Access Horizon Press Releases

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

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

"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."

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.

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.

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 19^th 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.

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.

[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.

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