What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-08 compared with 2023-05-10 · 182 added, 110 removed, 1289 unchanged (18% of the section changed)

45 unchanged sentences

(Dollar Amounts in Thousands, Except Per Share Data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Interest Income

18 unchanged sentences

Fiduciary activities 1,247 1,405 2,522 2,908

Losses on sale of investment securities ( 500 ) —

Gain (loss) on sale of investment securities 20 — ( 480 ) —

Gain on sale of mortgage loans 1,005 2,501 1,790 4,528

1 unchanged sentence

Increase in cash value of bank owned life insurance 1,015 519 1,996 1,029

Death benefit on bank owned life insurance — 644 — 644

Other income 349 461 711 1,353

22 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

2023 2022 2023 2022

Net Income $ 18,763 $ 24,859 $ 36,991 $ 48,422

2 unchanged sentences

Change in fair value of derivative instruments for the period 35 1,043 ( 523 ) 3,789

Reclassification adjustment for swap termination gain realized in income ( 1,453 ) — ( 1,453 ) —

Income tax effect 299 ( 219 ) 415 ( 796 )

20 unchanged sentences

Income (Loss) Total

Balances, April 1, 2022 $ — $ — $ 351,522 $ 380,700 $ ( 54,772 ) $ 677,450

Net income — — — 24,859 — 24,859

Other comprehensive loss, net of tax — — — — ( 38,292 ) ( 38,292 )

Amortization of unearned compensation — — 627 — — 627

Net settlement of share awards — — ( 25 ) — — ( 25 )

Stock retirement plans — — 288 — — 288

Cash dividends on common stock ($ 0.16 per share)

— — — ( 7,042 ) — ( 7,042 )

Balances, June 30, 2022 $ — $ — $ 352,412 $ 398,517 $ ( 93,064 ) $ 657,865

Balances, April 1, 2023 $ — $ — $ 354,035 $ 440,556 $ ( 92,032 ) $ 702,559

Net income — — — 18,763 — 18,763

Other comprehensive loss, net of tax — — — — ( 5,887 ) ( 5,887 )

Amortization of unearned compensation — — 944 — — 944

Net settlement of share awards — — ( 26 ) — — ( 26 )

Cash dividends on common stock ($ 0.16 per share)

— — — ( 7,110 ) — ( 7,110 )

Balances, June 30, 2023 $ — $ — $ 354,953 $ 452,209 $ ( 97,919 ) $ 709,243

See notes to condensed consolidated financial statements

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Dollar Amounts in Thousands, Except Per Share Data)

Six Months Ended

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

Balances, January 1, 2022 $ — $ — $ 352,122 $ 363,742 $ 7,345 $ 723,209

8 unchanged sentences

— — — ( 13,647 ) — ( 13,647 )

Balances, March 31, 2022 $ — $ — $ 351,522 $ 380,700 $ ( 54,772 ) $ 677,450

Balances, June 30, 2022 $ — $ — $ 352,412 $ 398,517 $ ( 93,064 ) $ 657,865

Balances, January 1, 2023 $ — $ — $ 354,188 $ 429,385 $ ( 106,198 ) $ 677,375

6 unchanged sentences

— — — ( 14,167 ) — ( 14,167 )

Balances, March 31, 2023 $ — $ — $ 354,035 $ 440,556 $ ( 92,032 ) $ 702,559

Balances, June 30, 2023 $ — $ — $ 354,953 $ 452,209 $ ( 97,919 ) $ 709,243

See notes to condensed consolidated financial statements

3 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended

Six Months Ended

Operating Activities

32 unchanged sentences

Premises and equipment expenditures ( 5,277 ) ( 3,224 )

Proceeds from bank owned life insurance — 3,554

Net cash used in investing activities 15,609 ( 813,937 )

12 unchanged sentences

Additional Supplemental Information

Interest paid $ 26,019 $ 4,726

HORIZON BANCORP, INC.

2 unchanged sentences

(Dollar Amounts in Thousands)

Interest paid $ 49,910 $ 8,308

Income taxes paid 1,554 650

10 unchanged sentences

All inter–company balances and transactions have been eliminated.

The results of operations for the periods ended March 31, 2023 and March 31, 2022 are not necessarily indicative of the operating results for the full year of 2023 or 2022.

The results of operations for the periods ended June 30, 2023 and June 30, 2022 are not necessarily indicative of the operating results for the full year of 2023 or 2022.

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, 2023, Horizon had repurchased a total of 803,349 shares at an average price per share of $ 16.89 .

As of June 30, 2023, 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.

1 unchanged sentence

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

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

2023 2022 2023 2022

Basic earnings per share

14 unchanged sentences

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

There were 601,685 shares for the three months ended March 31, 2023 which were not included in the computation of diluted earnings per share because they were non–dilutive.

There were 1,000 shares for the three months ended March 31, 2022 which were not included in the computation of diluted earnings per share because they were non–dilutive.

There were 484,650 and 415,455 shares for the three and six months ended June 30, 2023 which were not included in the computation of diluted earnings per share because they were non–dilutive.

There were 319,692 and 206,421 shares for the three and six months ended June 30, 2022 which were not included in the computation of diluted earnings per share because they were non–dilutive.

Reclassifications

Certain reclassifications have been made to the 2022 condensed consolidated financial statements to be comparable to 2023.

These reclassifications were not material and had no effect on net income.

Revision of Previously Issued Financial Statements

4 unchanged sentences

We evaluated the aggregate effects of these errors to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No.

108 and, based upon quantitative and qualitative factors, determined that the errors were not material to the previously issued financial statements and disclosures included in our Quarterly Report on Form 10–Q for the three months ended March 31, 2022.

The following tables present the revisions to the line items of our previously issued financial statements to reflect the correction of the errors:

Consolidated Statements of Income

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

As Reported Indirect Loan Dealer Reserve Adjustment As Revised

12 unchanged sentences

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

Consolidated Statements of Income

Six Months Ended June 30, 2022

As Reported Indirect Loan Dealer Reserve Adjustment As Revised

Interest income

Loans receivable $ 79,428 $ ( 2,304 ) $ 77,124

Total interest income 109,654 ( 2,304 ) 107,350

Net interest income 101,179 ( 2,304 ) 98,875

Net interest income after credit loss expense (recovery) 102,325 ( 2,304 ) 100,021

Non–interest expense

Loan expense 5,042 ( 2,304 ) 2,738

Total non–interest expense 72,978 ( 2,304 ) 70,674

Net income 48,422 — 48,422

Additional immaterial reclassifications made to the 2022 condensed consolidated financial statements to be comparable to 2023 are not included within the revision to the consolidated statement of cash flows noted below.

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

As Reported Indirect Loan Dealer Reserve Adjustment Transfer of AFS Securities to HTM Securities As Revised

15 unchanged sentences

These amendments eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Additionally, these amendments require that an entity disclose current–period gross write–offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326–20.

4 unchanged sentences

The Company adopted this standard during the first quarter of 2023 and it did not have a material impact on the consolidated financial statements.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Accounting Guidance Issued But Not Yet Adopted

28 unchanged sentences

The fair value of securities is as follows:

March 31, 2023

June 30, 2023

Available for sale

38 unchanged sentences

The fair value of the transferred AFS securities became the book value of the HTM securities at March 31, 2022.

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2023 and December 31, 2022, by contractual maturity, are shown below.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2023 and December 31, 2022, 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, 2023

June 30, 2023

Available for sale

22 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, 2023

June 30, 2023

Less than 12 Months 12 Months or More Total

24 unchanged sentences

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost.

As of March 31, 2023 and December 31, 2022, the Company had 2,647 and 2,828 securities, respectively, with market values below their cost basis.

The total fair value of these investments at March 31, 2023 and December 31, 2022 was $ 2.5 billion and $ 2.6 billion, which is approximately 95.7 % and 97.0 %, respectively, of the Company's available for sale and held to maturity securities portfolio.

As of June 30, 2023 and December 31, 2022, the Company had 2,655 and 2,828 securities, respectively, with market values below their cost basis.

The total fair value of these investments at June 30, 2023 and December 31, 2022 was $ 2.5 billion and $ 2.6 billion, which is approximately 97.8 % and 97.0 %, respectively, of the Company's available for sale and held to maturity securities portfolio.

These declines resulted primarily from fluctuations in market interest rates after purchase.

Management believes the declines in fair value for these securities are temporary.

No allowance for credit losses for available for sale debt securities or held to maturity securities was recorded at March 31, 2023 or December 31, 2022.

Accrued interest receivable on available for sale debt securities and held to maturity securities totaled $ 17.0 million at March 31, 2023 and $ 17.8 million at December 31, 2022 and is excluded from the estimate of credit losses.

No allowance for credit losses for available for sale debt securities or held to maturity securities was recorded at June 30, 2023 or December 31, 2022.

Accrued interest receivable on available for sale debt securities and held to maturity securities totaled $ 16.7 million at June 30, 2023 and $ 17.8 million at December 31, 2022 and is excluded from the estimate of credit losses.

government sponsored entities and agencies and mortgage–backed securities are either explicitly or implicitly guaranteed by the U.S.

9 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

2023 2022 2023 2022

Sales of securities available for sale

23 unchanged sentences

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

The following table presents total loans outstanding by portfolio class, as of March 31, 2023 and December 31, 2022:

The following table presents total loans outstanding by portfolio class, as of June 30, 2023 and December 31, 2022:

2023 December 31,

16 unchanged sentences

Net loans $ 4,216,284 $ 4,107,534

Total loans include net deferred loan costs of $ 24.6 million at March 31, 2023 and $ 22.7 million at December 31, 2022, respectively.

Total loans include net deferred loan costs of $ 23.2 million at June 30, 2023 and $ 22.7 million at December 31, 2022, respectively.

The risk characteristics of each loan portfolio segment are as follows:

43 unchanged sentences

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, 2023:

March 31, 2023

The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loans at June 30, 2023:

June 30, 2023

Non–accrual Loans Past

45 unchanged sentences

Total $ 17,630 $ 92 $ 1,548 $ 2,570 $ 21,840 $ 18,980

There was no interest income recognized on non–accrual loans during the three months ended March 31, 2023 and 2022, respectively, while the loans were in non–accrual status.

There was no interest income recognized on non–accrual loans during the six months ended June 30, 2023 and 2022, respectively, while the loans were in non–accrual status.

HORIZON BANCORP, INC.

2 unchanged sentences

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

The following table presents the payment status by class of loan, excluding non–accrual loans of $ 19.7 million at March 31, 2023:

March 31, 2023

The following table presents the payment status by class of loan, excluding non–accrual loans of $ 20.8 million at June 30, 2023:

June 30, 2023

Current 30–59 Days

46 unchanged sentences

Troubled Debt Restructurings and Vintage Disclosures, during the first quarter of 2023.

This amendment eliminated the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

These amendments eliminated the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

During the first quarter of 2023, the Company did not modify any loans.

Prior to the adoption of ASU 2022–02, loans modified as TDRs generally consist of allowing borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans' contractual terms.

TDRs that continue to accrue interest are individually monitored on a monthly basis and evaluated for impairment annually and transferred to non–accrual status when it is probable that any remaining principal and interest payments due on the loan will not be collected in accordance with the contractual terms of the loan.

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

During the first six months of 2023, the Company did not modify any loans.

Prior to the adoption of ASU 2022–02, loans modified as TDRs generally consisted of allowing borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans' contractual terms.

TDRs that continued to accrue interest were individually monitored on a monthly basis and evaluated for impairment annually and transferred to non–accrual status when it was probable that any remaining principal and interest payments due on the loan would not be collected in accordance with the contractual terms of the loan.

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

HORIZON BANCORP, INC.

31 unchanged sentences

The table below presents 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.

March 31, 2023

June 30, 2023

Real Estate Accounts Receivable/Equipment Other Total ACL

120 unchanged sentences

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

The following tables present loans by credit grades and origination year at March 31, 2023.

March 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

The following tables present loans by credit grades and origination year at June 30, 2023.

June 30, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

Owner occupied real estate

37 unchanged sentences

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

March 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

June 30, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

Residential mortgage

13 unchanged sentences

Gross charge–offs during period $ — $ — $ — $ — $ — $ — $ — $ —

March 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

June 30, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

Direct installment

85 unchanged sentences

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, 2023 and 2022:

Three Months Ended March 31, 2023

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, 2023

Commercial Real Estate Mortgage Warehouse Consumer Total

5 unchanged sentences

Balance, end of period $ 30,354 $ 3,648 $ 893 $ 15,081 $ 49,976

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Commercial Real Estate Mortgage Warehouse Consumer Total

5 unchanged sentences

Balance, end of period $ 34,802 $ 4,422 $ 1,067 $ 12,059 $ 52,350

Six Months Ended June 30, 2023

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 32,445 $ 5,577 $ 1,020 $ 11,422 $ 50,464

Credit loss expense (recovery) ( 1,715 ) ( 1,945 ) ( 127 ) 4,123 336

PCD loan charge–offs ( 171 ) — — — ( 171 )

Charge–offs ( 333 ) ( 4 ) — ( 1,014 ) ( 1,351 )

Recoveries 128 20 — 550 698

Balance, end of period $ 30,354 $ 3,648 $ 893 $ 15,081 $ 49,976

Six Months Ended June 30, 2022

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 40,775 $ 3,856 $ 1,059 $ 8,596 $ 54,286

Credit loss expense (recovery) ( 5,640 ) 596 8 3,890 ( 1,146 )

PCD loan charge–offs ( 370 ) — — — ( 370 )

Charge–offs ( 137 ) ( 58 ) — ( 1,013 ) ( 1,208 )

Recoveries 174 28 — 586 788

Balance, end of period $ 34,802 $ 4,422 $ 1,067 $ 12,059 $ 52,350

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 pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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.

10 unchanged sentences

The forecasted loss rate then reverts to the historical base rate on a straight–line methodology for the remaining life of loan for each pool.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

The Company segments the loan portfolio into pools based on the following risk characteristics:

2 unchanged sentences

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 $ 1.514 billion and $ 1.532 billion at March 31, 2023 and December 31, 2022.

The unpaid principal balances of loans serviced for others totaled approximately $ 1.491 billion and $ 1.532 billion at June 30, 2023 and December 31, 2022.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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.

Mortgage servicing rights are included in other assets on the balance sheets as of March 31, 2023 and December 31, 2022.

Three Months Ended

March 31, March 31,

Mortgage servicing rights are included in other assets on the balance sheets as of June 30, 2023 and December 31, 2022.

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

2023 2022 2023 2022

Mortgage servicing rights

9 unchanged sentences

Mortgage servicing rights, net $ 18,507 $ 18,761 $ 18,507 $ 18,761

Fair value, beginning of period $ 18,600 $ 18,592 $ 18,619 $ 15,186

Fair value, end of period 18,507 18,761 18,507 18,761

Note 6 – Goodwill

The carrying amount of goodwill was $ 155.2 million as of March 31, 2023 and December 31, 2022, respectively.

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2023 and 2022.

The carrying amount of goodwill was $ 155.2 million as of June 30, 2023 and December 31, 2022, respectively.

There were no changes in the carrying amount of goodwill for the three and six months ended June 30, 2023 and 2022.

Goodwill is assessed for impairment annually, or more frequently if events occur or circumstances change that indicate an impairment may exist.

2 unchanged sentences

Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment.

Goodwill was assessed for impairment using a qualitative analysis as of March 31, 2023 which resulted in no goodwill impairment charges for the three months ended March 31, 2023.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Goodwill was assessed for impairment using a qualitative analysis as of June 30, 2023 which resulted in no goodwill impairment charges for the six months ended June 30, 2023.

Note 7 – Repurchase Agreements

3 unchanged sentences

The following tables show repurchase agreements accounted for as secured borrowings and the related securities, at fair value, pledged for repurchase agreements:

March 31, 2023

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

June 30, 2023

Remaining Contractual Maturity of the Agreements

25 unchanged sentences

Total $ 160,517 $ — $ — $ — $ — $ — $ 160,517

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 8 – Subordinated Notes

6 unchanged sentences

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

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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.

9 unchanged sentences

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 an interest rate swap agreement for a portion of its floating rate debt on July 20, 2018.

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 fixed rate of 2.81 % on a notional amount of $ 50.0 million at March 31, 2023 and December 31, 2022.

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

This interest rate swap agreement matures on July 19, 2026.

The Company terminated this interest rate swap agreement on May 23, 2023 and recorded a related gain of $ 1.5 million as a reduction of interest expense.

Management has designated the interest rate swap agreement as a cash flow hedging instrument.

1 unchanged sentence

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, 2023, 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

2 unchanged sentences

To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company has entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate.

For derivative instruments that are designated and qualify as a fair value hedge, the gain or

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 June 30, 2023, 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 non–interest income.

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

HORIZON BANCORP, INC.

2 unchanged sentences

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

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, 2023, 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 non–interest income.

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

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, 2023, 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, 2023, 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.

1 unchanged sentence

Asset Derivatives Liability Derivatives

March 31, 2023 March 31, 2023

June 30, 2023 June 30, 2023

Value Notional

24 unchanged sentences

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

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

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

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Derivatives in cash flow hedging relationship

Interest rate contracts $ ( 1,119 ) $ 824 $ ( 1,561 ) $ 2,993

The effect of the derivative designated as a hedging instrument on the condensed consolidated statements of income for the three–month periods ended March 31 is as follows:

The effect of the derivative designated as a hedging instrument on the condensed consolidated statements of income for the three and six–month periods ended June 30 is as follows:

Location of gain

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

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Derivative designated as hedging instruments

1 unchanged sentence

Total $ 1,624 $ ( 275 ) $ 1,832 $ ( 615 )

The effect of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the three–month periods ended March 31 is as follows:

The effect of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the three and six–month periods ended June 30 is as follows:

Location of gain (loss)

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

Three Months Ended

March 31, 2023 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Derivatives not designated as hedging instruments

17 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, 2023.

There have been no significant changes in the valuation techniques during the period ended June 30, 2023.

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

20 unchanged sentences

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, 2023

June 30, 2023

Fair Value Quoted Prices in Active Markets

11 unchanged sentences

Commitments to originate mortgage loans 131 — 131 —

Mortgage loan contracts 37 — 37 —

Interest rate swap agreements liability ( 39,146 ) — ( 39,146 ) —

Mortgage loan contracts ( 18 ) — ( 18 ) —

December 31, 2022

23 unchanged sentences

(Level 2) Significant

March 31, 2023

June 30, 2023

Collateral dependent loans $ 8,114 $ — $ — $ 8,114

6 unchanged sentences

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, 2023

June 30, 2023

Value Valuation

17 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, 2023 and December 31, 2022.

The disclosed fair value estimates are limited to Horizon’s significant financial instruments at June 30, 2023 and December 31, 2022.

These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheets as well as certain off–balance sheet financial instruments.

23 unchanged sentences

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.

March 31, 2023

June 30, 2023

Amount Quoted Prices in Active Markets

9 unchanged sentences

Interest receivable 37,536 — 37,536 —

Mortgage servicing rights — — — —

Non–interest bearing deposits $ 1,170,055 $ 1,170,055 $ — $ —

4 unchanged sentences

Interest payable 12,739 — 12,739 —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

December 31, 2022

10 unchanged sentences

Interest receivable 35,294 — 35,294 —

Mortgage servicing rights — — — —

Non–interest bearing deposits $ 1,277,768 $ 1,277,768 $ — $ —

4 unchanged sentences

Interest payable 5,380 — 5,380 —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 12 – Accumulated Other Comprehensive Income (Loss)

12 unchanged sentences

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.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel III–based regulations.

2 unchanged sentences

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, 2023 and December 31, 2022, 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 2023 that management believes have changed the Bank’s classification as well capitalized.

As of June 30, 2023 and December 31, 2022, 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 2023 that management believes have changed the Bank’s classification as well capitalized.

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

3 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, 2023 and December 31, 2022 were as follows:

Horizon and the Bank’s actual and required capital ratios as of June 30, 2023 and December 31, 2022 were as follows:

Actual Required for Capital

7 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

March 31, 2023

June 30, 2023

Total capital (to risk–weighted assets) (1)

26 unchanged sentences

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 14 – General Litigation

11 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2023 and 2022

For the Three and Six Months ended June 30, 2023 and 2022

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