The government investment, administered by the U.S. Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis in an effort to stabilize the financial services sector and spur lending between banks and to consumers and other businesses.

Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.

The program calls for the U.S. Treasury Department to receive preferred stock and warrants to purchase common stock in return for the investment. The preferred stock will carry a dividend of 5 percent for the first five years before increasing to 9 percent each year after that time if the shares are not redeemed.

The Treasury will receive warrants to purchase 231,817 shares of common stock at a price of $16.18 per share.

Shares of Horizon Bancorp, which operates branches in Northern Indiana and Southwest Michigan, fell 1 cent to $14 in afternoon trading.