	1,343,296		$	1,194,447
Short term investments		10,418			1,378
Investment securities		331,941			252,791
Commercial loans		313,857			303,179
Mortgage warehouse loans		163,083			82,865
Real estate loans		146,096			168,940
Installment loans		272,394			283,430
Earning assets		1,260,807			1,115,241
Non-interest bearing deposit accounts		83,940			81,212
Interest bearing transaction accounts		388,954			349,767
Time deposits		375,256			361,307
Borrowings		349,499			293,423
Long-term borrowings		27,837			27,837
Common stockholders' equity		82,965			73,613
Total stockholders’ equity		107,194			73,613
Income statement:
Net interest income	$	22,679		$	18,258
Provision for loan losses		6,487			2,268
Other income		9,010			7,111
Other expenses		19,325			16,266
Income tax expense		1,178			1,317
Net income		4,699			5,518
Preferred stock dividend		(700	)		-
Net income available to shareholders		3,999			5,518
Per share data:
Basic earnings per share	$	1.25		$	1.72
Diluted earnings per share		1.22			1.70
Cash dividends declared per common share		0.32			0.32
Book value per common share		25.85			22.95
Market value - high		19.45			24.46
Market value - low	$	10.50		$	17.56
Basic common shares outstanding		3,209,482			3,207,825
Diluted  common shares outstanding		3,267,314			3,241,656
Key ratios:
Return on average assets		0.69	%		0.91	%
Return on average common stockholders' equity		9.66			14.77
Net interest margin		3.65			3.24
Loan loss reserve to loans		1.40			1.16
Non-performing loans to loans		1.49			0.67
Average equity to average assets		7.81			6.13
Bank only capital ratios:
Tier 1 capital to average assets		8.15			7.52
Tier 1 capital to risk weighted assets		11.88			10.12
Total capital to risk weighted assets		13.13			11.23

HORIZON BANCORP

Allocation of the Allowance for Loan and Lease Losses

(Dollars in Thousands)

	June 30, 2009 (Unaudited)		March 31, 2009 Unaudited)		December 31, 2008 (Unaudited)
Commercial	$	3,076	$	2,441	$	3,202
Real estate		1,511		1,038		973
Mortgage warehousing		1,453		1,428		1,354
Installment		6,609		6,682		5,881
Unallocated		—		—		—
Total	$	12,649	$	11,589	$	11,410

Net Charge-offs

(Dollars in Thousands)

	Three months ended
	(Unaudited)
	June 30, 2009		March 31, 2009		December 31, 2008			September 30, 2008			June 30, 2008
Commercial	$	262	$	1,076	$	(5	)	$	1,276		$	32
Real estate		214		50		26			(50	)		224
Mortgage warehousing		—		—		—			—			—
Installment		1,754		1,892		1,257			1,198			1,103
Total	$	2,230	$	3,018	$	1,278		$	2,424		$	1,359

Total Non-performing Loans

(Dollars in Thousands)

	June 30, 2009 (Unaudited)		March 31, 2009 (Unaudited)		December 31, 2008 (Unauditied)
Commercial	$	7,959	$	6,474	$	5,167
Real estate		3,764		2,446		1,904
Mortgage warehousing		—		—		—
Installment		1,754		1,549		792
Total	$	13,477	$	10,469	$	7,863

Other Real Estate Owned and Repossessed Assets

(Dollars in Thousands)

	June 30, 2009 (Unaudited)		March 31, 2009 Unaudited)		December 31, 2008 Unaudited)
Commercial	$	—	$	—	$	—
Real estate		2,212		2,492		2,874
Mortgage warehousing		—		—		—
Installment		115		204		207
Total	$	2,327	$	2,696	$	3,081

HORIZON BANCORP AND SUBSIDIARIES

Average Balance Sheets

(Dollar Amounts in Thousands)

	Three Months Ended								Three Months Ended
	June 30, 2009								June 30, 2008
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Interest-earning assets
Federal funds sold	$	11,247		$	7		0.25	%	$	11,395		$	59		2.08	%
Interest-earning deposits		61,369			39		0.25	%		3,210			19		2.38	%
Investment securities - taxable		247,847			2,765		4.47	%		182,099			2,136		4.72	%
Investment securities - non-taxable		91,812			947		5.52	%		82,148			862		5.63	%
Loans receivable (2)		921,903			15,091		6.57	%		840,330			14,194		6.80	%
Total interest-earning assets (1)		1,334,178			18,849		5.70	%		1,119,182			17,270		6.22	%
Noninterest-earning assets
Cash and due from banks		15,634								13,595
Allowance for loan losses		(11,316	)							(9,625	)
Other assets		72,835								67,652
	$	1,411,331							$	1,190,804
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits	$	851,522		$	3,993		1.88	%	$	732,477		$	4,697		2.58	%
Borrowings		329,891			3,222		3.92	%		270,171			2,846		4.24	%
Subordinated debentures		27,837			371		5.35	%		27,837			392		5.66	%
Total interest-bearing liabilities		1,209,250			7,586		2.52	%		1,030,485			7,935		3.10	%
Noninterest-bearing liabilities
Demand deposits		82,914								76,802
Accrued interest payable and other liabilities		9,137								7,437
Shareholders' equity		110,030								76,080
	$	1,411,331							$	1,190,804
Net interest income/spread				$	11,263		3.18	%				$	9,335		3.12	%
Net interest income as a percent  of average interest earning assets (1)							3.51	%							3.40	%

(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.  Interest income 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)

	Six Months Ended								Six Months Ended
	June 30, 2009								June 30, 2008
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
ASSETS
Interest-earning assets
Federal funds sold	$	7,509		$	9		0.24	%	$	29,019		$	425		2.95	%
Interest-earning deposits		34,453			44		0.26	%		8,990			138		3.09	%
Investment securities - taxable		246,591			5,607		4.59	%		174,847			4,199		4.83	%
Investment securities - non-taxable		90,573			1,867		5.54	%		81,861			1,699		5.56	%
Loans receivable (2)		919,758			29,996		6.58	%		854,849			29,561		6.96	%
Total interest-earning assets (1)		1,298,884			37,523		5.86	%		1,149,566			36,022		6.31	%
Noninterest-earning assets
Cash and due from banks		15,216								17,351
Allowance for loan losses		(11,356	)							(9,673	)
Other assets		76,229								67,991
	$	1,378,973							$	1,225,235
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits	$	818,341		$	7,989		1.97	%	$	775,110		$	11,291		2.93	%
Borrowings		334,628			6,114		3.68	%		265,235			5,674		4.30	%
Subordinated debentures		27,837			741		5.37	%		27,837			799		5.77	%
Total interest-bearing liabilities		1,180,806			14,844		2.54	%		1,068,182			17,764		3.34	%
Noninterest-bearing liabilities
Demand deposits		81,358								75,008
Accrued interest payable and other liabilities		9,146								7,265
Shareholders' equity		107,663								74,780
	$	1,378,973							$	1,225,235
Net interest income/spread				$	22,679		3.32	%				$	18,258		2.97	%
Net interest income as a percent of average interest earning assets (1)							3.65	%							3.24	%

(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.  Interest income 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

Condensed Consolidated Balance Sheets

(Dollar Amounts in Thousands)

	June 30		December 31
	2009		2008
	(Unaudited)
Assets
Cash and due from banks	$	13,885	$	36,001
Federal Reserve and fed funds sold		2,695		-
Cash and cash equivalents		16,580		36,001
Interest-bearing deposits		10,418		2,679
Investment securities, available for sale		319,066		301,638
Investment securities, held to maturity		12,875		1,630
Loans held for sale		9,793		5,955
Loans, net of allowance for loan losses of $12,649 and $11,410		882,781		870,557
Premises and equipment		30,210		28,280
Federal Reserve and Federal Home Loan Bank stock		13,225		12,625
Goodwill		5,787		5,787
Other intangible assets		1,597		1,751
Interest receivable		6,051		5,708
Cash value life insurance		22,792		22,451
Deferred tax asset		2,520		2,580
Other assets		9,601		9,215
Total assets	$	1,343,296	$	1,306,857
Liabilities
Deposits
Non-interest bearing	$	83,940	$	83,642
Interest bearing		764,210		757,527
Total deposits		848,150		841,169
Borrowings		349,499		324,383
Subordinated debentures		27,837		27,837
Interest payable		1,657		1,910
Other liabilities		8,959		8,208
Total liabilities		1,236,102		1,203,507
Commitments and contingent liabilities
Stockholders’ Equity
Preferred stock, no par value, $1,000 liquidation value
Authorized, 1,000,000 shares
Issued 25,000 shares
Common stock, $.2222 stated value		24,229		24,154
Authorized, 22,500,000 shares
Issued, 3,266,611 and 3,254,482 shares		1,114		1,114
Additional paid-in capital		9,785		9,650
Retained earnings		70,807		67,804
Accumulated other comprehensive income		1,259		628
Total stockholders’ equity		107,194		103,350
Total liabilities and stockholders’ equity	$	1,343,296	$	1,306,857

HORIZON BANCORP AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Dollar Amounts in Thousands, Except Per Share Data)

	Three Months Ended June 30						Six Months Ended June 30
	2009			2008			2009			2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Interest Income
Loans receivable	$	15,091		$	14,194		$	29,996		$	29,561
Investment securities
Taxable		2,811			2,214			5,660			4,762
Tax exempt		947			862			1,867			1,699
Total interest income		18,849			17,270			37,523			36,022
Interest Expense
Deposits		3,993			4,697			7,989			11,291
Borrowed funds		3,222			2,846			6,114			5,674
Subordinated debentures		371			392			741			799
Total interest expense		7,586			7,935			14,844			17,764
Net Interest Income		11,263			9,335			22,679			18,258
Provision for loan losses		3,290			1,490			6,487			2,268
Net Interest Income after Provision for Loan Losses		7,973			7,845			16,192			15,990
Other Income
Service charges on deposit accounts		974			989			1,908			1,910
Wire transfer fees		261			122			508			227
Interchange fees		456			214			844			402
Fiduciary activities		824			1,021			1,741			1,906
Gain on sale of loans		1,671			661			3,584			1,465
Mortgage servicing net of impairment		(32	)		29			(166	)		5
Increase in cash surrender value of bank owned life insurance		185			221			341			449
Death benefit on officer life insurance		-			538			-			538
Loss on sale of securities		-			(15	)		-			(15	)
Other income		177			118			250			224
Total other income		4,516			3,898			9,010			7,111
Other Expenses
Salaries and employee benefits		4,894			4,220			9,725			8,495
Net occupancy expenses		899			918			1,931			1,890
Data processing		396			350			775			682
Professional fees		310			291			705			540
Outside services and consultants		351			308			677			612
Loan expense		644			552			1,210			1,010
FDIC deposit expense		1,059			142			1,351			258
Other losses		82			141			467			242
Other Expenses		1,293			1,317			2,484			2,537
Total other expenses		9,928			8,239			19,325			16,266
Income Before Income Tax		2,561			3,504			5,877			6,835
Income tax expense		497			514			1,178			1,317
Net Income		2,064			2,990			4,699			5,518
Preferred stock dividend and discount accretion		(350	)		-			(700	)		-
Net Income Available to Common Shareholders	$	1,714		$	2,990		$	3,999		$	5,518
Basic Earnings Per Share	$	0.53		$	0.93		$	1.25		$	1.72
Diluted Earnings Per Share	$	0.52		$	0.92		$	1.22		$	1.70