Net interest income rises at Horizon Bancorp (NASDAQ: HBNC) despite securities losses
Filing Impact
Filing Sentiment
Form Type
10-Q
Horizon Bancorp, Inc. reports first‑quarter 2026 results showing stronger core banking income but weaker comprehensive earnings. Net interest income rose to $62,240 thousand from $52,267 thousand a year earlier as deposit and borrowing costs declined sharply, lifting net income to $26,168 thousand from $23,943 thousand.
Despite higher profit dollars, basic earnings per share slipped to $0.51 from $0.55 on a larger share count. Total assets reached $6,564,216 thousand and deposits $5,422,307 thousand. Credit quality remained stable with an allowance for credit losses of $51,297 thousand and non‑accrual loans of $34,784 thousand.
Comprehensive income fell to $18,451 thousand from $22,838 thousand, mainly because unrealized losses on available‑for‑sale securities deepened, reducing accumulated other comprehensive income by $7,717 thousand after tax. The securities portfolio continues to carry sizable unrealized losses following a 2025 reclassification and sale of former held‑to‑maturity bonds.
Positive
- None.
Negative
- None.
Key Figures
Total assets: $6,564,216 thousand
Total deposits: $5,422,307 thousand
Net interest income: $62,240 thousand
+5 more
8 metrics
Total assets
$6,564,216 thousand
Condensed consolidated balance sheet at March 31, 2026
Total deposits
$5,422,307 thousand
Customer funding at March 31, 2026
Net interest income
$62,240 thousand
Three months ended March 31, 2026 vs $52,267 thousand in 2025
Net income
$26,168 thousand
Three months ended March 31, 2026
Basic EPS
$0.51 per share
Three months ended March 31, 2026 vs $0.55 in 2025
Allowance for credit losses
$51,297 thousand
ACL on loans at March 31, 2026
Non-accrual loans
$34,784 thousand
Loans on non-accrual status at March 31, 2026
Unrealized loss on AFS securities
$46,938 thousand gross
Gross unrealized losses in available-for-sale portfolio at March 31, 2026
Key Terms
allowance for credit losses, available for sale, non-accrual loans, collateral dependent loans, +1 more
5 terms
allowance for credit losses financial
"Allowance for credit losses of $ 51,297 and $ 51,299"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
available for sale financial
"Investment securities, available for sale | 882,168 | 875,414"
Available for sale describes investments, usually bonds or stocks, that a company intends to keep but may sell before they mature; they are reported at current market value on the balance sheet while any unrealized profit or loss is kept separate from regular earnings. For investors, this matters because changes in market value affect a company’s reported net worth and can become realized gains or losses when sold, similar to how the changing resale value of a collectible affects your net wealth even before you sell it.
non-accrual loans financial
"The following table presents non–accrual loans and loans past due over 90 days still on accrual"
A non-accrual loan is a loan a lender has decided is unlikely to produce the scheduled interest payments, so the lender stops counting future interest as income and may record the loan at a reduced value. Think of it like renting out a house where the tenant has stopped paying: you stop counting future rent as earnings because it’s uncertain you’ll get it. For investors, a rise in non-accrual loans signals worsening credit quality, lower reported income and higher potential losses that can weaken a bank’s capital and share price.
collateral dependent loans financial
"Collateral Dependent Financial Assets A collateral dependent financial loan relies solely on the operation or sale of the collateral"
fair value hedges financial
"The Company utilizes fair value hedges and applies the portfolio layer method to hedge stated amounts"
Fair value hedges are financial contracts used to offset changes in the market value of a specific asset or liability, like locking a price to protect against swings in value. For investors, they matter because they reduce sudden swings in reported earnings and balance-sheet values that arise from market movements, helping reveal the company’s underlying performance much like insurance smooths out the financial impact of an unexpected loss.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from________to
Commission file number 0-10792
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (219 ) 879-0211
Former name, former address and former fiscal year, if changed since last report: N/A
____________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | ☒ | |||||||||
| Non-accelerated Filer | ☐ | Smaller Reporting Company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 51,329,764 shares of Common Stock, no par value, at May 6, 2026.
Table of Contents
HORIZON BANCORP, INC.
FORM 10–Q
INDEX
PART I. FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements (Unaudited) | 3 | ||||||
Condensed Consolidated Balance Sheets | 3 | |||||||
Condensed Consolidated Statements of Income | 4 | |||||||
Condensed Consolidated Statements of Comprehensive Income | 5 | |||||||
Condensed Consolidated Statements of Stockholders’ Equity | 6 | |||||||
Condensed Consolidated Statements of Cash Flows | 7 | |||||||
Notes to Condensed Consolidated Financial Statements | 8 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 47 | ||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 60 | ||||||
Item 4. | Controls and Procedures | 60 | ||||||
PART II. OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 62 | ||||||
Item 1A. | Risk Factors | 62 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 62 | ||||||
Item 3. | Defaults Upon Senior Securities | 62 | ||||||
Item 4. | Mine Safety Disclosures | 62 | ||||||
Item 5. | Other Information | 62 | ||||||
Item 6. | Exhibits | 62 | ||||||
Index to Exhibits | 62 | |||||||
Signatures | 64 | |||||||
2
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
HORIZON BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollar Amounts in Thousands)
| March 31, 2026 | December 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | $ | |||||||||
| Interest-bearing deposits in banks | |||||||||||
| Total cash and cash equivalents | |||||||||||
| Investment securities, held for trading | |||||||||||
| Investment securities, available for sale | |||||||||||
| Loans held for sale | |||||||||||
Loans, net of allowance for credit losses of $ | |||||||||||
| Premises and equipment, net | |||||||||||
| Federal Home Loan Bank stock | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Interest receivable | |||||||||||
| Cash value of life insurance | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Deposits | |||||||||||
| Non-interest bearing | $ | $ | |||||||||
| Interest bearing | |||||||||||
| Total deposits | |||||||||||
| Short and long term borrowings | |||||||||||
| Subordinated notes, net | |||||||||||
| Junior subordinated debentures issued to capital trusts | |||||||||||
| Interest payable | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingent liabilities | |||||||||||
| Stockholders’ Equity | |||||||||||
Preferred stock, Authorized, | |||||||||||
Common stock, no par value, Authorized | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
See accompanying Notes to Condensed Consolidated Financial Statements
3
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(Dollar Amounts in Thousands, Except Per Share Data)
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Interest Income | ||||||||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | $ | ||||||||||||||||||||||||||||||||||||
| Investment securities - taxable | ||||||||||||||||||||||||||||||||||||||
| Investment securities - tax exempt | ||||||||||||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||||||||
| Total interest income | ||||||||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||
| Short and long term borrowings | ||||||||||||||||||||||||||||||||||||||
| Subordinated notes | ||||||||||||||||||||||||||||||||||||||
| Junior subordinated debentures issued to capital trusts | ||||||||||||||||||||||||||||||||||||||
| Total interest expense | ||||||||||||||||||||||||||||||||||||||
| Net Interest Income | ||||||||||||||||||||||||||||||||||||||
| Credit loss expense | ||||||||||||||||||||||||||||||||||||||
| Net Interest Income after Provision for Credit Losses | ||||||||||||||||||||||||||||||||||||||
| Non-interest Income | ||||||||||||||||||||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||||||||||||||||||||
| Wire transfer fees | ||||||||||||||||||||||||||||||||||||||
| Interchange fees | ||||||||||||||||||||||||||||||||||||||
| Fiduciary activities | ||||||||||||||||||||||||||||||||||||||
| Loss on sale of investment securities | ( | |||||||||||||||||||||||||||||||||||||
| Gain on sale of mortgage loans | ||||||||||||||||||||||||||||||||||||||
| Mortgage servicing income net of impairment | ||||||||||||||||||||||||||||||||||||||
| Increase in cash value of bank owned life insurance | ||||||||||||||||||||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||||||||||||
| Total non-interest income | ||||||||||||||||||||||||||||||||||||||
| Non-interest Expense | ||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | ||||||||||||||||||||||||||||||||||||||
| Net occupancy expenses | ||||||||||||||||||||||||||||||||||||||
| Data processing | ||||||||||||||||||||||||||||||||||||||
| Professional fees | ||||||||||||||||||||||||||||||||||||||
| Outside services and consultants | ||||||||||||||||||||||||||||||||||||||
| Loan expense | ||||||||||||||||||||||||||||||||||||||
| FDIC insurance expense | ||||||||||||||||||||||||||||||||||||||
| Core deposit intangible amortization | ||||||||||||||||||||||||||||||||||||||
| Merger related expense | ||||||||||||||||||||||||||||||||||||||
| Other losses | ||||||||||||||||||||||||||||||||||||||
| Other expense | ||||||||||||||||||||||||||||||||||||||
| Total non-interest expense | ||||||||||||||||||||||||||||||||||||||
| Income Before Income Taxes | ||||||||||||||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||||||||||||||
| Net Income Available to Common Shareholders | $ | $ | ||||||||||||||||||||||||||||||||||||
| Basic Earnings Per Share | $ | $ | ||||||||||||||||||||||||||||||||||||
| Diluted Earnings Per Share | $ | $ | ||||||||||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statement
4
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollar Amounts in Thousands)
| Three Month Ended | |||||||||||||||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| Net Income | $ | $ | |||||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||||
| Change in securities: | |||||||||||||||||||||||||||||||||||
| Unrealized gain (loss) for the period on AFS securities | ( | ( | |||||||||||||||||||||||||||||||||
| Amortization from transfer of securities from available for sale to held to maturity securities | ( | ||||||||||||||||||||||||||||||||||
| Reclassification adjustment for securities (gains) losses realized in income | |||||||||||||||||||||||||||||||||||
| Income tax effect | |||||||||||||||||||||||||||||||||||
| Unrealized gains (losses) on securities | ( | ( | |||||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax | ( | ( | |||||||||||||||||||||||||||||||||
| Comprehensive Income | $ | $ | |||||||||||||||||||||||||||||||||
5
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(Dollar Amounts in Thousands, Except Per Share Data)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||
| Balances, January 1, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Amortization of unearned compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Net settlement of share awards | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balances, March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
| Balances, January 1, 2026 | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Amortization of unearned compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Cash dividends on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balances, March 31, 2026 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements
6
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollar Amounts in Thousands)
| Three Months Ended | |||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | $ | |||||||||
| Items not requiring (providing) cash | |||||||||||
| Provision for credit losses | |||||||||||
| Depreciation and amortization | |||||||||||
| Share based compensation | |||||||||||
| Amortization of mortgage servicing rights | |||||||||||
| Net (accretion of discounts) or amortization of premiums on securities | ( | ||||||||||
| Purchases of securities held for trading | ( | ||||||||||
| Proceeds from maturities, calls and principal repayments of securities, held for trading | |||||||||||
| Loss on sale of investment securities | |||||||||||
| Gain on sale of mortgage loans | ( | ( | |||||||||
| Net loss on sale of portfolio loans | ( | ||||||||||
| Proceeds from sales of loans | |||||||||||
| Loans originated for sale | ( | ( | |||||||||
| Gain on cash value life insurance | ( | ( | |||||||||
| Gain on other real estate owned | ( | ( | |||||||||
| Net change in: | |||||||||||
| Interest receivable | |||||||||||
| Interest payable | ( | ||||||||||
| Other assets | |||||||||||
| Other liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | $ | $ | |||||||||
| Investing Activities | |||||||||||
| Purchases of securities available for sale | ( | ||||||||||
| Proceeds from sales of securities available for sale | |||||||||||
| Proceeds from maturities, calls and principal repayments of securities available for sale | |||||||||||
| Proceeds from maturities of securities held to maturity | |||||||||||
| Net change in interest-earning time deposits | |||||||||||
| Redemption of FHLB stock | |||||||||||
| Proceeds from sale of portfolio loans | |||||||||||
| Net change in loans | ( | ( | |||||||||
| Proceeds on the sale of OREO and repossessed assets | |||||||||||
| Premises and equipment expenditures | ( | ( | |||||||||
| Proceeds from bank owned life insurance | |||||||||||
| Net cash provided by (used in) investing activities | $ | ( | $ | ||||||||
| Financing Activities | |||||||||||
| Net change in deposits | |||||||||||
| Proceeds from borrowings | |||||||||||
| Repayment of borrowings | ( | ( | |||||||||
| Net change in repurchase agreements | ( | ( | |||||||||
| Net settlement of share awards | ( | ||||||||||
| Dividends paid on common stock | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | $ | $ | ( | ||||||||
| Net Change in Cash and Cash Equivalents | $ | $ | ( | ||||||||
| Cash and Cash Equivalents, Beginning of Period | $ | $ | |||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | |||||||||
| Additional Supplemental Information | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid | |||||||||||
| Transfer of loans to other real estate and repossessed assets | |||||||||||
| Transfer of held to maturity securities to available for sale | |||||||||||
| Cash dividends declared, not paid | |||||||||||
7
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Note 1 - Accounting Policies
Nature of Business and Basis of Reporting
Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form 10–K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission on March 13, 2026 (the “2025 Annual Report on Form 10–K”). The condensed consolidated balance sheet of Horizon as of December 31, 2025 has been derived from the audited balance sheet as of that date.
The CODM uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the business or distribute dividends to shareholders. The CODM also uses net income in competitive analysis by benchmarking against Horizon Bancorp’s competitors. The competitive analysis, along with the monitoring of budgeted versus actual results, is used in assessing performance of the segment and in establishing management’s compensation.
On July 16, 2019, the Board of Directors of the Company authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of March 31, 2026, Horizon had repurchased a total of 803,349 shares at an average price per share of $16.89 .
Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted–average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
8
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table shows computation of basic and diluted earnings per share.
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands, except per share) | March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||
| Basic earnings per share | ||||||||||||||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||
| Basic earnings per share | $ | $ | ||||||||||||||||||||||||||||||||||||
| Diluted earnings per share | ||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | ||||||||||||||||||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||||||||||||||
| Restricted stock | ||||||||||||||||||||||||||||||||||||||
| Stock options | ||||||||||||||||||||||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||||||||||||||||||||
| Diluted Earnings per Share | $ | $ | ||||||||||||||||||||||||||||||||||||
There were 26,735 shares for the three months ended March 31, 2026 which were not included in the computation of diluted earnings per share because they were non–dilutive. There were 202,139 shares for the three months ended March 31, 2025 which were not included in the computation of diluted earnings per share because they were non–dilutive.
9
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Note 2 – Securities
The fair value of available-for-sale securities is as follows.
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Amortized Cost | Allowance for Credit Losses | Net Carrying Amount | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| Available for sale | |||||||||||||||||||||||||||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| State and municipal | ( | ||||||||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | |||||||||||||||||||||||||||||||||
| Total available for sale investment securities | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The fair value of trading securities is as follows:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Held for Trading | |||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | $ | |||||||||
| State and municipal | |||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||
| Corporate notes | |||||||||||
| Total trading securities | $ | $ | |||||||||
For the three-months ending March 31, 2026, the net gains (losses) on trading securities were determined to be immaterial to the consolidated financial statements.
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Amortized Cost | Allowance for Credit Losses | Net Carrying Amount | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||
| Available for sale | |||||||||||||||||||||||||||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| State and municipal | ( | ||||||||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | |||||||||||||||||||||||||||||||||
| Total available for sale investment securities | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The amortized cost and fair value of securities available for sale and at March 31, 2026 and December 31, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
10
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| March 31, 2026 | |||||||||||||||||||||||
| Amortized Cost | Fair Value | ||||||||||||||||||||||
| Available for sale | |||||||||||||||||||||||
| Within one year | $ | $ | |||||||||||||||||||||
| One to five years | |||||||||||||||||||||||
| Five to ten years | |||||||||||||||||||||||
| After ten years | |||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||||||||||||||
| Total available for sale investment securities | $ | $ | |||||||||||||||||||||
The following tables show the gross unrealized losses and the fair value of the Company’s available for sale investments in which an allowance for credit losses were not recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
| Available for Sale Investment Securities | |||||||||||||||||||||||||||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| State and municipal | ( | ( | ( | ||||||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | |||||||||||||||||||||||||||||||||
| Total available for sale investment securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
| Available for Sale Investment Securities | |||||||||||||||||||||||||||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||
| State and municipal | ( | ( | ( | ||||||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | |||||||||||||||||||||||||||||||||
| Total available for sale investment securities | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. As of March 31, 2026 and December 31, 2025, the Company had 843 and 836 securities, respectively, with market values below their cost basis. The total fair value of these investments at March 31, 2026 and December 31, 2025 was $466.0 million and $310.1 million, which is approximately 53 % and 35 %, respectively, of the Company's available for sale securities portfolio.
11
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The Company determines credit losses on available-for-sale investment securities by a discounted cash flow approach using the security’s prepayment-adjusted effective interest rate. The allowance for credit losses is measured as the amount by which an investment security’s amortized cost exceeds the net present value of expected future cash flows. However, the amount of credit losses for available-for-sale investment securities is limited to the amount of a security’s unrealized loss.
The following table details activity in the allowance for credit losses on available for sale debt securities during the three months ended March 31, 2026 and 2025.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Beginning balance | $ | $ | |||||||||||||||||||||
| Credit loss expense (benefit) | |||||||||||||||||||||||
| Ending balance | $ | $ | |||||||||||||||||||||
Due to a specific issuer's deferral of principal and interest payments, the Company placed the security with a fair value of $3.9 million on non-accrual status and recorded a $120 thousand allowance for credit losses on certain corporate debt securities.
Based on an evaluation of available evidence, management believes the unrealized losses on available for sale state and municipal securities, U.S. agency mortgage–backed securities and corporate notes, excluding certain securities disclosed above, were due to changes in interest rates. Due to the contractual terms, the issuers of state and municipal securities are not allowed to settle for less than the amortized cost of the security.
In August 2025, the Company reclassified its held-to-maturity investment portfolio, with a carrying value of $1.8 billion and unrealized loss of $282.6 million, to the available-for-sale portfolio as part of the Company's balance sheet repositioning. Following the reclassification, the Company sold securities with a fair value of $1.4 billion, recognizing a pre-tax loss of $299.5 million upon sale. Following the transfer and sale, the Company released the allowance for credit losses related to the held-to-maturity investment portfolio.
The following table details activity in the allowance for credit losses on held-to-maturity securities during the three months ended March 31, 2026 and 2025.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Beginning balance | $ | $ | |||||||||||||||||||||
| Credit loss expense (benefit) | ( | ||||||||||||||||||||||
| Ending balance | $ | $ | |||||||||||||||||||||
Accrued interest receivable on available for sale debt securities totaled $4.8 million at March 31, 2026 and $5.3 million at December 31, 2025 and is excluded from the estimate of credit losses.
The U.S. government sponsored entities and agencies and mortgage–backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses.
12
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Information regarding securities proceeds, gross gains, and gross losses are presented below:
| Three Months Ended | |||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Sales of available for sale securities | |||||||||||||||||||||||
| Proceeds | $ | $ | |||||||||||||||||||||
| Gross gains | |||||||||||||||||||||||
| Gross losses | ( | ||||||||||||||||||||||
The tax benefit of the proceeds from the sale of securities available for sale was zero and $0.1 million for the three months ended March 31, 2026, and 2025.
The following table represents the fair value and amortized costs of pledged securities, excluding overnight repurchase agreements.
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Fair Value | Amortized Cost | Fair Value | Amortized Cost | ||||||||||||||||||||
| Pledged securities for borrowing availability at the Federal Reserve | $ | $ | $ | $ | |||||||||||||||||||
13
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Note 3 – Loans
The table below identifies the Company’s loan portfolio segments and classes.
| Portfolio Segment | Class of Financing Receivable | |||||||
| Commercial | Owner occupied real estate | |||||||
| Non-owner occupied real estate | ||||||||
| Residential spec homes | ||||||||
| Development & spec land | ||||||||
| Commercial and industrial | ||||||||
| Residential real estate | Residential mortgage | |||||||
| Residential construction | ||||||||
| Consumer | Direct installment | |||||||
| Indirect installment | ||||||||
| Home equity | ||||||||
Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity’s method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Construction loans are reviewed and rewritten prior to being originated as a term loan.
14
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table presents outstanding loans held for investment by portfolio class, as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | ||||||||||
| Commercial | |||||||||||
| Owner occupied real estate | $ | $ | |||||||||
| Non–owner occupied real estate | |||||||||||
| Residential spec homes | |||||||||||
| Development & spec land | |||||||||||
| Commercial and industrial | |||||||||||
| Total commercial | |||||||||||
| Real estate | |||||||||||
| Residential mortgage | |||||||||||
| Residential construction | |||||||||||
| Total real estate | |||||||||||
| Consumer | |||||||||||
| Direct installment | |||||||||||
| Indirect installment | |||||||||||
| Home equity | |||||||||||
| Total consumer | |||||||||||
| Total loans | |||||||||||
| Allowance for credit losses | ( | ( | |||||||||
| Net loans | $ | $ | |||||||||
Total loans include net unearned discounts and deferred loan costs of $6.5 million at March 31, 2026 and $6.8 million at December 31, 2025, respectively.
The risk characteristics of each loan portfolio segment are as follows:
Commercial
Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.
Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy or fluctuations in interest rates. The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner occupied commercial real estate loans versus non-owner occupied loans.
15
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Real Estate and Consumer
With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.
Non–performing Loans
The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loans at March 31, 2026:
| March 31, 2026 | |||||||||||||||||
| Total Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-accruing Loans with no Allowance for Credit Losses | |||||||||||||||
| Commercial | |||||||||||||||||
| Owner occupied real estate | $ | $ | $ | ||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||
| Residential spec homes | |||||||||||||||||
| Development & spec land | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||
| Total commercial | |||||||||||||||||
| Real estate | |||||||||||||||||
| Residential mortgage | |||||||||||||||||
| Residential construction | |||||||||||||||||
| Total real estate | |||||||||||||||||
| Consumer | |||||||||||||||||
| Direct installment | |||||||||||||||||
| Indirect installment | |||||||||||||||||
| Home equity | |||||||||||||||||
| Total consumer | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
16
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loan at December 31, 2025:
| December 31, 2025 | |||||||||||||||||
| Total Non-accrual | Loans Past Due Over 90 Days Still Accruing | Non-accruing Loans with no Allowance for Credit Losses | |||||||||||||||
| Commercial | |||||||||||||||||
| Owner occupied real estate | $ | $ | $ | ||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||
| Residential spec homes | |||||||||||||||||
| Development & spec land | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||
| Total commercial | |||||||||||||||||
| Real estate | |||||||||||||||||
| Residential mortgage | |||||||||||||||||
| Residential construction | |||||||||||||||||
| Total real estate | |||||||||||||||||
| Consumer | |||||||||||||||||
| Direct installment | |||||||||||||||||
| Indirect installment | |||||||||||||||||
| Home equity | |||||||||||||||||
| Total consumer | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
There was no
The amount of accrued interest receivable written off by the Company by reversing interest income was not material during the three months periods ended March 31, 2026 and 2025, respectively.
17
Table of Contents
HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table presents the payment status by class of loan at March 31, 2026:
| March 31, 2026 | |||||||||||||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Total Loans | ||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||||||||||||||||||||
| Residential spec homes | |||||||||||||||||||||||||||||||||||
| Development & spec land | |||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||
| Real estate | |||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||
| Residential construction | |||||||||||||||||||||||||||||||||||
| Total real estate | |||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||
| Direct installment | |||||||||||||||||||||||||||||||||||
| Indirect installment | |||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
18
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table presents the payment status by class of loan at December 31, 2025:
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Total Loans | ||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||||||||||||||||||||
| Residential spec homes | |||||||||||||||||||||||||||||||||||
| Development & spec land | |||||||||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||||||||
| Real estate | |||||||||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||||||||
| Residential construction | |||||||||||||||||||||||||||||||||||
| Total real estate | |||||||||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||||||||
| Direct installment | |||||||||||||||||||||||||||||||||||
| Indirect installment | |||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.
Modified Loans
The following tables detail the amortized cost at March 31, 2026 of loans that were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and the amortized cost at March 31, 2025, of loans that were modified to borrowers experiencing financial difficulty during the three months periods ended March 31, 2025:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Other-Than-Insignificant Payment Delay | Term Extension and Interest Rate Reduction | Total | % of Loans Held for Investment | ||||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied real estate | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Development spec & land | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Extension | Interest Rate Reduction | Other-Than-Insignificant Payment Delay | Term Extension and Interest Rate Reduction | Total | % of Loans Held for Investment | ||||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||||
| Non-owner occupied real estate | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Development spec & land | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | % | |||||||||||||||||||||||||||||||||||||||||
The following tables summarize the financial impacts of loan modifications and payment deferrals, as applicable, during the three months periods ended March 31, 2026 and 2025:
| Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
| Weighted Average Term Extension (In Months) | Weighted average interest rate reduction (In Percentage Terms) | Weighted Average Payment Delay (In Months) | Term Extension (In Months) & Rate Reduction (In Percentage Terms) | ||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Owner occupied real estate | 0 | — | % | 0 | |||||||||||||||||||||||||
| Non-owner occupied real estate | — | 0 | 0 | ||||||||||||||||||||||||||
| Development spec & land | — | 0 | 0 | ||||||||||||||||||||||||||
| Commercial and industrial | — | 0 | 0 | ||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| Weighted Average Term Extension (In Months) | Weighted average interest rate reduction (In Percentage Terms) | Weighted Average Payment Delay (In Months) | Term Extension (In Months) & Rate Reduction (In Percentage Terms) | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Owner occupied real estate | 0 | — | % | 0 | |||||||||||||||||||
| Non-owner occupied real estate | — | 0 | 0 | ||||||||||||||||||||
| Development spec & land | — | 0 | 0 | ||||||||||||||||||||
| Commercial and industrial | — | 0 | |||||||||||||||||||||
20
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The financial impacts of the modifications did not significantly impact our determination of the allowance for credit losses during the periods presented above.
The following table presents the amortized cost basis at March 31, 2026 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months:
| March 31, 2026 | |||||||||||||||||||||||
| Current | 30-89 Days Past Due | 90 Days Past Due | Total | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | |||||||||||||||||||
| Non-owner occupied real estate | |||||||||||||||||||||||
| Development spec & land | |||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The following table presents the amortized cost basis at March 31, 2025 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months:
| March 31, 2025 | |||||||||||||||||||||||
| Current | 30-89 Days Past Due | 90 Days Past Due | Total | ||||||||||||||||||||
| Commercial | |||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | |||||||||||||||||||
| Non-owner occupied real estate | |||||||||||||||||||||||
| Development spec & land | |||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
During the quarters ended March 31, 2026 and 2025, the Company had zero and $0.1 million, respectively of loans to borrowers experiencing financial difficulty that had a payment default and were modified within the three months prior to the payment default. For purposes of this disclosure, the Company defines “default” as being 30 days or more past due of contractual interest or principal.
Collateral Dependent Financial Assets
A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with the loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.
The tables below present the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses, at March 31, 2026 and December 31, 2025.
21
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| March 31, 2026 | |||||||||||||||||||||||||||||
| Real Estate | Accounts Receivable/ Equipment | Other | Total | ACL Allocation | |||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||||||||||||||
| Development & spec land | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||
| Real estate | |||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||
| Total real estate | |||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||
| Total collateral dependent loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Real Estate | Accounts Receivable/ Equipment | Other | Total | ACL Allocation | |||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||
| Owner occupied real estate | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Non–owner occupied real estate | |||||||||||||||||||||||||||||
| Development & spec land | |||||||||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||||||||
| Total commercial | |||||||||||||||||||||||||||||
| Real estate | |||||||||||||||||||||||||||||
| Residential mortgage | |||||||||||||||||||||||||||||
| Total real estate | |||||||||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||
| Total consumer | |||||||||||||||||||||||||||||
| Total collateral dependent loans | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
As of March 31, 2026, the Company had a carrying value of $3.1 million of repossessed assets. As of March 31, 2026, the Company had a recorded net investment of $1.0 million of residential mortgage and home equity loans in which foreclosure proceedings have commenced. Repossessed assets are a component of other assets within the condensed consolidated balance sheet.
Credit Quality Indicators
Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re–evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the credit quality grade.
•For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective regions (ranging from $3,000,000 to $6,000,000 ) are validated by the Loan
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Committee, which is chaired by the Chief Commercial Banking Officer (“CCBO”).
•Commercial loan officers are responsible for reviewing their loan portfolios and promptly assessing any adverse change in credit quality and revising the risk rating appropriately. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the Credit Department of the change in the credit quality grade. Downgrades are accepted immediately, however, lenders must present their factual information to the Credit Department when recommending an upgrade. Downgrades to impaired status require the concurrence of the CCBO and the Senior Workout Loan Manager.
•The CCBO, or a designee, meets periodically with loan officers to discuss the status of past due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.
•Monthly, senior management meets as members of the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, loan modifications, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Credit Losses on Loans and Leases.
For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non–accrual, or are classified as modified loans are graded “Substandard.” After being 90 to 120 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non–accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.
Horizon Bank employs a nine–grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.
Risk Grade 1: Excellent (Pass)
Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents or loans to any publicly held company with a current long–term debt rating of A or better and meeting defined key financial metric ranges.
Risk Grade 2: Good (Pass)
Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three years consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities with required margins where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit histories; or loans to publicly held companies with current long–term debt ratings of Baa or better and meeting defined key financial metric ranges.
Risk Grade 3: Satisfactory (Pass)
Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:
•At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory;
•At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
•The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.
•During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.
Risk Grade 4: Satisfactory/Monitored
Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory rated loans and meet defined key financial metric ranges. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.
Risk Grade 4W: Management Watch
Loans in this category are considered to be of acceptable quality and meet defined key financial metric ranges, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion. Commercial construction loans are graded as 4W Management Watch until the projects are completed and stabilized.
Risk Grade 5: Special Mention
Loans which possess some temporary (normally less than one year) credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength and must meet defined key financial metric ranges.
Risk Grade 6: Substandard
One or more of the following characteristics may be exhibited in loans classified Substandard:
•Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.
•Loans are inadequately protected by the current net worth and paying capacity of the obligor.
•The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.
•Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.
•Unusual courses of action are needed to maintain a high probability of repayment.
•The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.
•The lender is forced into a subordinated or unsecured position due to flaws in documentation.
•Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.
•The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
•There is a significant deterioration in market conditions to which the borrower is highly vulnerable.
•The borrower meets defined key financial metric ranges.
Risk Grade 7: Doubtful
One or more of the following characteristics may be present in loans classified Doubtful:
•Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable.
•The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.
•The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.
•The borrower meets defined key financial metric ranges.
Risk Grade 8: Loss
Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The Company defines term loans as those having a fixed duration, repayment schedule and defined interest rate. Revolving loans include loans with revolving privileges and certain complex lending arrangements involving commitments made by the Company under predefined terms or loans with interchangeable interest rate and repayment options that extend beyond the time of origination. Revolving term loans include loans with revolving privileges and certain complex lending arrangements involving commitments made by the Company under predefined terms, including loans with both revolving and non-revolving components and loans with delayed draw down features.
The following tables present loans by credit grades and origination year at March 31, 2026.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total owner occupied real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–owner occupied real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non–owner occupied real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential spec homes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential spec homes | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Development & spec land | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total development & spec land | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential construction | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct installment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total direct installment | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Indirect installment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total indirect installment | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total home equity | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following tables present loans by credit grades and origination year at December 31, 2025.
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Owner occupied real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total owner occupied real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–owner occupied real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total non–owner occupied real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential spec homes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential spec homes | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Development & spec land | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total development & spec land | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
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Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential construction | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential construction | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total real estate | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Term Loans | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct installment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total direct installment | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Indirect installment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total indirect installment | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non–performing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total home equity | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs during period | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Note 4 – Allowance for Credit and Loan Losses
The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended March 31, 2026 and 2025:
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(Table Dollar Amounts in Thousands, Except Per Share Data)
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||||||
| Commercial | Real Estate | Consumer | Total | |||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Credit loss expense (recovery) | ( | |||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| Commercial | Real Estate | Consumer | Total | |||||||||||||||||||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Credit loss expense (recovery) | ( | |||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Recoveries | ||||||||||||||||||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||||||||||||||||||
The accrued interest receivable on our loan receivables is excluded from the allowance for credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of March 31, 2026 and December 31, 2025, the accrued interest on our loan portfolio was $23.4 million and $23.7 million, respectively.
The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge–offs, net of recoveries, (“loan losses”) recognized over the life of a closed pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).
To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.
The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look–back period includes January 2009 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data. The Company supplemented data for 2009 and 2010 with the use of adjusted Uniform Bank Performance Report peer group data.
Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit–related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.
The Company’s CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized Moody's economic forecast scenarios including both National and Regional econometrics, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, and qualitative adjustments were utilized to reflect the forecast and other relevant factors.
The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.
Liability for Commitments to Extend Credit and Standby Letters of Credit
The following tables represent, by loan portfolio segment, a summary of changes in the activity in the liability for
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commitments to extend credit and standby letters of credit (please see note 14):
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||||||||||||||||||||||||||
| Balance, beginning of period | Credit loss expense (reversal) | Ending balance | Balance, beginning of period | Credit loss expense (reversal) | Ending balance | |||||||||||||||||||||||||||||||||
| Commercial | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Real Estate | ( | |||||||||||||||||||||||||||||||||||||
| Consumer | ( | |||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Note 5 – Loan Servicing
Loans serviced for others are not included in the accompanying condensed consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.40 billion and $1.41 billion at March 31, 2026 and December 31, 2025.
Activity for mortgage servicing rights and the related impairment allowance were as follows:
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||
| Mortgage servicing rights | |||||||||||||||||||||||||||||||||||
| Balances, January 1 | $ | $ | |||||||||||||||||||||||||||||||||
| Servicing rights capitalized | |||||||||||||||||||||||||||||||||||
| Amortization of servicing rights | ( | ( | |||||||||||||||||||||||||||||||||
| Ending balance | |||||||||||||||||||||||||||||||||||
| Impairment allowance | |||||||||||||||||||||||||||||||||||
| Beginning balance | |||||||||||||||||||||||||||||||||||
| Additions | |||||||||||||||||||||||||||||||||||
| Reductions | |||||||||||||||||||||||||||||||||||
| Ending balance | |||||||||||||||||||||||||||||||||||
| Mortgage servicing rights, net | $ | $ | |||||||||||||||||||||||||||||||||
| Fair value, beginning of period | $ | ||||||||||||||||||||||||||||||||||
| Fair value, end of period | |||||||||||||||||||||||||||||||||||
Note 6 – Goodwill
The carrying amount of goodwill was $155.2
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may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.
Note 7 – Repurchase Agreements
The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Company’s control.
The following tables show repurchase agreements accounted for as secured borrowings and the related securities, at fair value, pledged for repurchase agreements:
| March 31, 2026 | |||||||||||||||||||||||||||||
| Remaining Contractual Maturity of the Agreements | |||||||||||||||||||||||||||||
| Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater Than 90 Days | Total | |||||||||||||||||||||||||
| Repurchase Agreements and repurchase-to-maturity transactions | |||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||||||||||||||||||||
| Total Repurchase Agreements | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Repurchase Agreements subject to offsetting arrangements | — | ||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Remaining Contractual Maturity of the Agreements | |||||||||||||||||||||||||||||
| Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater Than 90 Days | Total | |||||||||||||||||||||||||
| Repurchase Agreements and repurchase-to-maturity transactions | |||||||||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||||||||||||||||||||
| Total Repurchase Agreements | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Repurchase Agreements subject to offsetting arrangements | — | ||||||||||||||||||||||||||||
Securities sold under agreements to repurchase are secured by securities with a carrying amount of $68.4 million and $90.7 million at March 31, 2026 and December 31, 2025, respectively.
Note 8 – Subordinated Notes
On August 29, 2025, Horizon completed the offering and sale of $100.0 million in aggregate principal amount of its 7.000 % Fixed-to-Floating Rate Subordinated Notes due 2035 (the “2035 Notes”). The 2035 Notes were issued by Horizon at a price equal to 100 % of their face amount. Horizon used the net proceeds from the offering for general corporate purposes, including in support of the repositioning of its balance sheet, and to redeem approximately $56.5 million in aggregate principal amount of its 5.625 % fixed-to-floating rate subordinated notes due 2030, which was completed on October 1,
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2025. The 2035 Notes will bear interest at a fixed interest rate of 7.000 % per annum until September 15, 2030, after which time the interest rate will reset quarterly to a floating rate equal to a benchmark rate, which is expected to be the then current three-month term Secured Overnight Financing Rate (SOFR) plus 360 basis points until the 2035 Notes' maturity on September 15, 2035. The 2035 Notes are redeemable by Horizon, in whole or in part, on any interest payment date on or after September 15, 2030, and at any time upon the occurrence of certain events, subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital regulations. The 2035 Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes.
Note 9 – Derivative Financial Instruments
Our hedging policy allows the use of interest rate derivative instruments to manage our exposure to interest rate risk or hedge specified assets and liabilities. All derivative instruments are carried on the balance sheet at their estimated fair value and are recorded in other assets or other liabilities, as appropriate, and in the net change in each of these financial statement line items in the accompanying consolidated statement of cash flows.
Fair Value Hedges
Fair value hedges are intended to manage interest rate risk associated with the underlying hedged items. The Company utilizes fair value hedges and applies the portfolio layer method to hedge stated amounts within a closed portfolio of certain available-for-sale mortgage-backed debt securities.
To mitigate the impact of interest rate fluctuations on fair value, the Company previously entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. The Company also previously utilized fair value hedges to hedge investment securities, converting the fixed rate security to a variable rate. Changes in fair value of both the hedge instruments and the underlying loan and security agreements are recorded as gains or losses in interest income. During the year ended December 31, 2024, the Company terminated the fair value hedges on loans and securities, recording a deferred gain of $2.3 million on the loan termination that will be accreted into interest income over the remaining life of the underlying loans, and a mark-to-market adjustment of $0.3 million that was recorded in non-interest income on the termination of the fair value hedges against investment securities. The remaining accretion on the loans was $1.6 million at March 31, 2026.
During the year ended December 31, 2025, the Company entered into interest rate swap agreements designated as fair value hedges of interest rate rate risk associated with certain fixed-rate investment securities. The swaps are intended to hedge changes in fair value attributable to fluctuations in that benchmark rate. Changes to fair value hedges on mortgage-backed securities are recorded as gains or losses in interest income. The hedged items consist of mortgage-backed securities which are located in the 'Investment securities, available for sale' line item on the consolidated balance sheet. The hedge relationship fair value is recorded in the "other assets" line item on the condensed consolidated balance sheet. The hedge relationships had stated maturities ranging from March 27, 2040 to March 27, 2042.
The company assesses hedge effectiveness on a monthly basis using regression analysis, the fair value hedges are considered highly effective.
Other Derivative Instruments
From time to time, we may enter into certain interest rate swaps that are not designated as hedging instruments. These interest rate derivative contracts relate to transactions in which we enter into an interest rate swap with a customer while concurrently entering into an offsetting interest rate swap with a third-party financial institution. We agree to pay interest to the customer on a notional amount at a variable rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay a third-party financial institution the same fixed interest rate on the
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same notional amount and receive the same variable interest rate on the same notional amount. These interest rate derivative contracts allow our customers to effectively convert a variable rate loan to a fixed rate loan.
The Company enters into non–hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At March 31, 2026, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.
Changes in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.
The following tables summarize the fair value of our derivative financial instruments utilized by Horizon on a gross basis for the periods indicated.
| Asset Derivatives | Liability Derivatives | ||||||||||||||||||||||
| March 31, 2026 | March 31, 2026 | ||||||||||||||||||||||
| Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
| Derivatives designated as hedging instruments | |||||||||||||||||||||||
| Interest rate contracts – fair value hedges | $ | $ | $ | $ | |||||||||||||||||||
| Total derivatives designated as hedging instruments | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments | |||||||||||||||||||||||
| Interest rate contracts - customer accommodation | $ | $ | $ | $ | |||||||||||||||||||
| Mortgage loan contracts | |||||||||||||||||||||||
| Commitments to originate mortgage loans | |||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | |||||||||||||||||||||||
| Total derivatives subject to enforceable master netting arrangements, gross | $ | $ | $ | $ | |||||||||||||||||||
| Less: Gross amounts offset | |||||||||||||||||||||||
| Total derivatives subject to enforceable master netting arrangements, net | $ | $ | $ | $ | |||||||||||||||||||
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| Asset Derivatives | Liability Derivatives | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2025 | ||||||||||||||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||
| Derivatives designated as hedging instruments | |||||||||||||||||||||||
| Interest rate contracts - fair value hedges | $ | $ | $ | $ | |||||||||||||||||||
| Total derivatives designated as hedging instruments | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments | |||||||||||||||||||||||
| Interest rate contracts - customer accommodation | $ | $ | $ | $ | |||||||||||||||||||
| Mortgage loan contracts | |||||||||||||||||||||||
| Commitments to originate mortgage loans | |||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | |||||||||||||||||||||||
| Total derivatives subject to enforceable master netting arrangements, gross | $ | $ | $ | $ | |||||||||||||||||||
| Less: Gross amounts offset | |||||||||||||||||||||||
| Total derivatives subject to enforceable master netting arrangements, net | $ | $ | $ | $ | |||||||||||||||||||
While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company has elected to not offset derivative assets and liabilities under these agreements on its consolidated balance sheets.
Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities. At March 31, 2026, the Company did not pledge any marketable securities as collateral.
The effect of the derivative and the hedged item in fair value hedging relationships on the condensed consolidated statements of income for three month periods ended March 31, 2026 and March 31, 2025 is as follows:
Location of gain (loss) recognized on derivative and Hedge item | Amount of Gain (Loss) Recognized on Derivative and Hedged Item | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||||||||
| Interest rate contracts - fair value hedge | Interest income - investment securities | ||||||||||||||||||||||||||||||||||||||||
| Hedged item | ( | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||||||||||||||||||||
The effect of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the three month periods ended March 31, 2026 and March 31, 2025 is as follows:
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Location of gain (loss) recognized on derivative | Amount of Gain (Loss) Recognized on Derivative | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Derivative not designated as hedging relationship | |||||||||||||||||||||||||||||||||||||||||
| Mortgage loan contracts | Non-interest income-gain (loss) on sale of loans | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Commitments to originate mortgage loans | Non-interest income-gain (loss) on sale of loans | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Total | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
The following tables summarize the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.
| Amortized Cost of Hedged Items | Cumulative Hedge Accounting Basis Adjustments | ||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||
| Available-for-Sale Debt Securities | $ | $ | $ | ( | $ | ( | |||||||||||||||||
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Note 10 – Disclosures about Fair Value of Assets and Liabilities
The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2026. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.
Available for sale securities
When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, U.S. government agency mortgage-backed securities, corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed–income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features. Level 3 securities use the discounted cash flow model or other market indicators to calculate the fair values.
Equity investments in other assets
The fair value of the Company's equity investments in other assets is estimated by a third party utilizing readily determinable fair values quoted on an active market. These investments include the Company's non-qualified deferred compensation plan (see Note 14 - Non-Qualified Deferred Compensation Plan in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025). The Company informally funded its obligation to plan participants in a rabbi trust, which is consolidated by the Company, and is comprised of investment options similar to those selected by the Participants. The assets held in the rabbi trust were reported at their estimated fair value and were included in cash and other assets in the Company's consolidated balance sheets. The related accrued benefit cost (representing the Company's benefit obligation to participants) is recorded as an offsetting liability in other liabilities in the Company's consolidated balance sheets. These assets are classified within Level 1 of the valuation hierarchy.
Interest rate swap agreements
The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy.
Commitments to originate mortgage loans and mortgage loan contract assets/liabilities
The Company’s forward commitments are valued based on quoted prices for similar assets in an active market with inputs that are observable.
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The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed consolidated financial statements measured at fair value on a recurring basis and the level within the FASB ASC fair value hierarchy in which the fair value measurements fall at the following:
| March 31, 2026 | |||||||||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Available for sale securities | |||||||||||||||||||||||
| U.S. Treasury and federal agencies | $ | $ | $ | $ | |||||||||||||||||||
| State and municipal | |||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||||||||||||||
| Corporate notes | |||||||||||||||||||||||
| Total available for sale securities | |||||||||||||||||||||||
| Equity securities in other assets | |||||||||||||||||||||||
| Held for trading securities | |||||||||||||||||||||||
| Interest rate swap agreements asset | |||||||||||||||||||||||
| Commitments to originate mortgage loans | |||||||||||||||||||||||
| Mortgage loans contracts | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Interest rate swap agreements liability | ( | ( | |||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Available for sale securities | |||||||||||||||||||||||
| U.S. Treasury and federal agencies | $ | $ | $ | $ | |||||||||||||||||||
| State and municipal | |||||||||||||||||||||||
| U.S. government agency mortgage-backed securities | |||||||||||||||||||||||
| Corporate notes | |||||||||||||||||||||||
| Total available for sale securities | |||||||||||||||||||||||
| Equity securities in other assets | |||||||||||||||||||||||
| Held for trading securities | |||||||||||||||||||||||
| Interest rate swap agreements asset | |||||||||||||||||||||||
| Commitments to originate mortgage loans | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Mortgage loan contracts | ( | ( | |||||||||||||||||||||
| Interest rate swap agreements liability | ( | ( | |||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Level 3 recurring fair value measurements:
As of March 31, 2026, the Company has one Level 3 fair value measurement, an available‑for‑sale corporate debt security, which was transferred from Level 2 to Level 3 in 2025 due to increased reliance on significant unobservable inputs used in the discounted cash flow model. These valuation inputs primarily relate to expected cash flow timing, credit assumptions, and the discount rate applied to those cash flows. At the time of transfer, the security had an amortized cost of $5 million and the Company recognized an initial allowance for credit losses $150 thousand and an initial write down of $2.1 million; the fair value at the transfer date is reflected within "Transfers into Level 3". The following table presents the changes in fair value for assets classified within Level 3 of the fair value hierarchy as of March 31, 2026 and December 31, 2025:
| Level 3 instruments at fair value | March 31, 2026 | December 31, 2025 | |||||||||
| Fair value beginning of year | $ | $ | |||||||||
| Transfers into Level 3 (at fair value on transfer date) | |||||||||||
| Total gains/(losses) included in earnings (subsequent ACL change - AFS securities) | |||||||||||
| Total gains/(losses) included in OCI | ( | ||||||||||
| Ending balance – March 31, 2026 | $ | $ | |||||||||
Certain other assets are measured at fair value on a non-recurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment):
| Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||
| Collateral dependent loans | $ | $ | $ | $ | |||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Collateral dependent loans | $ | $ | $ | $ | |||||||||||||||||||
Collateral Dependent Loans: For loans identified as collateral dependent, the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.
The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| March 31, 2026 | |||||||||||||||||||||||
| Fair Value | Valuation Technique | Unobservable Inputs | Range (Weighted Average) | ||||||||||||||||||||
| Collateral dependent loans | $ | ||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Fair Value | Valuation Technique | Unobservable Inputs | Range (Weighted Average) | ||||||||||||||||||||
| Collateral dependent loans | $ | ||||||||||||||||||||||
Note 11 – Fair Value of Financial Instruments
The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts.
The following table does not include certain financial instruments that are recorded at fair value on a recurring basis, including some non-recurring financial instruments. See Note 10 for more details.
The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at March 31, 2026 and December 31, 2025. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheets as well as certain off–balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy.
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and Cash Equivalents – Cash and cash equivalents are composed of: cash and due from banks, interest bearing deposits in banks, and federal funds sold. The carrying amounts approximate fair value.
Interest-Earning Time Deposits – The carrying amounts approximate fair value.
Loans Held for Sale – For mortgage loans, the fair value is derived from third party pricing models, based on active quotes. For non-mortgage loans, the assets are carried at the lower of cost or fair value.
Net Loans – The fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.
FHLB Stock – Fair value of FHLB stock is based on the price at which it may be resold to the FHLB.
Interest Receivable/Payable – The carrying amounts approximate fair value.
Deposits – The fair value of demand deposits, savings accounts, interest bearing checking accounts and money market deposits is the amount payable on demand at the reporting date and are classified within Level 1. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
similar remaining maturity and are classified within Level 2.
Borrowings – Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.
Subordinated Notes – The fair value of subordinated notes is based on discounted cash flows based on current borrowing rates for similar types of instruments.
Junior Subordinated Debentures to Capital Trusts – Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.
The following tables present estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
| March 31, 2026 | |||||||||||||||||||||||
| Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | |||||||||||||||||||
| Interest- bearing deposits in banks | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||
| Loans, net | |||||||||||||||||||||||
| Stock in FHLB | |||||||||||||||||||||||
| Interest receivable | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Non-interest bearing deposits | $ | $ | $ | $ | |||||||||||||||||||
| Interest bearing deposits | |||||||||||||||||||||||
| Borrowings | |||||||||||||||||||||||
| Subordinated notes | |||||||||||||||||||||||
| Junior subordinated debentures issued to capital trusts | |||||||||||||||||||||||
| Interest payable | |||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and due from banks | $ | $ | $ | $ | |||||||||||||||||||
| Interest- bearing deposits in banks | |||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Loans held for sale | |||||||||||||||||||||||
| Loans (excluding loan level hedges), net | |||||||||||||||||||||||
| Stock in FHLB | |||||||||||||||||||||||
| Interest receivable | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Non-interest bearing deposits | $ | $ | $ | $ | |||||||||||||||||||
| Interest bearing deposits | |||||||||||||||||||||||
| Borrowings | |||||||||||||||||||||||
| Subordinated notes | |||||||||||||||||||||||
| Junior subordinated debentures issued to capital trusts | |||||||||||||||||||||||
| Interest payable | |||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Note 12 – Stockholders' Equity
The components of accumulated other comprehensive loss, net of tax included in capital are as follows:
Accumulated Other Comprehensive Income (Loss)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Unrealized gain (loss) on securities available for sale | $ | ( | $ | ( | |||||||
| Total accumulated other comprehensive income (loss) | $ | ( | $ | ( | |||||||
Note 13 – Regulatory Capital
Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd–Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off–balance–sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel III–based regulations. As allowed under Basel III rules, the Company made the decision to opt–out of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below.
In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk–based, Tier I risk–based, common equity Tier I risk–based and Tier I leverage ratios as set forth in the table below. As of March 31, 2026 and December 31, 2025, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the first quarter of 2026 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well capitalized status for bank holding companies.
On March 19, 2026, the federal banking regulators issued three proposals to modernize the regulatory capital framework for banks of all sizes. The federal banking agencies stated the proposals would streamline capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system. The proposals are intended to be the final phase of the Basel capital reforms. Comments on the proposals are due by June 18, 2026. The Company's management continues to evaluate the impact of these proposals on the Company, the Bank, and its business, financial condition, and results of operations.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
The following table presents Horizon and the Bank’s actual and required capital ratios as of March 31, 2026 and December 31, 2025:
| Actual | Required for Capital Adequacy Purposes(1) | Required For Capital Adequacy Purposes with Capital Buffer(1) | Well Capitalized Under Prompt Corrective Action Provisions(1) | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
Total capital (to risk-weighted assets)(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | $ | |||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital (1) (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 capital (1) (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets)(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
(1) As defined by regulatory agencies | |||||||||||||||||||||||||||||||||||||||||||||||
| Actual | Required for Capital Adequacy Purposes(1) | Required For Capital Adequacy Purposes with Capital Buffer(1) | Well Capitalized Under Prompt Corrective Action Provisions(1) | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
Total capital (to risk-weighted assets)(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital (1) (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 capital (1) (to risk-weighted assets) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital (to average assets)(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||
| Bank | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||
(1) As defined by regulatory agencies | |||||||||||||||||||||||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Table Dollar Amounts in Thousands, Except Per Share Data)
Note 14 – Off-Balance Sheet Arrangements, Commitments, and Contingencies
In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the consolidated balance sheets.
Commitments to extend credit are legally binding agreements to lend to a client, so long as there is no violation of any condition established in the commitment contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third party. The credit risk involved in issuing letters of credit is essentially the same as the credit risk involved in extending loan facilities to clients. The Company’s policy for obtaining collateral, and determining the nature of such collateral, is essentially the same as in the Company’s policies for making commitments to extend credit. The methodology for estimating the liability for unfunded loan commitments is consistent with the allowance for credit losses on loans.
The following table represents the commitments to extend credit and standby letters of credit as of March 31, 2026 and December 31, 2025, respectively:
| March 31, 2026 | December 31, 2025 | |||||||||||||
| Commitments to extend credit | $ | $ | ||||||||||||
| Standby letters of credit | ||||||||||||||
| Total | $ | $ | ||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward–Looking Statements
This report contains certain forward–looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Horizon Bancorp, Inc. (“Horizon” or the “Company”) and Horizon Bank (the “Bank”). Horizon intends such forward–looking statements to be covered by the safe harbor provisions for forward–looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for the purposes of these safe harbor provisions. Statements in this report should be considered in conjunction with the other information available about Horizon, including the information in the other filings we make with the Securities and Exchange Commission. The forward–looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “expect,” “estimate,” “project,” “intend,” “plan,” “believe,” “could,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward–looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.
Actual results may differ materially, adversely or positively, from the expectations of the Company that are expressed or implied by any forward–looking statement. Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward–looking statement include but are not limited to:
•effects on Horizon’s business resulting from new U.S. domestic or foreign governmental trade measures, including but not limited to tariffs, import and export controls, foreign exchange intervention accomplished to offset the effects of trade policy or in response to currency volatility, and other restrictions on free trade;
•uncertain conditions within the domestic and international macroeconomic environment, including trade policy, monetary and fiscal policy, and conditions in the investment, credit, interest rate, and derivatives markets, and their impact on Horizon and its customers;
•current financial conditions within the banking industry;
•the impact of continued partial shutdown of the U.S. government;
•changes in the level and volatility of interest rates, spreads on earning assets and interest bearing liabilities, and interest rate sensitivity;
•the aggregate effects of elevated inflation levels in recent years;
•loss of key Horizon personnel;
•macroeconomic conditions and their impact on Horizon and its customers;
•the increasing use of Bitcoin and other crypto currencies and/or stable coin and the possible impact these alternative currencies may have on deposit disintermediation and income derived from payment systems;
•risks related to the development and use of artificial intelligence (AI);
•the effect of interest rates on net interest rate margin and their impact on mortgage loan volumes and the outflow of deposits;
•increases in disintermediation, as new technologies allow consumers to complete financial transactions without the assistance of banks;
•potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms (e.g., Apple Pay or Bitcoin) take a greater market share of the payment systems;
•estimates of fair value of certain of Horizon’s assets and liabilities;
•volatility and disruption in financial markets;
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
•changes in prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets;
•changes in sources of liquidity;
•potential risk of environmental liability related to lending and acquisition activities;
•changes in the competitive environment in Horizon’s market areas and among other financial service providers;
•legislation and/or regulation affecting the financial services industry as a whole, and Horizon and its subsidiaries in particular;
•changes in regulatory supervision and oversight, including monetary policy and capital requirements;
•changes in accounting policies or procedures as may be adopted and required by regulatory agencies;
•litigation, regulatory enforcement, tax, and legal compliance risk and costs, as applicable generally and specifically to the financial and fiduciary (generally and as an ESOP fiduciary) environment, especially if materially different from the amount we expect to incur or have accrued for, and any disruptions caused by the same;
•the effects and costs of governmental investigations or related actions by third parties;
•rapid technological developments and changes;
•the risks presented by cyber terrorism and data security breaches;
•the rising costs of effective cybersecurity;
•containing costs and expenses;
•the ability of the U.S. federal government to manage federal debt limits;
•the risks of expansion through mergers and acquisitions, including unexpected credit quality problems with acquired loans, difficulty integrating acquired operations and material differences in the actual financial results of such transactions compared with Horizon’s initial expectations, including the full realization of anticipated cost savings; and
•acts of terrorism, war and global conflicts, such as the Russia-Ukraine conflict and continued unrest in the Middle East, and the potential impact they may have on supply chains, the availability of commodities, commodity prices, and the overall U.S. and global financial markets.
The foregoing list of important factors is not exclusive, and you are cautioned not to place undue reliance on these forward–looking statements, which speak only as of the date of this document or, in the case of documents incorporated by reference, the dates of those documents. We do not undertake to update any forward–looking statements, whether written or oral, that may be made from time to time by us or on our behalf. For a detailed discussion of the risks and uncertainties that may cause our actual results or performance to differ materially from the results or performance expressed or implied by forward–looking statements, see “Risk Factors” in Item 1A of Part I of our 2025 Annual Report on Form 10–K, in Item 1A of Part II of this Quarterly Report on Form 10–Q, and in the subsequent reports we file with the SEC.
Critical Accounting Estimates
The Notes to the Consolidated Financial Statements included in Item 8 of the Company’s 2025 Annual Report on Form 10–K contain a summary of the Company’s significant accounting policies. Certain of these policies are important to the portrayal of the Company’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. The Company considers these policies to be its critical accounting estimates. Management has identified as critical accounting estimates as the allowance for credit losses, income taxes, and valuation measurements.
For additional information regarding critical accounting estimates, see Note 1 – Nature of Operations and Summary of Significant Accounting Policies included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in the Company’s application of critical accounting estimates since December 31, 2025.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Results of Operations
Net Income
Net Income increased $2.2 million, to $26.2 million, or $0.51 per diluted share, during the three months ended March 31, 2026 when compared to net income of $23.9 million, or $0.54 per diluted share, for the same period in 2025. The increase in net income when compared with the prior year period reflects an increase in net interest income of $10.0 million and a decrease in provision expense of $1.0 million. The increase was partially offset by a decrease of non-interest income of $5.3 million, an increase in tax expense of $2.0 million and an increase in non-interest expense of $1.4 million.
Net Interest Income
Net interest income increased $10.0 million, or 19.1% during the three months ended March 31, 2026, to $62.2 million, when compared to the same period in 2025. While average earning assets decreased, owed to the balance sheet repositioning and deleveraging efforts in the third quarter of 2025, the reported net FTE interest margin1 increased by 125 basis points, to 4.29% for the three months ended March 31, 2026 compared to the prior year period, driven by the favorable mix shift in both average interest earning assets toward higher-yielding loans, and the funding mix toward lower cost deposit liabilities. Additionally, loan and securities yields have expanded while deposit costs have declined when compared with the comparable year ago period.
1Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Following are the average balance sheets for the three months ended (dollars in thousands):
| Average Balance Sheet | |||||||||||||||||||||||
| (Dollars in Thousands, Unaudited) | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||
Average Balance (6) | Interest(5) | Average Rate | Average Balance (6) | Interest(5) | Average Rate | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Interest earning assets | |||||||||||||||||||||||
| Interest earning deposits (incl. Fed Funds Sold) | $ | 165,084 | $ | 1,509 | 3.71 | % | $ | 223,148 | $ | 2,487 | 4.52 | % | |||||||||||
Federal Home Loan Bank stock(1) | 45,713 | 551 | 4.89 | % | 51,769 | 1,012 | 7.93 | % | |||||||||||||||
Investment securities - taxable (2) | 581,146 | 6,944 | 4.85 | % | 974,109 | 5,027 | 2.09 | % | |||||||||||||||
Investment securities - non-taxable (2) | 319,276 | 3,220 | 4.09 | % | 1,120,249 | 7,838 | 2.84 | % | |||||||||||||||
| Total investment securities | 900,422 | 10,164 | 4.58 | % | 2,094,358 | 12,865 | 2.49 | % | |||||||||||||||
Loans receivable (3) (4) | 4,873,753 | 75,485 | 6.28 | % | 4,865,449 | 74,840 | 6.24 | % | |||||||||||||||
| Total interest earning assets | $ | 5,984,972 | 87,709 | 5.94 | % | $ | 7,234,724 | 91,204 | 5.11 | % | |||||||||||||
| Non-interest earning assets | |||||||||||||||||||||||
| Cash and due from banks | 68,007 | 88,624 | |||||||||||||||||||||
| Allowance for credit losses | (51,217) | (51,863) | |||||||||||||||||||||
| Other assets | 533,989 | 483,765 | |||||||||||||||||||||
| Total average assets | $ | 6,535,751 | $ | 7,755,250 | |||||||||||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||||||
| Interest bearing liabilities | |||||||||||||||||||||||
| Interest bearing demand deposits | $ | 1,638,208 | $ | 4,586 | 1.14 | % | $ | 1,750,446 | $ | 6,491 | 1.50 | % | |||||||||||
| Saving and money market deposits | 1,475,444 | 5,619 | 1.54 | % | 1,674,590 | 8,263 | 2.00 | % | |||||||||||||||
| Time deposits | 1,153,484 | 9,739 | 3.42 | % | 1,212,386 | 10,847 | 3.63 | % | |||||||||||||||
| Total Deposits | 4,267,136 | 19,944 | 1.90 | % | 4,637,422 | 25,601 | 2.24 | % | |||||||||||||||
| Borrowings | 150,229 | 1,421 | 3.84 | % | 971,496 | 8,772 | 3.66 | % | |||||||||||||||
| Repurchase agreements | 77,376 | 233 | 1.22 | % | 88,469 | 416 | 1.91 | % | |||||||||||||||
| Subordinated notes | 98,231 | 1,830 | 7.56 | % | 55,750 | 829 | 6.03 | % | |||||||||||||||
| Junior subordinated debentures issued to capital trusts | 57,706 | 983 | 6.91 | % | 57,497 | 1,290 | 9.10 | % | |||||||||||||||
| Total interest bearing liabilities | 4,650,678 | 24,411 | 2.13 | % | 5,810,634 | 36,908 | 2.58 | % | |||||||||||||||
| Non-interest bearing liabilities | |||||||||||||||||||||||
| Demand deposits | 1,117,930 | 1,085,826 | |||||||||||||||||||||
| Accrued interest payable and other liabilities | 59,227 | 78,521 | |||||||||||||||||||||
| Stockholders' equity | 707,916 | 780,269 | |||||||||||||||||||||
| Total average liabilities and stockholders' equity | $ | 6,535,751 | $ | 7,755,250 | |||||||||||||||||||
Net FTE interest income (Non-GAAP) (5) | $ | 63,298 | $ | 54,296 | |||||||||||||||||||
Less FTE adjustments (5) | 1,058 | 2,029 | |||||||||||||||||||||
| Net Interest Income | $ | 62,240 | $ | 52,267 | |||||||||||||||||||
Net FTE interest margin (Non-GAAP) (5) | 4.29 | % | 3.04 | % | |||||||||||||||||||
(1) Includes dividend income on FHLB stock. | |||||||||||||||||||||||
(2) 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. | |||||||||||||||||||||||
(3) Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate. | |||||||||||||||||||||||
(4) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees. | |||||||||||||||||||||||
(5) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate | |||||||||||||||||||||||
(5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure. | |||||||||||||||||||||||
(6) Average balances are calculated on a daily average basis | |||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
The following table illustrates the impact of changes in the volume of interest earning assets and interest bearing liabilities and interest rates on net interest income for the periods indicated.
| Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Total Change | Change Due To Volume | Change Due To Rate | |||||||||||||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | (978) | $ | (578) | $ | (400) | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | (461) | (108) | (353) | ||||||||||||||||||||||||||||||||
| Investment securities - taxable | 1,917 | (2,654) | 4,571 | ||||||||||||||||||||||||||||||||
| Investment securities - non-taxable | (4,618) | (7,134) | 2,516 | ||||||||||||||||||||||||||||||||
| Loans receivable | 645 | 128 | 517 | ||||||||||||||||||||||||||||||||
| Total interest income | (3,495) | (10,346) | 6,851 | ||||||||||||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | (1,905) | (394) | (1,511) | ||||||||||||||||||||||||||||||||
| Savings and money market savings deposits | (2,644) | (905) | (1,739) | ||||||||||||||||||||||||||||||||
| Time deposits | (1,108) | (513) | (595) | ||||||||||||||||||||||||||||||||
| Borrowings | (7,351) | (7,749) | 398 | ||||||||||||||||||||||||||||||||
| Repurchase agreements | (183) | (47) | (136) | ||||||||||||||||||||||||||||||||
| Subordinated notes | 1,001 | 752 | 249 | ||||||||||||||||||||||||||||||||
| Junior subordinated debentures issued to capital trusts | (307) | 5 | (312) | ||||||||||||||||||||||||||||||||
| Total interest expense | (12,497) | (8,851) | (3,646) | ||||||||||||||||||||||||||||||||
| Net FTE interest income (Non-GAAP) | 9,002 | (1,495) | 10,497 | ||||||||||||||||||||||||||||||||
| Less change in FTE adjustments | (971) | ||||||||||||||||||||||||||||||||||
| Net Interest Income | $ | 9,973 | |||||||||||||||||||||||||||||||||
Non-Interest Income
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
| Non-interest Income | |||||||||||||||||||||||||||||||||||||||||||||||
| Service charges on deposit accounts | $ | 3,524 | $ | 3,208 | $ | 316 | 10 | % | |||||||||||||||||||||||||||||||||||||||
| Wire transfer fees | 63 | 71 | (8) | (11) | % | ||||||||||||||||||||||||||||||||||||||||||
| Interchange fees | 3,373 | 3,241 | 132 | 4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Fiduciary activities | 1,556 | 1,326 | 230 | 17 | % | ||||||||||||||||||||||||||||||||||||||||||
| Loss on sale of investment securities | — | (407) | 407 | (100) | % | ||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of mortgage loans | 1,090 | 1,076 | 14 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage servicing income net of impairment | 337 | 385 | (48) | (12) | % | ||||||||||||||||||||||||||||||||||||||||||
| Increase in cash value of bank owned life insurance | 333 | 335 | (2) | (1) | % | ||||||||||||||||||||||||||||||||||||||||||
| Other income | 967 | 7,264 | (6,297) | (87) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total non-interest income | $ | 11,243 | $ | 16,499 | $ | (5,256) | (32) | % | |||||||||||||||||||||||||||||||||||||||
Total non-interest income decreased $5.3 million, to net income of $11.2 million for the three months ended March 31, 2026 compared to the same period in 2025. The primary components of the change were as follows:
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Service charges on deposit accounts increased by $0.3 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase is primarily related to higher transaction-based fee activity in the current period.
Fiduciary activities increased $0.2 million for the three months ended March 31, 2026, compared to the same period in 2025. The increase is primarily related to an increase in trust fees in the current period related to increased volume in estate planning and annuity sales.
Other income, which includes various miscellaneous income items as well as fair market value adjustments to certain other assets, decreased by $6.3 million, to $1.0 million for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was primarily related to the pre-tax gain of $7.0 million on the sale of the Company's mortgage warehouse business in the first quarter of 2025, which did not recur.
The remaining changes were nominal amongst the remaining individual non-interest income accounts.
Non-Interest Expense
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, | March 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
| Non-interest Expense | |||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 23,187 | $ | 22,414 | $ | 773 | 3 | % | |||||||||||||||||||||||||||||||||||||||
| Net occupancy expenses | 4,197 | 3,702 | 495 | 13 | % | ||||||||||||||||||||||||||||||||||||||||||
| Data processing | 3,353 | 2,872 | 481 | 17 | % | ||||||||||||||||||||||||||||||||||||||||||
| Professional fees | 929 | 826 | 103 | 13 | % | ||||||||||||||||||||||||||||||||||||||||||
| Outside services and consultants | 2,764 | 3,265 | (501) | (15) | % | ||||||||||||||||||||||||||||||||||||||||||
| Loan expense | 1,219 | 689 | 530 | 77 | % | ||||||||||||||||||||||||||||||||||||||||||
| FDIC insurance expense | 1,023 | 1,288 | (265) | (21) | % | ||||||||||||||||||||||||||||||||||||||||||
| Core deposit intangible amortization | 675 | 816 | (141) | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
| Merger related expense | — | 305 | (305) | (100) | % | ||||||||||||||||||||||||||||||||||||||||||
| Other losses | 192 | 228 | (36) | (16) | % | ||||||||||||||||||||||||||||||||||||||||||
| Other expense | 3,208 | 2,901 | 307 | 11 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total non-interest expense | $ | 40,747 | $ | 39,306 | $ | 1,441 | 4 | % | |||||||||||||||||||||||||||||||||||||||
Non-interest expense increased $1.4 million for the three months ended March 31, 2026 compared to the same period in 2025. The primary components of the change were as follows:
Salaries and employee benefits expense increased by $0.8 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase is partially attributable to increased salary expense related to strategic hiring and annual merit increases, partially offset by a lower level of benefit expense compared with the year ago period.
Loan expense increased by $0.5 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase is primarily related to a higher amount of production related expense in the current period and a higher amount of reimbursements in the year ago period.
Net occupancy expenses increased by $0.5 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase is primarily driven by increases in building maintenance expenses in the current period.
Data processing expense increased by $0.5 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase is primarily driven by increases in debit card processing activity and software maintenance.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Outside services and consultants expense decreased by $0.5 million for the three months ended March 31, 2026 compared to the same period in 2025. The decrease reflects management's ongoing efforts to reduce the reliance on third party services.
The remaining changes were nominal amongst the remaining individual non-interest expense accounts.
Provision and Allowance for Credit Losses
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||
| Allowance for Credit Losses on Loans | |||||||||||||||||||||||
| Balance at beginning of period | $ | 51,299 | $ | 51,980 | |||||||||||||||||||
| Provision for credit losses on loans | 624 | 1,543 | |||||||||||||||||||||
| Net loan (charge-offs) recoveries: | |||||||||||||||||||||||
| Commercial | $ | (339) | $ | 47 | |||||||||||||||||||
| Residential Real estate | (1) | 47 | |||||||||||||||||||||
| Consumer | (286) | (963) | |||||||||||||||||||||
| Total net loan (charge-offs) recoveries | $ | (626) | $ | (869) | |||||||||||||||||||
| Balance at end of period | $ | 51,297 | $ | 52,654 | |||||||||||||||||||
| Liability for Unfunded Lending Commitments | |||||||||||||||||||||||
| Balance at beginning of period | $ | 1,840 | $ | 2,149 | |||||||||||||||||||
| Provision (benefit) for credit losses on unfunded lending commitments | (233) | (149) | |||||||||||||||||||||
| Balance at end of period | $ | 1,607 | $ | 2,000 | |||||||||||||||||||
| Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments | $ | 52,904 | $ | 54,654 | |||||||||||||||||||
Horizon assesses the adequacy of its Allowance for Credit Losses (“ACL”) by regularly reviewing the performance of its loan portfolio against various economic backdrops, which periodically change. During the three months ended March 31, 2026, the Company recorded a provision for credit losses on loans of $0.6 million. This compares to a provision for credit losses on loans of $1.5 million compared to the same period in 2025. The decrease in the provision for credit losses on loans when compared to the year ago period was primarily attributable to modest net loan growth and slight changes in the baseline economic outlook. The total provision for credit losses, including the benefit for credit losses on unfunded lending commitments of $0.2 million, was $0.4 million for three months ended March 31, 2026 compared to a provision for credit losses of $1.4 million for the same period in 2025.
For the three months ended March 31, 2026, net loan charge-offs decreased by $0.2 million to $0.6 million, compared to $0.9 million during the same period in 2025. The decrease in charge-offs is due to decreases in charge-offs in the consumer portfolio, as a result of the sale of the indirect auto portfolio, which occurred in 2025.
The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.05% at March 31, 2026, compared to 1.07% at March 31, 2025.
As of March 31, 2026, the liability for unfunded lending commitments was $1.6 million compared to $2.0 million as of March 31, 2025.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Income Taxes
The Company’s income tax expense for the three months ended March 31, 2026 was $6.2 million compared to $4.1 million for the same period in 2025, resulting in effective tax rates of 19.1% and 14.7% for those periods, respectively. The increase in the effective tax rate for three months ended March 31, 2026 was primarily due to expectations of higher pre-tax income in the first quarter of 2026 as compared to 2025, and less exposure to tax preferential assets in the investment portfolio.
The effective income tax rates differed from the U.S. statutory federal income tax rates of 21% during the comparable periods primarily due to the effect of tax exempt income from securities, loans, and life insurance policies, and net tax benefits from tax credit investments.
Financial Condition
Total assets increased by $127.6 million, or 2.0%, as of March 31, 2026, from $6.4 billion as of December 31, 2025. The increase in total assets is primarily due to an increase in total cash and cash equivalents of $119.6 million, or 85.8%, and an increase in investment securities available-for-sale of $6.8 million, or 0.8%, and an increase in other assets of $2.2 million, or 1.0%. The increase was partially offset by a decrease in premises and equipment of $2.0 million, or 2.2%.
Total loans HFI, net of ACL, increased $2.0 million, to $4.8 billion, as of March 31, 2026 compared to balances as of December 31, 2025, due to growth in commercial loans that was mostly offset by runoff within the consumer and residential loan portfolios. The company continues to maintain a balanced growth profile across various geographies, products and industries, and holds a diverse lending portfolio consisting primarily of commercial real estate, consumer, residential and commercial and industrial portfolios.
Total deposit balances increased by $146.9 million, or 2.8%, to $5.4 billion as of March 31, 2026 when compared to balances as of December 31, 2025. The increase was driven by a $61.3 million increase in time deposits, a $60.8 million increase in non-interest-bearing demand deposits, and a $52.9 million increase in savings and money market balances, reflecting continued success in core deposit gathering efforts. These increases were partially offset by a $28.1 million decrease in interest-bearing deposits. The Company maintains a granular and tenured deposit base, with a continued focus on core commercial and consumer deposit gathering.
Total borrowings decreased by $22.8 million, or 9.2%, to $225.8 million as of March 31, 2026 when compared to balances as of December 31, 2025, related to a decrease in repurchase agreements.
Total investment securities increased $6.8 million, or 0.8%, to $882.2 million as of March 31, 2026 when compared to balances as of December 31, 2025. During the quarter, the Company purchased approximately $33.4 million of available for sale securities, which was offset by amortization and maturities within the portfolio and changes in market value.
Investment securities are comprised of the following as of (dollars in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| Available for sale | |||||||||||||||||||||||
| U.S. Treasury, federal agencies, and government sponsored agencies | $ | 15,704 | $ | 15,870 | $ | 16,837 | $ | 16,905 | |||||||||||||||
| State and municipal | 356,413 | 316,033 | 353,559 | 319,665 | |||||||||||||||||||
| U.S. government agency mortgage-backed securities | 505,173 | 505,656 | 489,683 | 494,174 | |||||||||||||||||||
| Corporate notes | 48,750 | 44,609 | 48,750 | 44,670 | |||||||||||||||||||
| Total available for sale investment securities | $ | 926,040 | $ | 882,168 | $ | 908,829 | $ | 875,414 | |||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Credit Quality
The ACL balance at March 31, 2026 was $51.3 million, or 1.05% of period-end loans HFI, compared to an ACL balance of $51.3 million at December 31, 2025, or 1.05% of loans HFI. The ACL was essentially unchanged, due to modest net loan growth and immaterial changes in the baseline economic outlook.
As of March 31, 2026, total non-accrual loans increased by $2.3 million, or 7.2%, from December 31, 2025, to 0.71% of total loans HFI. Total non-performing assets increased $3.4 million, or 8.4%, from December 31, 2025, to 0.67% of total assets.
During the three months ended March 31, 2026, net charge-offs were $0.6 million, or 5 basis points annualized of average loans in the period, a change from $0.9 million, or 7 basis point annualized of average loans in the year ago comparable period.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
| Credit Quality | ||||||||||||||
| (Dollars in Thousands Except Ratios, Unaudited) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Non-accrual loans | ||||||||||||||
| Commercial | $ | 15,761 | $ | 14,549 | ||||||||||
| Residential Real estate | 10,607 | 10,087 | ||||||||||||
| Consumer | 8,416 | 7,821 | ||||||||||||
| Total non-accrual loans | $ | 34,784 | $ | 32,457 | ||||||||||
| 90 days and greater delinquent - accruing interest | $ | 2,211 | $ | 2,489 | ||||||||||
| Total non-performing loans | $ | 36,995 | $ | 34,946 | ||||||||||
| Other real estate owned | ||||||||||||||
| Commercial | $ | 594 | $ | 539 | ||||||||||
| Residential Real estate | 631 | 672 | ||||||||||||
| Consumer | 1,875 | 480 | ||||||||||||
| Total other real estate owned | $ | 3,100 | $ | 1,691 | ||||||||||
Other non-performing assets (1) | $ | 3,935 | $ | 3,991 | ||||||||||
| Total non-performing assets | $ | 44,030 | $ | 40,628 | ||||||||||
| Net charge-offs (recoveries) | ||||||||||||||
| Commercial | $ | 339 | $ | 436 | ||||||||||
| Residential Real estate | 1 | (25) | ||||||||||||
| Consumer | 286 | 559 | ||||||||||||
| Total net charge-offs | $ | 626 | $ | 970 | ||||||||||
| Allowance for credit losses | ||||||||||||||
| Commercial | $ | 34,997 | $ | 35,473 | ||||||||||
| Residential Real estate | 3,183 | 3,183 | ||||||||||||
| Consumer | 13,117 | 12,643 | ||||||||||||
| Total allowance for credit losses | $ | 51,297 | $ | 51,299 | ||||||||||
| Credit quality ratios | ||||||||||||||
| Non-accrual loans to HFI loans | 0.71 | % | 0.67 | % | ||||||||||
| Non-performing assets to total assets | 0.67 | % | 0.63 | % | ||||||||||
| Annualized net charge-offs of average total loans | 0.05 | % | 0.08 | % | ||||||||||
| Allowance for credit losses to HFI loans | 1.05 | % | 1.05 | % | ||||||||||
| Allowance for credit losses to non-performing loans | 138.66 | % | 146.80 | % | ||||||||||
| (1) Other non-performing assets consist of a single available for sale security placed on non-accrual status in the third quarter of 2025. | ||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the Three months ended March 31, 2026 and 2025
Liquidity
The Bank maintains a stable base of core deposits provided by long–standing relationships with individuals and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the FHLB. At March 31, 2026, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.70 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $1.68 billion at December 31, 2025.
The cash flows from the operating, investing and financing activities of the Company resulted in a net increase in cash, cash equivalents and restricted cash of $119.6 million during the three months ended March 31, 2026, as reported in the consolidated statements of cash flows. Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of $20.8 million and have historically been a stable source of funds. Investing activities, which occur mainly in the loan and investment securities portfolios, used cash of $17.2 million mainly due to purchases of AFS securities of $33.4 million, which was partially offset by proceeds from maturities, calls and principal repayments of securities available for sale of $17.9 million. Financing activities provided cash of $116.0 million, largely resulting from the proceeds from the net change in deposits of $146.9 million, which was partially offset by cash used in the net change in repurchase agreements of $22.5 million and $8.2 million in dividends paid on common stock, during the three months ended March 31, 2026.
Capital Resources
The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2026. Stockholders’ equity totaled $699.0 million as of March 31, 2026, compared to $688.3 million as of December 31, 2025. The increase in stockholders’ equity during the period was due to an increase in retained earnings related to net income for the quarter of $26.2 million, less cash dividend payments on outstanding common stock of $8.2 million, partially offset by an increase in accumulated other comprehensive loss of $7.7 million.
As of March 31, 2026, the ratio of total stockholders’ equity to total assets is 10.65%. Book value per common share was $13.69, increasing $0.19 compared to December 31, 2025.
Tangible common equity1 totaled $537.3 million at March 31, 2026, and the ratio of tangible common equity to tangible assets1 was 8.39% at March 31, 2026. Tangible book value, which excludes intangible assets from total equity, per common share1 was $10.52, increasing $0.20 compared to December 31, 2025.
Horizon declared common stock dividends in the amount of $0.16 per share during the three months ended March 31, 2026 and $0.16 per share for the same period in 2025. The dividend payout ratio (dividends as a percent of basic earnings per share) was 31.37% and 29.09% for the three months ended March 31, 2026 and 2025, respectively. For additional information regarding dividends, see Horizon’s 2025 Annual Report on Form 10–K.
1 Non-GAAP financial metric. See Non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the three months ended March 31, 2026 and 2025
Use of Non-GAAP Financial Measures
In addition to financial measures presented in accordance with GAAP, this document refers to non-GAAP financial measures, which Horizon believes are helpful to investors and provide a greater understanding of our business and financial results without the impact of items or events that may obscure trends in the Company’s underlying performance. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this document for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures.
| Non–GAAP Reconciliation of Net Fully-Taxable Equivalent ("FTE") Interest Margin | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Interest income (GAAP) | (A) | $ | 86,651 | $ | 89,175 | |||||||||||||||||||||||||||||||||||||||
| Taxable-equivalent adjustment: | ||||||||||||||||||||||||||||||||||||||||||||
Investment securities - tax exempt (1) | $ | 677 | $ | 1,646 | ||||||||||||||||||||||||||||||||||||||||
Loan receivable (2) | 381 | 383 | ||||||||||||||||||||||||||||||||||||||||||
Total taxable-equivalent adjustment (3) | $ | 1,058 | $ | 2,029 | ||||||||||||||||||||||||||||||||||||||||
| Interest income (non-GAAP) | (B) | $ | 87,709 | $ | 91,204 | |||||||||||||||||||||||||||||||||||||||
| Interest expense (GAAP) | (C) | $ | 24,411 | $ | 36,908 | |||||||||||||||||||||||||||||||||||||||
| Net interest income (GAAP) | (D) =(A) - (C) | $ | 62,240 | $ | 52,267 | |||||||||||||||||||||||||||||||||||||||
| Net FTE interest income (non-GAAP) | (E) = (B) - (C) | $ | 63,298 | $ | 54,296 | |||||||||||||||||||||||||||||||||||||||
| Average interest earning assets | (F) | $ | 5,984,972 | $ | 7,234,724 | |||||||||||||||||||||||||||||||||||||||
| Net FTE interest margin (non-GAAP) | (G) = (E*) / (F) | 4.29 | % | 3.04 | % | |||||||||||||||||||||||||||||||||||||||
| (1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity | ||||||||||||||||||||||||||||||||||||||||||||
| (2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment | ||||||||||||||||||||||||||||||||||||||||||||
| (3) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate | ||||||||||||||||||||||||||||||||||||||||||||
| *Annualized | ||||||||||||||||||||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition
And Results of Operations
For the three months ended March 31, 2026 and 2025
| Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets | ||||||||||||||||||||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| Total stockholders' equity (GAAP) | (A) | $ | 699,027 | $ | 688,251 | |||||||||||||||||||||||||||
| Intangible assets (end of period) | (B) | 161,716 | 162,391 | |||||||||||||||||||||||||||||
| Total tangible common equity (non-GAAP) | (C) = (A) - (B) | $ | 537,311 | $ | 525,860 | |||||||||||||||||||||||||||
| Total assets (GAAP) | (D) | 6,564,216 | 6,436,611 | |||||||||||||||||||||||||||||
| Intangible assets (end of period) | (B) | 161,716 | 162,391 | |||||||||||||||||||||||||||||
| Total tangible assets (non-GAAP) | (E) = (D) - (B) | $ | 6,402,500 | $ | 6,274,220 | |||||||||||||||||||||||||||
| Tangible common equity to tangible assets (Non-GAAP) | (G) = (C) / (E) | 8.39 | % | 8.38 | % | |||||||||||||||||||||||||||
| Non–GAAP Reconciliation of Tangible Book Value Per Share | ||||||||||||||||||||||||||||||||
| (Dollars in Thousands, Unaudited) | ||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| Total stockholders' equity (GAAP) | (A) | $ | 699,027 | $ | 688,251 | |||||||||||||||||||||||||||
| Intangible assets (end of period) | (B) | 161,716 | 162,391 | |||||||||||||||||||||||||||||
| Total tangible common equity (non-GAAP) | (C) = (A) - (B) | $ | 537,311 | $ | 525,860 | |||||||||||||||||||||||||||
| Common shares outstanding | (D) | 51,056,888 | 50,978,030 | |||||||||||||||||||||||||||||
| Tangible book value per common share (non-GAAP) | (E) = (C) / (D) | $ | 10.52 | $ | 10.32 | |||||||||||||||||||||||||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk management focuses on monitoring and maintaining variances in the Company's net interest income profile due to changes in interests rates to within Board-approved policy limits. The Company primarily uses earnings simulation models to expose net interest income to 12- and 24- month sensitivities to various movements in rates. Simulations are modeled quarterly to include scenarios where market rates change instantaneously up or down in a parallel or non-parallel manner, which account for the periodic changes in the balance sheet composition. For further discussion of the Company’s market risk, see the Interest Rate Sensitivity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2025 Annual Report on Form 10-K.
The table below shows the modelled effects of an immediate and parallel shift in interest rates on the Company's net interest income profile over a one-year horizon versus the base case net interest income in a flat rate scenario. The simulation model assumes a static balance sheet over that twelve month period, and utilizes various non-maturity interest bearing deposit beta assumptions, based on the underlying products, ranging from 12% to 80% in the disclosed model outputs below. Deposit beta is an estimate for how quickly interest-bearing deposit pricing will change for a given change in interest rates. Because of limitations inherent in any approach used to measure interest rate risk, simulation results are not intended as a forecast of the actual effect of a change in market interest rates on our results, but rather to provide insight into our current interest rate exposure and to assist in the execution of appropriate asset/liability management strategies. As shown below, the model output would indicate that as of March 31, 2026, the Company's interest-bearing liabilities are projected to reprice at a slightly faster pace than interest-earning assets for the next 100 basis points of declining interest rates.
| March 31, 2026 | ||||||||
| (Dollars in thousands) | $ Change in Net Interest Income | % Change in Net Interest Income | ||||||
| 200 basis points rising | $ | 7,931.0 | 3.0 | % | ||||
| 100 basis points rising | 6,504.0 | 2.4 | % | |||||
| 100 basis points falling | $ | 469.0 | 0.2 | % | ||||
| 200 basis points falling | (1,182.0) | (0.4) | % | |||||
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HORIZON BANCORP, INC. AND SUBSIDIARIES
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation of disclosure controls and procedures as of March 31, 2026, Horizon’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of Horizon’s disclosure controls (as defined in Exchange Act Rule 13a–15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, such officers have concluded that, as of the evaluation date, Horizon's disclosure controls and procedures are effective to ensure that the information required to be disclosed by Horizon in the reports it files under the Exchange Act is recorded, processed, summarized and reported within the time specified in Securities and Exchange Commission's rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosures.
Changes in Internal Control Over Financial Reporting
Horizon’s management, including its Chief Executive Officer and Chief Financial Officer, also have concluded that during the fiscal quarter ended March 31, 2026, there have been no changes in Horizon’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Horizon’s internal control over financial reporting.
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Part II – Other Information
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various claims, legal actions, and complaints which arise in the ordinary course of business. In the Company’s opinion, all such matters are adequately covered by insurance, are without merit, or are of such kind, or involve such amounts, that unfavorable disposition would not have a material adverse effect on the financial condition or results of operations of the Company.
ITEM 1A. RISK FACTORS
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, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)Unregistered Sales of Equity Securities: Not Applicable
(b)Use of Proceeds: Not Applicable
(c)Repurchase of Our Equity Securities: Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended March 31, 2026, none of our directors or officers informed us of the adoption termination
ITEM 6. EXHIBITS
(a) Exhibits
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HORIZON BANCORP, INC. AND SUBSIDIARIES
Part II – Other Information
| Exhibit No. | Description | Location | ||||||
| 31.1 | Certification of Thomas M. Prame pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached | ||||||
| 31.2 | Certification of John R. Stewart pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Attached | ||||||
| 32.1 | Certification of Thomas M. Prame pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Attached | ||||||
| 32.2 | Certification of John R. Stewart pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Attached | ||||||
| 101 | Inline Interactive Data Files | Attached | ||||||
| 104 | The cover page from the Company’s Quarterly Report on Form 10–Q for the quarter ended March 31, 2026, has been formatted in Inline XBRL | Within the Inline XBRL document | ||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HORIZON BANCORP, INC. | ||||||||
| May 8, 2026 | /s/ Thomas M. Prame | |||||||
| Date | Thomas M. Prame | |||||||
| Chief Executive Officer | ||||||||
| May 8, 2026 | /s/ John R. Stewart | |||||||
| Date | John R. Stewart | |||||||
| Chief Financial Officer | ||||||||
64
FAQ
How did Horizon Bancorp (HBNC) perform financially in Q1 2026?
Horizon Bancorp generated net income of $26.2 million in Q1 2026, up from $23.9 million a year earlier. Stronger net interest income offset higher operating costs, although basic earnings per share declined to $0.51 from $0.55 due to more shares outstanding.
What happened to Horizon Bancorp’s net interest income in Q1 2026?
Net interest income increased to $62.2 million in Q1 2026 from $52.3 million in Q1 2025. Interest income was relatively stable, but interest expense on deposits and borrowings fell significantly, improving the bank’s net interest margin and supporting higher quarterly earnings.
How strong is Horizon Bancorp’s balance sheet as of March 31, 2026?
Total assets were $6.56 billion and total deposits $5.42 billion at March 31, 2026. Loans net of allowance were $4.83 billion, stockholders’ equity was $699.0 million, and the bank held $259.1 million in cash and cash equivalents, indicating substantial funding and liquidity.
What are Horizon Bancorp’s credit quality and reserves in Q1 2026?
The allowance for credit losses on loans stood at $51.3 million at March 31, 2026. Non‑accrual loans totaled $34.8 million and loans 90 days or more past due but still accruing were $2.2 million, suggesting reserved coverage against identified credit issues in the loan portfolio.
How did securities impact Horizon Bancorp’s Q1 2026 results?
Available‑for‑sale securities had a fair value of $882.2 million with gross unrealized losses of $46.9 million at March 31, 2026. A deeper unrealized loss on these securities reduced other comprehensive income by $7.7 million after tax, lowering total comprehensive income versus the prior year period.
What share count and dividends did Horizon Bancorp report in early 2026?
Horizon Bancorp reported 51,329,764 common shares outstanding as of May 6, 2026. During Q1 2026, it paid cash dividends on common stock totaling $8.2 million, or $0.16 per share, continuing its pattern of returning capital to shareholders through regular cash distributions.