Horizon Bancorp(US:HBNC)2026-03-13 20:06Financial Performance - As of December 31, 2025, Horizon Bank had total assets of $6.4 billion and total deposits of $5.3 billion[22]. - In 2025, revenues from loans accounted for 291.4% of total consolidated revenue, while revenues from investment securities accounted for 42.9%[24]. - As of December 31, 2025, Horizon employed 465 full-time and 26 part-time employees[29]. - Horizon is the largest bank in LaPorte County and Carroll County, and holds significant market shares in several other counties[32]. - Horizon's management believes that both Horizon and the Bank met all applicable regulatory capital requirements as of December 31, 2025[67]. Market Position and Competition - Horizon operates 71 full-service offices across northern and central Indiana and southern and central Michigan[22]. - Horizon's market share in LaPorte County is the largest among 8 bank and thrift institutions, with a market share of 58.00% in LaPorte County[32]. - The company faces competition from various financial institutions, including commercial banks, credit unions, and emerging FinTech start-ups[30]. - Horizon's primary market includes areas in Indiana and Michigan, with significant competition from both local and national financial service providers[30]. Regulatory Compliance - Horizon Bancorp is subject to extensive regulation and supervision by the Federal Reserve and the Indiana Department of Financial Institutions, ensuring compliance with the Bank Holding Company Act and other regulations[34][36]. - The company is required to act as a source of financial strength for its subsidiary bank, committing resources to support it in times of financial distress[42]. - Horizon is subject to the provisions of the USA PATRIOT Act and the Bank Secrecy Act, which require robust anti-money laundering measures[82]. - The Dodd-Frank Act has significantly changed the regulation of financial institutions, impacting capital requirements and operational practices[92]. - Horizon's compliance with the Sarbanes-Oxley Act includes a report on internal control over financial reporting[91]. Capital Adequacy - As of December 31, 2025, Horizon Bank met all applicable capital adequacy requirements, including a common equity Tier 1 capital to risk-based assets ratio of 4.5% and a total capital to risk-based assets ratio of 8%[63][57]. - As of December 31, 2025, Horizon's total capital ratio was 14.36%, significantly exceeding the required 8.00% for capital adequacy purposes[71]. - The Bank's Tier 1 capital ratio was 12.99%, above the required 8.00%[71]. - Horizon's common equity Tier 1 capital ratio was 10.42%, surpassing the minimum requirement of 4.50%[71]. - The Bank was categorized as "well capitalized," with a total risk-based capital ratio exceeding 10%[80]. Dividend Policy - The Bank could declare dividends of approximately $54.5 million to Horizon without prior regulatory approval as of December 31, 2025[76]. - Horizon is subject to regulatory restrictions on dividend payments, which are limited to the current year's net profits plus retained net profits from the previous two years[76]. - The Federal Reserve expects bank holding companies to consult with it before declaring dividends that could raise safety and soundness concerns[74]. Operational Challenges - Horizon has incurred higher operating costs due to compliance with the Dodd–Frank Act and expects these costs to continue for the foreseeable future[98]. - The company acknowledges risks related to interest rate volatility, competition, and regulatory changes that could impact its financial performance[17]. Investment and Funding - Horizon's investment in stock of the FHLB of Indianapolis was $45.7 million as of December 31, 2025, exceeding the required minimum[105]. - Dividends paid by the FHLB of Indianapolis to Horizon on the FHLB stock totaled approximately $3.6 million for the year ended December 31, 2025, resulting in an annualized rate of 7.8%[105]. - The FHLB serves as a reserve bank for its members and is funded primarily from deposits by banks and proceeds from the sale of consolidated obligations[101]. - The FHLB imposes limitations on advances, including a cap on certain real estate-related collateral to 30% of a member's capital[103]. Regulatory Changes - The Dodd-Frank Act mandates a minimum common equity Tier 1 capital to risk-based assets ratio of 4.5%[57]. - The FDIC has set a long-term goal for the designated reserve ratio of the Deposit Insurance Fund at 2% of estimated insured deposits, with a minimum reserve ratio of 1.35% mandated by the Dodd-Frank Act[50]. - Assessment rates for deposit insurance premiums for small Risk Category I banks, such as Horizon Bank, range from 5 to 9 basis points, with adjustments based on financial measures and supervisory ratings[51][53]. - The Economic Growth Act allows qualifying community banks to maintain a Community Bank Leverage Ratio (CBLR) between 8% and 10%[65]. - Regulatory changes under the Regulatory Relief Act have simplified capital calculations for community banks, although Horizon has not opted into the Community Bank Leverage Ratio framework[99][100].