What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-04 compared with 2020-05-11 · 270 added, 170 removed, 1443 unchanged (23% of the section changed)

6 unchanged sentences

Cash and due from banks $ 170,135 $ 98,831

$ 86,458 $ 98,831

Interest-earning time deposits 9,247 8,455

Investment securities, available for sale 935,140 834,776

900,476 834,776

Investment securities, held to maturity (fair value of $ 201,818 and $ 215,147 )

4 unchanged sentences

Premises and equipment, net 92,232 92,209

92,785 92,209

Federal Home Loan Bank stock 23,608 22,447

22,447 22,447

151,238 151,238

Goodwill 151,238 151,238

Other intangible assets 24,782 26,679

25,723 26,679

Interest receivable 20,185 18,828

17,774 18,828

Cash value of life insurance 95,709 95,577

95,153 95,577

85,461 66,628

$ 5,351,325 $ 5,246,829

Other assets 86,846 66,628

Total assets $ 5,739,262 $ 5,246,829

Non-interest bearing $ 981,868 $ 709,760

$ 709,978 $ 709,760

Interest bearing 3,325,731 3,221,242

3,172,293 3,221,242

Total deposits 4,307,599 3,931,002

3,882,271 3,931,002

704,613 549,741

Borrowings 583,073 549,741

Subordinated debentures 58,824 —

56,374 56,311

Junior subordinated debentures issued to capital trusts 56,437 56,311

Interest payable 2,353 3,062

Other liabilities 78,770 50,690

74,453 50,690

Total liabilities 5,087,056 4,590,806

4,720,483 4,590,806

Commitments and contingent liabilities

4 unchanged sentences

Additional paid-in capital 361,087 379,853

361,019 379,853

Retained earnings 269,849 269,738

260,501 269,738

Accumulated other comprehensive income 21,270 6,432

Total stockholders’ equity 652,206 656,023

630,842 656,023

Total liabilities and stockholders’ equity $ 5,739,262 $ 5,246,829

$ 5,351,325 $ 5,246,829

See notes to condensed consolidated financial statements

3 unchanged sentences

(Dollar Amounts in Thousands, Except Per Share Data)

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

2020 2019 2020 2019

Interest Income

7 unchanged sentences

Subordinated debentures 58 — 58 —

Junior subordinated debentures issued to capital trusts 710 888 1,485 1,484

Total interest expense 7,348 12,321 18,077 23,414

7 unchanged sentences

Fiduciary activities 1,765 2,063 4,293 4,152

Gains on sale of investment securities (includes $ 339 and $ 15 for the three months ended March 31, 2020 and 2019, respectively, related to accumulated other comprehensive earnings reclassifications)

Gains on sale of investment securities (includes $ 248 and $( 100 ) for the three months ended June 30, 2020 and 2019, respectively, and $ 587 and $( 85 ) for the six months ended June 30, 2020 and 2019, respectively, related to accumulated other comprehensive earnings reclassifications)

248 ( 100 ) 587 ( 85 )

Gain on sale of mortgage loans 6,620 2,078 10,093 3,387

16 unchanged sentences

Income Before Income Taxes 16,632 19,947 29,871 32,837

Income tax expense (includes $ 71 and $ 3 for the three months ended March 31, 2020 and 2019, respectively, related to income tax expense from reclassification items)

Income tax expense (includes $ 52 and $( 21 ) for the three months ended June 30, 2020 and 2019, respectively, and $ 123 and $( 18 ) for the six months ended June 30, 2020 and 2019, respectively, related to income tax expense from reclassification items)

1,993 3,305 3,577 5,379

Net Income $ 14,639 $ 16,642 $ 26,294 $ 27,458

6 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

2020 2019 2020 2019

Net Income $ 14,639 $ 16,642 $ 26,294 $ 27,458

7 unchanged sentences

Unrealized appreciation for the period on AFS securities

15,507 6,933 23,499 18,627

Amortization from transfer of securities from available for sale to held to maturity securities

16 unchanged sentences

Comprehensive

Balances, April 1, 2019 $ — $ — $ 378,963 $ 230,327 $ 178 $ 609,468

Net income — — — 16,642 — 16,642

Other comprehensive income, net of tax — — — — 4,029 4,029

Amortization of unearned compensation — — 210 — — 210

Exercise of stock options — — 38 — — 38

Stock option expense — — 58 — — 58

Stock issued stock plans — — 1,466 — — 1,466

Cash dividends on common stock ($ 0.12 per share)

— — — ( 5,450 ) — ( 5,450 )

Balances, June 30, 2019 $ — $ — $ 380,735 $ 241,519 $ 4,207 $ 626,461

Balances, April 1, 2020 $ — $ — $ 361,019 $ 260,501 $ 9,322 $ 630,842

Net income — — — 14,639 — 14,639

Other comprehensive income, net of tax — — — — 11,948 11,948

Amortization of unearned compensation — — ( 79 ) — — ( 79 )

Exercise of stock options — — ( 98 ) — — ( 98 )

Stock option expense — — 27 — — 27

Stock issued stock plans — — 218 — — 218

Cash dividends on common stock ($ 0.12 per share)

— — — ( 5,291 ) — ( 5,291 )

Balances, June 30, 2020 $ — $ — $ 361,087 $ 269,849 $ 21,270 $ 652,206

See notes to condensed consolidated financial statements

Six Months Ended

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

9 unchanged sentences

— — — ( 9,974 ) — ( 9,974 )

Balances, March 31, 2019 $ — $ — $ 378,963 $ 230,327 $ 178 $ 609,468

Balances, June 30, 2019 $ — $ — $ 380,735 $ 241,519 $ 4,207 $ 626,461

Balances, January 1, 2020 $ — $ — $ 379,853 $ 269,738 $ 6,432 $ 656,023

1 unchanged sentence

Other comprehensive income, net of tax

— — — — 14,838 14,838

Impact of adoption of ASU No.

1 unchanged sentence

Amortization of unearned compensation

— — 122 — — 122

Exercise of stock options — — 157 — — 157

4 unchanged sentences

— — — ( 10,548 ) — ( 10,548 )

Balances, March 31, 2020 $ — $ — $ 361,019 $ 260,501 $ 9,322 $ 630,842

Balances, June 30, 2020 $ — $ — $ 361,087 $ 269,849 $ 21,270 $ 652,206

See notes to condensed consolidated financial statements

3 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended March 31

Six Months Ended June 30

Operating Activities

4 unchanged sentences

Share based compensation 77 115

Mortgage servicing rights income ( 466 ) ( 1,165 )

Mortgage servicing rights net impairment 3,201 ( 11 )

Premium amortization on securities, net 4,266 2,589

Gain on sale of investment securities ( 339 ) ( 15 )

(Gain) loss on sale of investment securities ( 587 ) 85

Gain on sale of mortgage loans ( 10,093 ) ( 3,387 )

27 unchanged sentences

Proceeds from issuance of stock 671 1,496

Net proceeds from issuance of subordinated notes 58,824 —

Dividends paid on common stock ( 10,548 ) ( 9,974 )

7 unchanged sentences

Transfer of loans to other real estate and repossessed assets 939 1,213

Transfer of premises to other real estate — 1,564

Right-of-use assets exchanged for lease obligations — 3,411

9 unchanged sentences

All inter-company balances and transactions have been eliminated.

The results of operations for the periods ended March 31, 2020 and March 31, 2019 are not necessarily indicative of the operating results for the full year of 2020 or 2019.

The results of operations for the periods ended June 30, 2020 and June 30, 2019 are not necessarily indicative of the operating results for the full year of 2020 or 2019.

The accompanying unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of Horizon’s management, necessary to fairly present the financial position, results of operations and cash flows of Horizon for the periods presented.

4 unchanged sentences

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, 2020, Horizon had repurchased a total of 373,323 shares at an average price per share of $ 15.86 .

As of June 30, 2020, Horizon had repurchased a total of 373,323 shares at an average price per share of $ 15.86 .

In addition to the stock repurchase program, Horizon agreed to repurchase 1,000,000 shares at a price per share of $ 15.19 from an individual shareholder on March 6, 2020.

2 unchanged sentences

The following table shows computation of basic and diluted earnings per share.

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

2020 2019 2020 2019

Basic earnings per share

7 unchanged sentences

Restricted stock

7,614 — 40,017 —

Stock options

3 unchanged sentences

Diluted earnings per share $ 0.33 $ 0.37 $ 0.59 $ 0.65

There were 293,665 shares for the three months ended March 31, 2020, which were not included in the computation of diluted earnings per share because they were non-dilutive.

There were 350,618 shares for the three months ended March 31, 2019, which were not included in the computation of diluted earnings per share because they were non-dilutive.

There were 504,085 and 285,588 shares for the three and six months ended June 30, 2020, which were not included in the computation of diluted earnings per share because they were non-dilutive.

There were 341,394 and 341,394 shares for the three and six months ended June 30, 2019, which were not included in the computation of diluted earnings per share because they were non-dilutive.

HORIZON BANCORP, INC.

31 unchanged sentences

Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, and deferred loan fees and costs.

Accrued interest receivable totaled $ 11.0 million at March 31, 2020 was excluded from the ACL calculation and was reported in accrued interest receivable on the consolidated balance sheets.

Accrued interest receivable totaling $ 12.8 million at June 30, 2020 was excluded from the ACL calculation and was reported in accrued interest receivable on the consolidated balance sheets.

Interest income is accrued on the unpaid principal balance.

Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the effective yield method without anticipating prepayments.

Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income

HORIZON BANCORP, INC.

2 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

using the effective yield method without anticipating prepayments.

From time to time, the Bank obtains information that may lead management to believe that the collection of payments may be doubtful on a particular loan.

68 unchanged sentences

The qualitative adjustment is calculated based on current and forecasted conditions and evaluated each quarter by management, and therefore is dynamic in nature.

As a result of the forecast being applied as a qualitative factor and adjusted quarterly, no reversion to the historical loss rate is necessary, as the historical base loss rate is preserved in the calculation of “all in” loss rate.

As a result of the forecast being applied as a qualitative factor and adjusted quarterly, no reversion to the historical loss rate is necessary, as

HORIZON BANCORP, INC.

2 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

the historical base loss rate is preserved in the calculation of “all in” loss rate.

Specific reserves reflect impairment on loans identified for evaluation or individually considered non-performing, including troubled debt restructurings and receivables where the Company has determined foreclosure is probable.

28 unchanged sentences

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

HORIZON BANCORP, INC.

2 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

Commercial real estate loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate.

Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy, or fluctuations in interest rates.

57 unchanged sentences

Allowance for Credit Losses on Held to Maturity Securities

For held to maturity securities, the Company conducts an assessment of its held to maturity securities at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to perform satisfactorily in fulfilling its obligations.

The Company considers, among other factors, the nature of the securities and

HORIZON BANCORP, INC.

2 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

credit ratings or financial condition of the issuer.

perform satisfactorily in fulfilling its obligations.

The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer.

If available, the Company obtains a credit rating for issuers from Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration.

1 unchanged sentence

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss.

After completing this assessment, management determined any credit losses as of March 31, 2020 were not material to the consolidated financial statements.

After completing this assessment, management determined any credit losses as of June 30, 2020 were not material to the consolidated financial statements.

2017-04, Intangibles – Goodwill and Other (Topic 350):

45 unchanged sentences

The Company also expects to reduce costs through economies of scale.

Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition.

Under the acquisition method of accounting, the total purchase price was allocated to net tangible and intangible assets based on their current estimated fair values on the date of the acquisition.

Cash and due from banks

24 unchanged sentences

Evidence of credit quality deterioration as of the purchase date may include information such as past-due and non-accrual status, borrower credit scores and recent loan-to-value percentages.

Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future

Purchased credit-impaired loans at the acquisition date, were accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which

HORIZON BANCORP, INC.

2 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

credit losses expected to be incurred over the life of the loan.

Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date.

Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current assumptions, such as default rates, severity and prepayment speeds.

includes estimated future credit losses expected to be incurred over the life of the loan.

Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date.

Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporated the estimate of current assumptions, such as default rates, severity and prepayment speeds.

The following table details an estimate of the acquired loans that are accounted for in accordance with ASC 310-30 as of March 26, 2019.

4 unchanged sentences

Fair value of acquired loans accounted for under ASC310-30

Estimates of certain loans, those for which specific credit-related deterioration has occurred since origination, are recorded at fair value, reflecting the present value of the amounts expected to be collected.

Estimates of certain loans, those for which specific credit-related deterioration has occurred since origination, were recorded at fair value, reflecting the present value of the amounts expected to be collected.

Income recognition of these loans is based on reasonable expectation about the timing and amount of cash flows to be collected.

The results of operations of Salin have been included in the Company’s consolidated financial statements since the acquisition date.

The following schedule includes pro-forma results for the three months ended March 31, 2019 as if the Salin acquisition had occurred as of the beginning of the comparable prior reporting period.

The following schedule includes pro-forma results for the three and six months ended June 30, 2019 as if the Salin acquisition had occurred as of the beginning of the comparable prior reporting period.

Three Months Ended

Six Months Ended

June 30 June 30

Summary of Operations:

Net Interest Income

$ 41,529 $ 83,711

Provision for Loan Losses

Net Interest Income after Provision for Loan Losses

40,633 82,151

Non-interest Income

10,898 20,024

Non-interest Expense

31,584 73,736

Income before Income Taxes

19,947 28,439

Income Tax Expense

16,642 23,117

Net Income Available to Common Shareholders

$ 16,642 $ 23,117

Basic Earnings per Share

$ 0.37 $ 0.51

Diluted Earnings per Share

$ 0.37 $ 0.51

The pro-forma information includes adjustments for interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits acquired, premises expense for the banking centers acquired and the related income tax effects.

6 unchanged sentences

The fair value of securities is as follows:

March 31, 2020

June 30, 2020

Available for sale

38 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2020 and December 31, 2019, by contractual maturity, are shown below.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2020 and December 31, 2019, 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.

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Value Amortized

18 unchanged sentences

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

March 31, 2020

June 30, 2020

Less than 12 Months 12 Months or More Total

23 unchanged sentences

Information regarding security proceeds, gross gains and gross losses are presented below.

Three Months Ended March 31

Three Months Ended June 30 Six Months Ended June 30

2020 2019 2020 2019

Sales of securities available for sale

7 unchanged sentences

Note 4 – Loans

The following table presents total loans outstanding by portfolio class, as of March 31, 2020:

The following table presents total loans outstanding by portfolio class, as of June 30, 2020:

Owner occupied real estate $ 501,198

15 unchanged sentences

Net loans $ 3,923,292

Total loans include net deferred loan costs of $ 3.0 million at March 31, 2020.

As of June 30, 2020, loans originated under the Federal Paycheck Protection Program ("PPP") totaled approximately $ 308.1 million.

Total loans include net deferred loan fees of $ 7.1 million at June 30, 2020.

HORIZON BANCORP, INC.

35 unchanged sentences

$ 10,205 $ 3,443 $ 982 $ 14,630 $ 133 $ 14,497

Accretable yield, or income expected to be collected for the three months ended March 31, 2019 is as follows:

Three Months Ended March 31, 2019

Accretable yield, or income expected to be collected for the six months ended June 30, 2019 is as follows:

Six Months Ended June 30, 2019

Reclassification

8 unchanged sentences

$ 2,652 $ 735 $ ( 392 ) $ — $ ( 312 ) $ 2,683

During the three months ended March 31, 2019, the Company increased the allowance for loan losses on purchased loans by a charge to the income statement of $ 296,000 .

During the six months ended June 30, 2019, the Company increased the allowance for loan losses on purchased loans by a charge to the income statement of $ 154,000 .

HORIZON BANCORP, INC.

3 unchanged sentences

Note 6 – 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, 2020 and 2019:

Three Months Ended March 31, 2020

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30, 2020

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 32,550 $ 5,654 $ 1,055 $ 9,181 $ 48,440

Provision for credit losses on loans 6,603 202 135 117 7,057

Charge-offs ( 15 ) ( 34 ) — ( 526 ) ( 575 )

Recoveries 9 10 — 149 168

Balance, end of period $ 39,147 $ 5,832 $ 1,190 $ 8,921 $ 55,090

Three Months Ended June 30, 2019

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 11,556 $ 1,588 $ 1,014 $ 3,663 $ 17,821

Provision for credit losses on loans 590 185 26 95 896

Charge-offs ( 339 ) ( 48 ) — ( 327 ) ( 714 )

Recoveries 74 7 — 221 302

Balance, end of period $ 11,881 $ 1,732 $ 1,040 $ 3,652 $ 18,305

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30, 2020

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 11,996 $ 923 $ 1,077 $ 3,671 $ 17,667

Impact of adopting ASC 326 10,832 4,048 — 4,911 19,791

4 unchanged sentences

Balance, end of period $ 39,147 $ 5,832 $ 1,190 $ 8,921 $ 55,090

Three Months Ended March 31, 2019

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Six Months Ended June 30, 2019

Commercial Real Estate Mortgage Warehouse Consumer Total

14 unchanged sentences

Management attempts to quantify qualitative reserves whenever possible.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The Company's CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors.

3 unchanged sentences

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.

The $8.6 million ACL provision included special allocations related to the potential impact on two portfolios, hotels and restaurants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan).

The $ 15.7 million ACL provision included special allocations related to the potential impact on three portfolios, non-owner occupied retail, leisure and hospitality, and unstabilized commercial real estate while continuing allocations for hotels and restaurants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan).

Extensive analysis and monitoring of these portfolios has been undertaken and, while no loss has been specifically identified, the risks to certain borrowers are elevated and, therefore, the special allocation was deemed prudent.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents the balance in the allowance for credit loss and the recorded investment in loans, by portfolio segment, and based on impairment analysis as of December 31, 2019:

22 unchanged sentences

The following table presents the non-accrual, loans past due over 90 days still on accrual, and troubled debt restructured (“TDRs”) by class of loans:

March 31, 2020

June 30, 2020

Non-performing

26 unchanged sentences

$ 22,451 $ 123 $ 3,443 $ 2,039 $ 28,056 $ 21,500

There was no interest income recognized on non-accrual loans during the three months ended March 31, 2020 and 2019 while the loans were in non-accrual status.

There was no interest income recognized on non-accrual loans during the three and six months ended June 30, 2020 and 2019 while the loans were in non-accrual status.

HORIZON BANCORP, INC.

32 unchanged sentences

$ 15,679 $ 146 $ 2,006 $ 3,354 $ 21,185 $ 15,909

Included in the $ 18.3 million of non-accrual loans and the $ 3.4 million of non-performing TDRs at March 31, 2020 were $ 3.5 million and $ 101,000 , respectively, of loans acquired for which accretable yield was recognized.

Included in the $ 22.5 million of non-accrual loans and the $ 3.4 million of non-performing TDRs at June 30, 2020 were $ 3.3 million and $ 960,000 , respectively, of loans acquired for which accretable yield was recognized.

Troubled Debt Restructurings

2 unchanged sentences

TDRs that subsequently default are individually evaluated for impairment at the time of default.

At March 31, 2020, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments, and there have been no restructured loans with modified recorded balances.

At June 30, 2020, the type of concessions the Company has made on restructured loans has been temporary rate reductions and/or reductions in monthly payments, and there have been no restructured loans with modified recorded balances.

Any modification to a loan that is a concession and is not in the normal course of lending is considered a restructured loan.

A restructured loan is returned to accruing status after six consecutive payments but is still reported as TDR unless the loan bears interest at a market rate.

As of March 31, 2020, the Company had $ 5.5 million in TDRs, $ 3.4 million were performing according to the restructured terms, and one TDR was returned to accrual status during the first three months of 2020.

There were $ 435,000 of specific reserves allocated to TDRs at March 31, 2020 based on the discounted cash flows or, when appropriate, the fair value of the collateral.

These TDRs are exclusive of loans modified under the CARES Act during the first quarter of 2020.

As of June 30, 2020, the Company had $ 5.5 million in TDRs, $ 2.0 million were performing according to the restructured terms, and one TDR was returned to accrual status during the first six months of 2020.

There were $ 435,000 of specific reserves allocated to TDRs at June 30, 2020 based on the discounted cash flows or, when appropriate, the fair value of the collateral.

These TDRs are exclusive of loans modified under the CARES Act during the six months of 2020.

HORIZON BANCORP, INC.

3 unchanged sentences

The following table presents TDRs by loan portfolio:

March 31, 2020 December 31, 2019

June 30, 2020 December 31, 2019

Non-accrual Accruing Total Non-accrual Accruing Total

23 unchanged sentences

and (ii) to suspend any determination of a loan modified as a result of the effects of COVID-19 pandemic as being a TDR, including impairment for accounting purposes.

At March 31, 2020, the Bank modified loans totaling $ 56.6 million which qualify for treatment under the CARES Act.

At June 30, 2020, the Bank modified loans totaling $ 533.9 million which qualify for treatment under the CARES Act.

Collateral Dependent Financial Assets

8 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

The table below presents the value of collateral dependent loans by loan class as of March 31, 2020:

March 31, 2020

The table below presents the value of collateral dependent loans by loan class as of June 30, 2020:

June 30, 2020

Owner occupied real estate $ 3,018

2 unchanged sentences

Total commercial 4,394

Residential mortgage 681

Total real estate 681

Total collateral dependent loans $ 4,394

The following table presents the payment status by class of loan, excluding non-accrual loans of $ 18.3 million and non-performing TDRs of $ 3.4 million at March 31, 2020:

March 31, 2020

The following table presents the payment status by class of loan, excluding non-accrual loans of $ 22.5 million and non-performing TDRs of $ 3.4 million at June 30, 2020:

June 30, 2020

Current 30-59 Days

145 unchanged sentences

The following tables present loans by credit grades and origination year.

March 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

June 30, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

Owner occupied real estate

33 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

March 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

June 30, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

Residential mortgage

11 unchanged sentences

Total real estate $ 59,698 $ 69,063 $ 119,779 $ 115,690 $ 86,516 $ 231,300 $ 322,750 $ 1,004,796

March 31, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

June 30, 2020 2020 2019 2018 2017 2016 Prior Revolving Loans Total

Direct installment

33 unchanged sentences

Percentage of total loans 97.43 % 0.96 % 1.61 % 0.00 % 100.00 %

The increase in commercial loans classified as Special Mention from December 31, 2019 to March 31, 2020 is primarily due to the potential impact on two protfolios, hotels and resturants, as a result of the COVID-19 measures implemented by the states in which Horizon operates (Indiana and Michigan).

Extensive anlaysis and monitoring of these portfolios has been undertaken due to an increase in risks to certain borrowers within these portfolios.

Commercial loans modified due to the impact of the COVID-19 pandemic were immediately downgraded one level resulting in the increase of Special Mention commercial loans from December 31, 2019 to June 30, 2020.

Note 8 – 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 $ 1.5 billiom and $ 1.4 billion at June 30, 2020 and December 31, 2019.

The aggregate fair value of capitalized mortgage servicing rights was approximately $ 12.1 million and $ 14.4 million at June 30, 2020 and December 31, 2019, compared to the carrying values of $ 12.4 million and $ 14.3 million at June 30, 2020 and December 31, 2019, respectively.

Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value.

For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage servicing rights.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

June 30, December 31,

Mortgage servicing rights

Balance, beginning of period $ 15,046 $ 12,876

Servicing rights capitalized 2,573 3,547

Amortization of servicing rights ( 1,310 ) ( 1,377 )

Balance, end of period 16,309 15,046

Impairment allowance

Balance, beginning of period ( 719 ) ( 527 )

Additions ( 3,201 ) ( 234 )

Reductions — 42

Balance, end of period ( 3,920 ) ( 719 )

Mortgage servicing rights, net $ 12,389 $ 14,327

The Bank recorded additional impairment of approximately $ 3.2 million and $ 192,000 for the six months ended June 30, 2020 and December 31, 2019, respectively.

Note 9 – Goodwill

The following table presents the Company’s carrying amount of goodwill as of June 30, 2020 and December 31, 2019.

June 30, December 31,

Balance, beginning of period $ 151,238 $ 119,880

Goodwill acquired during the period — 31,358

Balance, end of period $ 151,238 $ 151,238

In accordance with ASC 350-20, the Company conducts a goodwill impairment test at least annually, or more frequently as events occur or circumstances change that would more-likely-than-not reduce the fair value below its carrying amount.

In the second quarter of 2020, the onset of the COVID-19 pandemic prompted the Company to assess qualitative and quantitative factors to determine whether it was more-likely-than-not the fair value of the Company was less than the carrying amount.

The Company assessed relevant events and circumstances, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in the composition or carrying amount of assets and liabilities, the market price of the Company’s common stock and other relevant facts.

The Company performed both a market capitalization approach and a discounted cash flow approach to determine the fair value of the Company.

As a result, no goodwill impairment charge was recognized during the three and six months ended June 30, 2020.

Note 10 – Repurchase Agreements

4 unchanged sentences

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table shows repurchase agreements accounted for as secured borrowings:

March 31, 2020

June 30, 2020

Remaining Contractual Maturity of the Agreements

12 unchanged sentences

Total $ 111,112 $ — $ — $ — $ — $ — $ 111,112

Note 11 – Subordinated Notes

On June 24, 2020, Horizon issued $ 60.0 million in aggregate principal amount of 5.625 % fixed-to-floating rate subordinated notes (the “Notes”).

The Notes were offered in denominations of $1,000 and integral multiples of $1,000 in excess thereof.

The Notes mature on July 1, 2030 (the “Maturity Date”).

From and including the date of original issuance to, but excluding, July 1, 2025 or the date of earlier redemption (the “fixed rate period”), the Notes bear interest at an initial rate of 5.625 % per annum, payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2021.

The last interest payment date for the fixed rate period will be July 1, 2025.

From and including July 1, 2025 to, but excluding, the Maturity Date or the date of earlier redemption (the “floating rate period”), the Notes bear interest at a floating rate per annum equal to the Benchmark rate (which is expected to be Three-Month Term SOFR), plus 549 basis points, payable quarterly in arrears on January 1, April 1, July1, and October 1 of each year, commencing on October 1, 2025.

Notwithstanding the foregoing, in the event that the Benchmark rate is less than zero, the Benchmark rate shall be deemed to be zero.

Horizon may, at its option, beginning with the interest payment date of July 1, 2025 and on any interest payment date thereafter, redeem the Notes, in whole or in part.

The Notes will not otherwise be redeemable by Horizon prior to maturity, unless certain events occur.

The redemption price for any redemption is 100 % of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption.

Any early redemption of the Notes will be 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 Notes are unsecured subordinated obligations, and rank pari passu, or equally, with all of Horizon's future unsecured subordinated debt and are junior to all existing and future senior debt.

The Notes are structurally subordinated to all existing and future liabilities of Horizon's subsidiaries, including the deposit liabilities and claims of other creditors of Horizon Bank, and are effectively subordinated to Horizon's existing and future secured indebtedness.

There is no sinking fund for the Notes.

The Notes are obligations of Horizon only and are not obligations of, and are not guaranteed by, any of Horizon's subsidiaries.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 12 – Derivative Financial Instruments

Cash Flow Hedges - As a strategy to maintain acceptable levels of exposure to the risk of changes in future cash flow due to interest rate fluctuations, the Company entered into interest rate swap agreements for a portion of its floating rate debt.

The agreements provide for the Company to receive interest from the counterparty at three months LIBOR and to pay interest to the counterparty at a weighted average fixed rate of 4.03 % on a notional amount of $ 15.5 million at March 31, 2020 and December 31, 2019.

The agreements provide for the Company to receive interest from the counterparty at three months LIBOR and to pay interest to the counterparty at a fixed rate of 4.20 % on a notional amount of $ 12.0 million at June 30, 2020 and a weighted average fixed rate of 4.03 % on a notional amount of $ 15.5 million December 31, 2019.

Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

The Company assumed additional interest rate swap agreements as the result of the LaPorte acquisition in July 2016.

The agreements provide for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a weighted average fixed rate of 2.42 % on a notional amount of $ 20.0 million at March 31, 2020 and at a weighted average fixed rate of 2.31 % on a notional amount of $ 30.0 million at December 31, 2019.

The agreements provide for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a fixed rate of 2.62 % on a notional amount of $ 10.0 million at June 30, 2020 and at a weighted average fixed rate of 2.31 % on a notional amount of $ 30.0 million at December 31, 2019.

Under the agreements, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

On July 20, 2018, the Company entered into an interest rate swap agreement for an additional portion of its floating rate debt.

The agreement provides for the Company to receive interest from the counterparty at one month LIBOR and to pay interest to the counterparty at a rate of 2.81 % on a notional amount of $ 50.0 million at March 31, 2020 and December 31, 2019.

Under the agreement, the Company pays or receives the net interest amount monthly, with the monthly settlements included in interest expense.

2 unchanged sentences

Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

At March 31, 2020, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

At June 30, 2020, the Company’s cash flow hedge was effective and is not expected to have a significant impact on the Company’s net income over the next 12 months.

Fair Value Hedges

3 unchanged sentences

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in current earnings.

At March 31, 2020, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

At June 30, 2020, the Company’s fair value hedges were effective and are not expected to have a significant impact on the Company’s net income over the next 12 months.

The change in fair value of both the hedge instruments and the underlying loan agreements are recorded as gains or losses in interest income.

The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material.

The notional amounts of the loan and security agreements being hedged were $ 400.5 million at March 31, 2020 and $ 361.0 million at December 31, 2019.

The notional amounts of the loan and security agreements being hedged were $ 425.8 million at June 30, 2020 and $ 361.0 million at December 31, 2019.

Other Derivative Instruments

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, 2020, 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.

At June 30, 2020, 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.

The change 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.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following tables summarize the fair value of derivative financial instruments utilized by Horizon:

Asset Derivatives Liability Derivatives

March 31, 2020 March 31, 2020

June 30, 2020 June 30, 2020

Balance Sheet

7 unchanged sentences

Total derivatives $ 42,968 $ 50,917

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Asset Derivatives Liability Derivatives

9 unchanged sentences

Total derivatives $ 11,686 $ 15,899

The effect of the derivative instruments on the condensed consolidated statements of income for the three-month periods ending March 31 is as follows:

The effect of the derivative instruments on the condensed consolidated statements of income for the three-month and six-month periods ending June 30 is as follows:

Amount of Loss Recognized in Other Comprehensive Income on Derivative

1 unchanged sentence

Three Months Ended

March 31, 2020 March 31, 2019

Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Derivatives in cash flow hedging relationship

3 unchanged sentences

Topic 820-10-55 establishes a fair value hierarchy that emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Location of gain

recognized on derivative Amount of Gain (Loss) Recognized on Derivative

Three Months Ended

March 31, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Derivative in fair value hedging relationship

6 unchanged sentences

recognized on derivative Amount of Gain (Loss) Recognized on Derivative

Three Months Ended

March 31, 2020 March 31, 2019

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Derivative not designated as hedging relationship

Mortgage contracts Other income - gain on sale of loans $ ( 679 ) $ 75 $ 364 $ 332

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 13 – Disclosures about Fair Value of Assets and Liabilities

7 unchanged sentences

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, 2020.

There have been no significant changes in the valuation techniques during the period ended June 30, 2020.

For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

7 unchanged sentences

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.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

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.

5 unchanged sentences

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.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

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, 2020

June 30, 2020

Quoted Prices in

10 unchanged sentences

Interest rate swap agreements liability ( 47,620 ) — ( 47,620 ) —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

December 31, 2019

20 unchanged sentences

( 38 ) — ( 38 ) —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Realized gains and losses included in net income for the periods are reported in the condensed consolidated statements of income as follows:

Three Months Ended

March 31, 2020 March 31, 2019

Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Non-interest Income

2 unchanged sentences

Fair value interest rate swap agreements

3,162 7,529 29,492 11,580

Derivative loan commitments

( 679 ) 75 364 332

$ ( 679 ) $ 75 $ 364 $ 332

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):

2 unchanged sentences

for Identical

March 31, 2020

June 30, 2020

Collateral dependent loans $ 12,389 $ — $ — $ 12,389

9 unchanged sentences

Allowable methods for determining the amount of impairment include estimating fair value using the fair value of the collateral for collateral-dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

6 unchanged sentences

The Company reviews the valuation assumptions against this market data for reasonableness and adjusts the assumptions if deemed appropriate.

The carrying amount of the MSRs’ fair value due to impairment decreased by $ 322,000 during the first three months of 2020 and increased by $ 14,000 during the first three months of 2019.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The carrying amount of the MSRs’ fair value due to impairment decreased by $ 3.2 million during the first six months of 2020 and increased by $ 11,000 during the first six months of 2019.

The following table presents qualitative information about unobservable inputs used in recurring and non-recurring Level 3 fair value measurements, other than goodwill.

March 31, 2020

June 30, 2020

(Weighted Average)

25 unchanged sentences

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, 2020 and December 31, 2019.

The disclosed fair value estimates are limited to Horizon’s significant financial instruments at June 30, 2020 and December 31, 2019.

These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheet 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.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

4 unchanged sentences

Loans Held for Sale — The carrying amounts approximate fair value.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Net Loans — The fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors.

4 unchanged sentences

Borrowings — Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings.

Subordinated Debentures — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

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 Issued to Capital Trusts — Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures.

Commitments to Extend Credit and Standby Letters of Credit — The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties.

2 unchanged sentences

Due to the short-term nature of these agreements, carrying amounts approximate fair value.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall (unaudited).

March 31, 2020

June 30, 2020

Quoted Prices in

2 unchanged sentences

Cash and due from banks $ 170,135 $ 170,135 $ — $ —

$ 86,458 $ 86,458 $ — $ —

Interest-earning time deposits 9,247 — 9,462 —

9,239 — 9,357 —

Investment securities, held to maturity 190,935 — 201,818 —

199,467 — 207,324 —

Loans held for sale 15,913 — — 15,913

6,245 — — 6,245

Loans (excluding loan level hedges), net 3,923,292 — — 3,912,434

3,658,859 — — 3,694,421

Stock in FHLB 23,608 — 23,608 —

22,447 — 22,447 —

Interest receivable 20,185 — 20,185 —

17,774 — 17,774 —

Non-interest bearing deposits $ 981,868 $ 981,868 $ — $ —

$ 709,978 $ 709,978 $ — $ —

Interest bearing deposits — — 3,328,498 —

3,172,293 — 3,151,657 —

704,613 — 710,005 —

Subordinated debentures

56,374 — 52,118 —

Borrowings — — 595,893 —

Subordinated notes 58,824 — 58,824 —

Junior subordinated debentures issued to capital trusts 56,437 — 52,603 —

Interest payable 2,353 — 2,353 —

2,772 — 2,772 —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

December 31, 2019

21 unchanged sentences

549,741 — 546,995 —

Subordinated debentures

56,311 — 51,809 —

Junior subordinated debentures issued to capital trusts 56,311 — 51,809 —

Interest payable

3,062 — 3,062 —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

Note 15 – Accumulated Other Comprehensive Income

17 unchanged sentences

The minimum regulatory capital requirements are set forth in the table below.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Table Dollar Amounts in Thousands, Except Per Share Data)

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, 2020 and December 31, 2019, 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 2020 that management believes have changed the Bank’s classification as well capitalized.

As of June 30, 2020 and December 31, 2019, 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 second quarter of 2020 that management believes have changed the Bank’s classification as well capitalized.

There is no threshold for well-capitalized status for bank holding companies.

7 unchanged sentences

(Table Dollar Amounts in Thousands, Except Per Share Data)

Horizon and the Bank’s actual and required capital ratios as of March 31, 2020 and December 31, 2019 were as follows:

Horizon and the Bank’s actual and required capital ratios as of June 30, 2020 and December 31, 2019 were as follows:

Required for Capital 1

6 unchanged sentences

Corrective Action

March 31, 2020

June 30, 2020

Total capital 1 (to risk-weighted assets)

46 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2020 and 2019

For the Three and Six Months ended June 30, 2020 and 2019

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements