Horizon Bancorp(HBNC) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of Horizon Bancorp, Inc. and its subsidiaries Item 1. Financial Statements (Unaudited) This section presents Horizon Bancorp's unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at period-end Total Assets | Date | Amount (Thousands) | | :--- | :--- | | June 30, 2025 | $7,652,051 | | December 31, 2024 | $7,801,146 | Total Cash and Cash Equivalents | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $137,917 | -53.01% | | December 31, 2024 | $293,431 | | Loans, net | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $4,931,183 | +2.84% | | December 31, 2024 | $4,795,060 | | Total Deposits | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $5,699,757 | +1.77% | | December 31, 2024 | $5,600,652 | | Total Stockholders' Equity | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $790,852 | +3.57% | | December 31, 2024 | $763,582 | | Condensed Consolidated Statements of Income This section details Horizon Bancorp's revenues, expenses, and net income over specific reporting periods Net Income Available to Common Shareholders | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $20,644 | $14,140 | +46.00% | | Six Months | $44,587 | $28,131 | +58.43% | Net Interest Income | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $55,355 | $45,279 | +22.26% | | Six Months | $107,622 | $88,567 | +21.51% | Total Non-interest Income | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $10,920 | $10,485 | +4.15% | | Six Months | $27,419 | $20,414 | +34.31% | Basic Earnings Per Share | Period | June 30, 2025 | June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $0.47 | $0.32 | +46.88% | | Six Months | $1.02 | $0.64 | +59.38% | Condensed Consolidated Statements of Comprehensive Income This section presents Horizon Bancorp's comprehensive income, including net income and other comprehensive income items Comprehensive Income | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $21,647 | $11,431 | +89.37% | | Six Months | $44,485 | $20,755 | +114.34% | Unrealized gains (losses) on securities (net of tax) | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | Change (YoY) | | :--- | :--- | :--- | :--- | | Three Months | $1,003 | $(2,709) | N/A (swing from loss to gain) | | Six Months | $(102) | $(7,376) | N/A (reduced loss) | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in Horizon Bancorp's stockholders' equity, including retained earnings and dividends Total Stockholders' Equity | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $790,852 | +8.83% | | June 30, 2024 | $726,665 | | Retained Earnings | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $466,497 | +5.31% | | June 30, 2024 | $442,977 | | Cash dividends on common stock (Six Months Ended) | Period | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $(14,212) | +0.26% | | June 30, 2024 | $(14,175) | | Condensed Consolidated Statements of Cash Flows This section reports Horizon Bancorp's cash inflows and outflows from operating, investing, and financing activities Net cash provided by operating activities (Six Months Ended) | Period | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $34,745 | +54.68% | | June 30, 2024 | $22,463 | | Net cash used in investing activities (Six Months Ended) | Period | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $(14,476) | -95.95% (less cash used) | | June 30, 2024 | $(357,479) | | Net cash used in financing activities (Six Months Ended) | Period | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $(175,783) | +287.26% (more cash used) | | June 30, 2024 | $(45,398) | | Net Change in Cash and Cash Equivalents (Six Months Ended) | Period | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $(155,514) | -59.12% (reduced outflow) | | June 30, 2024 | $(380,414) | | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 - Accounting Policies This note outlines Horizon Bancorp's significant accounting policies and operational segment information - Horizon Bancorp operates as one reportable segment, primarily offering commercial banking, retail banking, and private wealth management services in North America[25] - As of June 30, 2025, Horizon had repurchased 803,349 shares at an average price of $16.89 per share, under a program authorized for up to 2,250,000 shares[26] Basic Earnings Per Share (Six Months Ended) | Period | EPS | Weighted Average Shares | | :--- | :--- | :--- | | June 30, 2025 | $1.02 | 43,785,847 | | June 30, 2024 | $0.64 | 43,686,576 | Diluted Earnings Per Share (Six Months Ended) | Period | EPS | Weighted Average Shares | | :--- | :--- | :--- | | June 30, 2025 | $1.01 | 43,994,461 | | June 30, 2024 | $0.64 | 43,918,290 | Note 2 – Securities This note details Horizon Bancorp's investment securities, including available-for-sale and held-to-maturity portfolios Total Available for Sale Investment Securities | Date | Fair Value (Thousands) | Amortized Cost (Thousands) | Gross Unrealized Losses (Thousands) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $231,999 | $280,049 | $(47,900) | | December 31, 2024 | $233,677 | $282,022 | $(48,345) | Total Held to Maturity Investment Securities | Date | Fair Value (Thousands) | Amortized Cost (Thousands) | Gross Unrealized Losses (Thousands) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $1,536,980 | $1,819,229 | $(283,197) | | December 31, 2024 | $1,566,268 | $1,867,848 | $(302,538) | Allowance for Credit Losses on AFS Debt Securities | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :--- | :--- | :--- | | Three Months Ended | $150 | $0 | | Six Months Ended | $150 | $0 | Allowance for Credit Losses on HTM Securities | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :--- | :--- | :--- | | Three Months Ended | $142 | $158 | | Six Months Ended | $142 | $158 | Pledged Securities for Borrowing Availability (June 30, 2025) | Category | Fair Value (Thousands) | Amortized Cost (Thousands) | | :--- | :--- | :--- | | Federal Reserve | $849,709 | $1,042,168 | | FHLB borrowings | $297,446 | $345,111 | Note 3 – Loans This note provides detailed information on Horizon Bancorp's loan portfolio, including classifications and credit quality Total Loans Held for Investment | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $4,985,582 | +2.85% | | December 31, 2024 | $4,847,040 | | Non-accrual Loans | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $24,294 | -5.81% | | December 31, 2024 | $25,792 | | Total Past Due Loans (June 30, 2025) | Category | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | | :--- | :--- | :--- | :--- | :--- | | Commercial | $8,257 | $6,319 | $4,340 | $18,916 | | Real estate | $0 | $4,702 | $4,419 | $9,121 | | Consumer | $11,976 | $2,652 | $4,738 | $19,366 | | Total | $20,233 | $13,673 | $13,497 | $47,403 | - Total modified loans for the six months ended June 30, 2025, were $5,083 thousand. Commercial and industrial loans had a weighted average term extension of 36 months and a weighted average interest rate reduction of 1.73%[62][66] Collateral Dependent Loans (June 30, 2025) | Category | Total (Thousands) | ACL Allocation (Thousands) | Collateral Fair Value (Thousands) | | :--- | :--- | :--- | :--- | | Total commercial | $7,442 | $918 | $5,400 | Note 4 – Allowance for Credit and Loan Losses This note details Horizon Bancorp's allowance for credit losses on loans and unfunded lending commitments Allowance for Credit Losses on Loans (Six Months Ended) | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :--- | :--- | :--- | | Beginning balance | $51,980 | $50,029 | | Provision for credit losses on loans | $3,542 | $3,084 | | Net loan (charge-offs) recoveries | $(1,123) | $(898) | | Ending balance | $54,399 | $52,215 | Liability for Unfunded Lending Commitments (Six Months Ended) | Period | June 30, 2025 (Thousands) | June 30, 2024 (Thousands) | | :--- | :--- | :--- | | Beginning balance | $2,149 | $615 | | Credit loss expense (reversal) | $162 | $90 | | Ending balance | $2,311 | $705 | - The Company utilizes the Cumulative Loss Rate method for CECL estimation, based on historical credit loss experience (January 2009 to current), adjusted for current conditions and macroeconomic forecasts (Moody's scenarios)[99][101][103] Note 5 – Loan Servicing This note provides information on Horizon Bancorp's loan servicing activities and mortgage servicing rights Unpaid Principal Balance of Loans Serviced for Others | Date | Amount (Billions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $1.41 | -2.08% | | December 31, 2024 | $1.44 | | Mortgage Servicing Rights, net | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $17,752 | -3.69% | | June 30, 2024 | $18,432 | | - No impairment allowance was recorded for mortgage servicing rights as of June 30, 2025, or June 30, 2024[109] Note 6 – Goodwill This note details the carrying amount of goodwill and any impairment assessments for Horizon Bancorp Carrying Amount of Goodwill | Date | Amount (Millions) | | :--- | :--- | | June 30, 2025 | $155.2 | | December 31, 2024 | $155.2 | - No goodwill impairment charges were recorded for the six months ended June 30, 2025, or 2024[112] Note 7 – Repurchase Agreements This note outlines Horizon Bancorp's repurchase agreements and pledged securities Total Repurchase Agreements | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $95,089 | +5.76% | | December 31, 2024 | $89,912 | | Securities Pledged for Repurchase Agreements | Date | Carrying Amount (Thousands) | | :--- | :--- | | June 30, 2025 | $101,600 | | December 31, 2024 | $96,800 | Note 8 – Subordinated Notes This note describes Horizon Bancorp's subordinated notes, including interest rates and redemption terms Subordinated Notes Balance (net of unamortized issuance costs) | Date | Amount (Millions) | | :--- | :--- | | June 30, 2025 | $55.8 | | December 31, 2024 | $55.7 | - From July 1, 2025, the notes will bear interest at a floating rate equal to Three-Month Term SOFR plus 549 basis points[115] - Horizon may redeem the notes, in whole or in part, starting July 1, 2025, on any interest payment date[116] Note 9 – Derivative Financial Instruments This note details Horizon Bancorp's derivative instruments and their impact on financial performance - During 2024, the Company terminated fair value hedges on loans and securities, recording a deferred gain of $2.3 million on loan termination and a $0.3 million mark-to-market adjustment on securities[120] Derivatives Not Designated as Hedging Instruments (June 30, 2025) | Type | Notional Amount (Thousands) | Fair Value (Thousands) | | :--- | :--- | :--- | | Asset Derivatives | $531,551 | $17,282 | | Liability Derivatives | $531,629 | $16,756 | - For the six months ended June 30, 2025, mortgage loan contracts resulted in a gain of $443 thousand, while commitments to originate mortgage loans resulted in a loss of $(146) thousand[130] Note 10 – Disclosures about Fair Value of Assets and Liabilities This note provides fair value measurements for Horizon Bancorp's assets and liabilities, categorized by input levels - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (unobservable inputs significant to fair value)[137] Available for Sale Securities (June 30, 2025) | Category | Fair Value (Thousands) | Level 2 (Thousands) | Level 3 (Thousands) | | :--- | :--- | :--- | :--- | | Total | $231,999 | $229,213 | $2,786 | Collateral Dependent Loans (June 30, 2025) | Category | Fair Value (Thousands) | Unobservable Input (Weighted Average) | | :--- | :--- | :--- | | Collateral dependent loans | $6,322 | Discount to reflect current market conditions and ultimate collectability (35.8%) | Note 11 – Fair Value of Financial Instruments This note presents the fair value of Horizon Bancorp's financial instruments, including loans, deposits, and borrowings Fair Value of Loans, net (June 30, 2025) | Category | Carrying Amount (Thousands) | Fair Value (Level 3, Thousands) | | :--- | :--- | :--- | | Loans, net | $4,931,183 | $4,776,148 | Fair Value of Total Deposits (June 30, 2025) | Category | Carrying Amount (Thousands) | Fair Value (Level 1 & 2, Thousands) | | :--- | :--- | :--- | | Non-interest bearing deposits | $1,121,163 | $1,121,163 | | Interest bearing deposits | $4,578,594 | $3,385,413 (Level 1) + $1,189,542 (Level 2) | Fair Value of Borrowings (June 30, 2025) | Category | Carrying Amount (Thousands) | Fair Value (Level 2, Thousands) | | :--- | :--- | :--- | | Borrowings | $975,425 | $992,232 | Note 12 – Stockholders' Equity This note details the components of Horizon Bancorp's stockholders' equity, including accumulated other comprehensive income Total Accumulated Other Comprehensive Income (Loss) | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $(36,403) | +0.28% (reduced loss) | | December 31, 2024 | $(36,301) | | Components of AOCL (June 30, 2025) | Component | Amount (Thousands) | | :--- | :--- | | Unrealized gain (loss) on securities available for sale | $(37,842) | | Unamortized gain (loss) on securities held to maturity, previously transferred from AFS | $1,439 | Note 13 – Regulatory Capital This note provides Horizon Bancorp's regulatory capital ratios and compliance with capital adequacy requirements Capital Ratios (Consolidated, June 30, 2025) | Ratio | Actual | Required for Capital Adequacy | Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital | 14.44% | 8.00% | N/A | | Tier 1 Capital | 12.48% | 6.00% | N/A | | Common Equity Tier 1 Capital | 11.48% | 4.50% | N/A | | Tier 1 Capital (to average assets) | 9.59% | 4.00% | N/A | Capital Ratios (Bank, June 30, 2025) | Ratio | Actual | Required for Capital Adequacy | Well Capitalized | | :--- | :--- | :--- | :--- | | Total Capital | 13.21% | 8.00% | 10.00% | | Tier 1 Capital | 12.22% | 6.00% | 8.00% | | Common Equity Tier 1 Capital | 12.22% | 4.50% | 6.50% | | Tier 1 Capital (to average assets) | 9.36% | 4.00% | 5.00% | - Both Horizon and Horizon Bank met all capital adequacy requirements to be considered well capitalized as of June 30, 2025[160] Note 14 – Off-Balance Sheet Arrangements, Commitments, and Contingencies This note discloses Horizon Bancorp's off-balance sheet arrangements, commitments, and potential contingencies Total Off-Balance Sheet Commitments | Date | Amount (Thousands) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $1,096,015 | +5.21% | | December 31, 2024 | $1,041,759 | | Components (June 30, 2025) | Component | Amount (Thousands) | | :--- | :--- | | Commitments to extend credit | $1,069,729 | | Standby letters of credit | $26,286 | Note 15 - Subsequent Events This note reports any significant events occurring after the balance sheet date but before the financial statements were issued - No reportable subsequent events occurred between June 30, 2025, and the filing date[166] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Horizon's financial performance and condition, covering operations, financial health, and non-GAAP reconciliations Forward–Looking Statements This section outlines factors that could cause actual results to differ materially from forward-looking statements - Actual results may vary due to factors such as new governmental trade measures, uncertain macroeconomic conditions, changes in interest rates and spreads, elevated inflation, loss of key personnel, increasing use of cryptocurrencies, risks related to AI, changes in prepayment speeds, liquidity sources, environmental liability, competitive environment, legislation/regulation, accounting policy changes, litigation, cyber terrorism, and M&A risks[169][174] - The Company does not undertake to update any forward-looking statements[171] Critical Accounting Estimates This section identifies key accounting policies requiring significant management judgment and estimation - Management identifies critical accounting policies as the allowance for credit losses, goodwill and intangible assets, mortgage servicing rights, hedge accounting, and valuation measurements[172] - There have been no material changes in the Company's application of critical accounting estimates since December 31, 2024[173] Results of Operations This section analyzes Horizon Bancorp's financial performance, including net income, interest income, and expenses Net Income This section details Horizon Bancorp's net income and diluted earnings per share for the reporting periods Net Income (Three Months Ended) | Period | Amount (Millions) | Diluted EPS | Change (YoY) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $20.6 | $0.47 | +46.00% | | June 30, 2024 | $14.1 | $0.32 | | Net Income (Six Months Ended) | Period | Amount (Millions) | Diluted EPS | Change (YoY) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $44.6 | $1.01 | +58.43% | | June 30, 2024 | $28.1 | $0.64 | | Net Interest Income This section analyzes Horizon Bancorp's net interest income and net FTE interest margin, highlighting key drivers Net Interest Income (Three Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $55.4 | +22.3% | | June 30, 2024 | $45.3 | | Net FTE Interest Margin (Three Months Ended) | Period | Margin | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | 3.23% | +59 bps | | June 30, 2024 | 2.64% | | - Net interest income increased by $19.1 million for the six months ended June 30, 2025, to $107.6 million, driven by a favorable mix shift towards higher-yielding loans and lower-cost deposit liabilities[179] Drivers of Change (Six Months Ended June 30, 2025 vs. 2024) | Item | Total Change (Thousands) | Due To Volume (Thousands) | Due To Rate (Thousands) | | :--- | :--- | :--- | :--- | | Total interest income | $8,345 | $5,944 | $2,401 | | Total interest expense | $(10,648) | $(3,769) | $(6,879) | Non-Interest Income This section details Horizon Bancorp's non-interest income sources, including gains on loan sales and other fees Total Non-interest Income (Six Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $27.4 | +34% | | June 30, 2024 | $20.4 | | Gain on Sale of Mortgage Loans (Six Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $2.3 | +51% | | June 30, 2024 | $1.5 | | - Other income increased by $7.1 million during the six months ended June 30, 2025, primarily due to a $7.0 million pre-tax gain on the sale of the Company's mortgage warehouse business[193] - Interchange fees decreased by $0.3 million (-4%) for the six months ended June 30, 2025, primarily due to decreases in merchant and debit card fees[190] Non-Interest Expense This section analyzes Horizon Bancorp's non-interest expenses, including salaries, benefits, and other operating costs Total Non-interest Expense (Six Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $78.7 | +6% | | June 30, 2024 | $74.6 | | Salaries and Employee Benefits (Six Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $45.1 | +11% | | June 30, 2024 | $40.9 | | - Other expenses decreased by $1.6 million (-21%) for the six months ended June 30, 2025, primarily due to decreases in marketing and advertising expenses[198] Provision and Allowance for Credit Losses This section discusses Horizon Bancorp's provision for credit losses and the allowance for credit losses on loans Provision for Credit Losses on Loans (Three Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $2.0 | -16.67% | | June 30, 2024 | $2.4 | | Net Loan Charge-offs (Three Months Ended) | Period | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $0.3 | -50.00% | | June 30, 2024 | $0.6 | | Allowance for Credit Losses to HFI Loans | Date | Ratio | | :--- | :--- | | June 30, 2025 | 1.09% | | June 30, 2024 | 1.08% | Income Taxes This section details Horizon Bancorp's income tax expense and effective tax rates for the reporting periods Income Tax Expense (Three Months Ended) | Period | Amount (Millions) | Effective Tax Rate | | :--- | :--- | :--- | | June 30, 2025 | $3.8 | 15.4% | | June 30, 2024 | $1.7 | 10.9% | Income Tax Expense (Six Months Ended) | Period | Amount (Millions) | Effective Tax Rate | | :--- | :--- | :--- | | June 30, 2025 | $7.9 | 15.0% | | June 30, 2024 | $3.0 | 9.8% | - The increase in the effective tax rate for the comparative periods was primarily due to expectations of higher pre-tax income in 2025 and the Company's decision to discontinue further investment in certain tax credit structures[204] Financial Condition This section assesses Horizon Bancorp's financial health, including investment securities, credit quality, liquidity, and capital Investment securities This section details Horizon Bancorp's investment securities portfolio, including changes due to maturities and amortization Total Investment Securities | Date | Amount (Billions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $2.1 | -2.4% | | December 31, 2024 | $2.15 | | - The decrease in total investments was primarily due to normal maturities and amortization of investment securities. There were no purchases of investment securities during the six months ended June 30, 2025[213] Credit Quality This section evaluates Horizon Bancorp's credit quality, including allowance for credit losses and non-accrual loans ACL Balance | Date | Amount (Millions) | % of HFI Loans | | :--- | :--- | :--- | | June 30, 2025 | $54.4 | 1.09% | | December 31, 2024 | $52.0 | 1.07% | Non-accrual Loans | Date | Amount (Millions) | % of HFI Loans | Change (YoY) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $24.3 | 0.49% | -5.8% | | December 31, 2024 | $25.8 | 0.53% | | Total Non-performing Assets | Date | Amount (Millions) | % of Total Assets | Change (YoY) | | :--- | :--- | :--- | :--- | | June 30, 2025 | $30.5 | 0.40% | +11% | | December 31, 2024 | $27.4 | 0.35% | | - During the six months ended June 30, 2025, net charge-offs were $1.1 million, or 5 basis points annualized of average loans in the period[215] Liquidity This section discusses Horizon Bancorp's liquidity position, including available credit lines and cash flow activities - The Bank had approximately $1.75 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window, at June 30, 2025, up from $1.70 billion at December 31, 2024[222] - For the six months ended June 30, 2025, operating activities provided $34.7 million in cash, investing activities used $14.5 million (mainly due to loan portfolio growth), and financing activities used $175.8 million (largely for repayment of $632.0 million in long-term borrowings and $14.2 million in dividends)[223] Capital Resources This section details Horizon Bancorp's capital resources, including stockholders' equity and key capital ratios Total Stockholders' Equity | Date | Amount (Millions) | Change (YoY) | | :--- | :--- | :--- | | June 30, 2025 | $790.9 | +3.57% | | December 31, 2024 | $763.6 | | Key Capital Ratios (June 30, 2025) | Metric | Value | | :--- | :--- | | Ratio of total stockholders' equity to total assets | 10.34% | | Book value per common share | $18.06 | | Tangible common equity (Non-GAAP) | $627.0 million | | Ratio of tangible common equity to tangible assets (Non-GAAP) | 8.37% | | Tangible book value per common share (Non-GAAP) | $14.32 | | Dividend payout ratio (Six Months Ended) | 31.37% | Use of Non-GAAP Financial Measures This section explains the use of non-GAAP financial measures and provides reconciliations to GAAP equivalents Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin This section reconciles Horizon Bancorp's net fully-taxable equivalent interest margin, a non-GAAP measure Net FTE Interest Margin (Non-GAAP, Six Months Ended) | Period | Margin | | :--- | :--- | | June 30, 2025 | 3.14% | | June 30, 2024 | 2.57% | Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets This section reconciles Horizon Bancorp's tangible common equity to tangible assets, a non-GAAP measure Tangible Common Equity to Tangible Assets (Non-GAAP) | Date | Ratio | | :--- | :--- | | June 30, 2025 | 8.37% | | June 30, 2024 | 7.22% | Non–GAAP Reconciliation of Tangible Book Value Per Share This section reconciles Horizon Bancorp's tangible book value per share, a non-GAAP measure Tangible Book Value Per Common Share (Non-GAAP) | Date | Value | | :--- | :--- | | June 30, 2025 | $14.32 | | June 30, 2024 | $12.80 | Item 3. Quantitative and Qualitative Disclosures about Market Risk Horizon manages interest rate risk using earnings simulation models, projecting faster repricing of interest-bearing liabilities in declining rate environments - Interest rate risk management focuses on monitoring and maintaining variances in net interest income due to interest rate changes within Board-approved policy limits, using earnings simulation models[235] Modelled Effects on Net Interest Income (June 30, 2025, 1-year horizon) | Rate Shift | $ Change in Net Interest Income (Thousands) | % Change in Net Interest Income | | :--- | :--- | :--- | | 200 basis points rising | $(18,412.0) | (7.7)% | | 100 basis points rising | $(7,922.0) | (3.3)% | | 100 basis points falling | $2,199.0 | 0.9% | | 200 basis points falling | $(3,610.0) | (1.5)% | - The simulation model indicates that as of June 30, 2025, the Company's interest-bearing liabilities are projected to reprice at a faster pace than interest-earning assets for the next 100 basis points of declining interest rates[236] Item 4. Controls and Procedures Horizon's disclosure controls and procedures are effective, with no material changes to internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of Horizon's disclosure controls and procedures as of June 30, 2025 - Horizon's CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[239] - The controls are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized, and reported within specified timeframes and communicated to management for timely disclosure decisions[239] Changes in Internal Control Over Financial Reporting This section reports no material changes in Horizon's internal control over financial reporting during the fiscal quarter - Management concluded that there were no changes in Horizon's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the fiscal quarter ended June 30, 2025[240] PART II. OTHER INFORMATION This section provides additional information not covered in Part I, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings The Company is involved in ordinary course legal claims, which management believes are adequately covered or immaterial - The Company is involved in various claims, legal actions, and complaints arising in the ordinary course of business[243] - Management believes that all such matters are adequately covered by insurance, are without merit, or involve amounts that would not have a material adverse effect on the financial condition or results of operations[243] Item 1A. Risk Factors No material changes to risk factors previously disclosed in Horizon's Annual Report on Form 10-K for FY2024 - There have been no material changes from the factors previously disclosed under Item 1A of Horizon's Annual Report on Form 10–K for the fiscal year ended December 31, 2024[244] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period, with no unregistered equity sales or proceeds to report - This item is not applicable for the reporting period[246] Item 3. Defaults Upon Senior Securities This item is not applicable for the reporting period, with no defaults on senior securities to report - This item is not applicable for the reporting period[245] Item 4. Mine Safety Disclosures This item is not applicable for the reporting period, requiring no mine safety disclosures - This item is not applicable for the reporting period[245] Item 5. Other Information No directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers reported adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[245] Item 6. Exhibits This section lists exhibits filed with the 10-Q report, including stock agreements, CEO/CFO certifications, and data files Index to Exhibits This section provides an index to the exhibits filed with the report, detailing key documents - Key exhibits include Amended Form of Restricted Stock Award Agreement (performance-based and time-based), Certifications of Thomas M. Prame (CEO) and John R. Stewart (CFO), and Inline Interactive Data Files[248] Signatures The report is signed by Thomas M. Prame (CEO) and John R. Stewart (CFO) on August 11, 2025 - The report is signed by Thomas M. Prame, Chief Executive Officer, and John R. Stewart, Chief Financial Officer[251] - The signing date for the report is August 11, 2025[251]