What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 425 added, 252 removed, 1066 unchanged (39% of the section changed)

6 unchanged sentences

Cash and due from banks $ 106,691 $ 112,772

Interest earning deposits 4,957 12,071

Federal funds sold 34,453 401,672

Total cash and cash equivalents 146,101 526,515

Interest earning time deposits 1,715 2,205

26 unchanged sentences

Common stock, no par value, Authorized 99,000,000 shares

Issued and Outstanding 44,115,840 and 44,106,174 shares

43,712,059 shares issued and outstanding at June 30, 2024 and 43,652,063 shares issued and outstanding at December 31, 2023

Additional paid-in capital 357,673 356,400

8 unchanged sentences

(Dollar Amounts in Thousands, Except Per Share Data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Interest Income

46 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended

Three Months Ended Six Months Ended

June 30 June 30

2024 2023 2024 2023

Net Income $ 14,140 $ 18,763 $ 28,131 $ 36,991

2 unchanged sentences

Change in fair value of derivative instruments for the period — 35 — ( 523 )

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

Income tax effect — 299 — 415

19 unchanged sentences

Income (Loss) Total

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

Net income — — — 18,763 — 18,763

Other comprehensive income, 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

Balances, April 1, 2024 $ — $ — $ 356,599 $ 435,927 $ ( 71,276 ) $ 721,250

Net income — — — 14,140 — 14,140

Other comprehensive loss, net of tax — — — — ( 2,709 ) ( 2,709 )

Amortization of unearned compensation — — 1,134 — — 1,134

Net settlement of share awards — — ( 60 ) — — ( 60 )

Cash dividends on common stock ($ 0.16 per share)

— — — ( 7,090 ) — ( 7,090 )

Balances, June 30, 2024 $ — $ — $ 357,673 $ 442,977 $ ( 73,985 ) $ 726,665

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, 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

Balances, January 1, 2024 $ — $ — $ 356,400 $ 429,021 $ ( 66,609 ) $ 718,812

5 unchanged sentences

— — — ( 14,175 ) — ( 14,175 )

Balances, March 31, 2024 $ — $ — $ 356,599 $ 435,927 $ ( 71,276 ) $ 721,250

Balances, June 30, 2024 $ — $ — $ 357,673 $ 442,977 $ ( 73,985 ) $ 726,665

See notes to condensed consolidated financial statements

3 unchanged sentences

(Dollar Amounts in Thousands)

Three Months Ended

Six Months Ended

Operating Activities

1 unchanged sentence

Items not requiring (providing) cash

Credit loss expense (recovery) 805 242

Credit loss expense 3,174 922

Depreciation and amortization 5,170 5,268

42 unchanged sentences

Income taxes paid 8,000 1,554

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Dollar Amounts in Thousands)

Transfer of loans to other real estate and repossessed assets 915 1,452

Cash dividends declared, not paid 7,156 7,122

See notes to condensed consolidated financial statements

4 unchanged sentences

Note 1 - Accounting Policies

Reclassifications

Certain reclassifications have been made to the 2023 condensed consolidated financial statements to be comparable to 2024.

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

Revisions to Previously Issued Financial Statements

During the second quarter of 2024 management corrected a prior computation of the Company’s total capital (to risk-weighted assets), Tier 1 capital (to risk-weighted assets), and Tier 1 capital (to average assets) ratios for purposes of the Company’s consolidated financial statements for holding companies filed with the Federal Reserve (the “Regulatory Filings”), which involved an incorrect classification of the Company’s subordinated notes as Tier 1 capital.

This incorrect classification affected the Company's regulatory capital disclosures in certain prior period filings with the SEC, as those disclosures were sourced from the Regulatory Filings.

The Company evaluated the effects of the incorrect classification to its previously filed Regulatory Filings and previously issued financial statements in accordance with SEC Staff Accounting Bulletins No.

108 and, based upon qualitative and quantitative factors, determined the errors were not material to the previously filed Regulatory Filings or the previously issued financial statements and disclosures included in our Annual Reports on Form 10-K for the years ended December 31, 2020, 2021, 2022 and 2023, or for any of the quarterly reports included therein or through our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024.

The Company has amended its Regulatory Filings for the periods ended March 31, 2024 and December 31, 2023 to reclassify the subordinated notes balance from Tier 1 capital into Tier 2 capital.

The correction of the classification had no effect on the Company’s consolidated balance sheets, statements of income, stockholders’ equity, or the amounts or disclosure of the regulatory capital ratios of the Bank as included in its call reports.

The Company continues to exceed regulatory proxy ratios to be considered “well capitalized”, plus the capital conservation buffer, at June 30, 2024.

See "Note 13 - Regulatory Capital" below for further information.

Nature of Business and Basis of Reporting

The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp, Inc.

1 unchanged sentence

All inter–company balances and transactions have been eliminated.

The results of operations for the periods ended March 31, 2024 and March 31, 2023 are not necessarily indicative of the operating results for the full year of 2024 or 2023.

The results of operations for the periods ended June 30, 2024 and June 30, 2023 are not necessarily indicative of the operating results for the full year of 2024 or 2023.

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, 2024, Horizon had repurchased a total of 803,349 shares at an average price per share of $ 16.89 .

As of June 30, 2024, Horizon had repurchased a total of 803,349 shares at an average price per share of $ 16.89 .

Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted–average number of common shares outstanding.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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, June 30, June 30,

(dollars in thousands, except per share data) 2024 2023 2024 2023

Basic earnings per share

10 unchanged sentences

Diluted earnings per share $ 0.32 $ 0.43 $ 0.64 $ 0.85

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

There were 86,353 shares for the three months ended March 31, 2024 which were not included in the computation of diluted earnings per share because they were non–dilutive.

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.

Adoption of New Accounting Standards

2023–02, Investments Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

The FASB has issued ASU 2023–02, Investments Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

This guidance allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits.

This guidance is effective for public business entities for fiscal years including interim periods within those fiscal years, beginning after December 15, 2023.

Early adoption is permitted in any interim period.

The Company adopted ASU 2023–02 on January 1, 2024 and it did not have a material impact on its accounting and disclosures.

Accounting Guidance Issued But Not Yet Adopted

2023–09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

The FASB has issued ASU 2023–09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

These amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate.) The amendments also require that all entities disclose on an annual basis the following information about income taxes paid:

(1) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received.) This guidance is effective for public business entities for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments should be applied on a prospective basis although retrospective application is permitted.

The Company is continuing to assess ASU 2023–09 and its impact on its accounting and disclosures.

FASB ASU 2023–07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

The FASB has issued ASU 2023–07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments retrospectively to all periods presented in the financial statements.

The Company is continuing to assess ASU 2023–07 and its impact on its accounting and disclosures.

There were 167,943 and 257,773 shares for the three and six months ended June 30, 2024 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.

HORIZON BANCORP, INC.

4 unchanged sentences

The fair value of securities is as follows:

March 31, 2024

June 30, 2024

Available for sale

5 unchanged sentences

Total available for sale investment securities $ 623,428 $ 2 $ ( 96,376 ) $ 527,054

March 31, 2024

June 30, 2024

Value Allowance for Credit Losses Net

30 unchanged sentences

Total held to maturity investment securities $ 1,945,795 $ 1,185 $ ( 278,222 ) $ 1,668,758 $ ( 157 ) $ 1,945,638

The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2024 and December 31, 2023, by contractual maturity, are shown below.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2024 and December 31, 2023, 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, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Amortized

18 unchanged sentences

Total held to maturity investment securities $ 1,904,439 $ 1,596,987 $ 1,945,795 $ 1,668,758

As of June 30, 2024, investment securities with a carrying value of $ 144.4 million were pledged as collateral against $ 1.2 billion of Federal Home Loan Bank (FHLB) borrowings.

HORIZON BANCORP, INC.

3 unchanged sentences

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

March 31, 2024

June 30, 2024

Less than 12 Months 12 Months or More Total

22 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, 2024 and December 31, 2023, the Company had 2,320 and 2,290 securities, respectively, with market values below their cost basis.

The total fair value of these investments at March 31, 2024 and December 31, 2023 was $ 2.1 billion and $ 2.1 billion, which is approximately 86.0 % and 85.1 %, respectively, of the Company's available for sale and held to maturity securities portfolio.

As of June 30, 2024 and December 31, 2023, the Company had 2,314 and 2,290 securities, respectively, with market values below their cost basis.

The total fair value of these investments at June 30, 2024 and December 31, 2023 was $ 2.1 billion and $ 2.1 billion, which is approximately 86.5 % and 85.1 %, 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 was recorded at March 31, 2024 or December 31, 2023.

No allowance for credit losses for available for sale debt securities was recorded at June 30, 2024 or December 31, 2023.

The allowance for credit losses for held to maturity securities is a contra asset valuation account that is deducted from the carrying amount of held to maturity securities to present the net amount expected to be collected.

Held to maturity securities are charged off against the allowance for credit loss when deemed uncollectible.

Adjustments to the allowance for credit loss are reported in our Consolidated Statements of Income in credit loss expense.

Adjustments to the allowance for credit loss are reported in our Condensed Consolidated Statements of Income in credit loss expense.

We measure expected credit losses on held to maturity securities on a collective basis by major security type with each type sharing similar risk characteristics, and consider historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

3 unchanged sentences

therefore, no allowance for credit losses has been recorded for these securities.

With regard to obligations of states and municipal, private

With regard to obligations of states and

HORIZON BANCORP, INC.

2 unchanged sentences

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

label mortgage-backed and corporate note held to maturity securities, we consider (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.

municipal, private label mortgage-backed and corporate note held to maturity securities, we consider (1) issuer bond ratings, (2) historical loss rates for given bond ratings, (3) the financial condition of the issuer, and (4) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities.

Historical loss rates associated with securities having similar grades as those in our portfolio have been insignificant.

As of March 31, 2024 and December 31, 2023, there were no past due principal and interest payments associated with these securities.

An allowance for credit loss of $ 158,000 and $ 157,000 was recorded on these securities based on applying the long-term historical rating agency credit loss rate for similarly rated securities at March 31, 2024 and December 31, 2023, respectively.

Accrued interest receivable on available for sale debt securities and held to maturity securities totaled $ 14.4 million at March 31, 2024 and $ 14.7 million at December 31, 2023 and is excluded from the estimate of credit losses.

As of June 30, 2024 and December 31, 2023, there were no past due principal and interest payments associated with these securities.

On a quarterly basis, the Company refreshes the credit quality indicator of each held-to-maturity security.

The Company applies ratings derived from Nationally Recognized Statistical Rating Organizations ("NRSRO"), specifically Moody's and Standard & Poor's.

For state and municipal securities where no rating is available from the NRSROs, a consistent internally-assigned rating methodology is applied.

The amortized cost of these securities in the following tables subject to this methodology totaled $ 131.9 million as of June 30, 2024, and $ 143.7 million as of December 31, 2023.

The following table summarizes credit ratings of our held-to-maturity securities at amortized cost for the periods indicated:

June 30, 2024 AAA AA A BBB BB Not Rated Total

Treasury and federal agencies $ — $ 284,114 $ — $ — $ — $ — $ 284,114

State and municipal 284,849 713,834 63,772 2,183 — — 1,064,638

Federal agency collateralized mortgage obligations 48,668 — — — — — 48,668

Federal agency mortgage-backed pools 314,069 — — — — — 314,069

Private labeled mortgage-backed pools 30,780 — — — — — 30,780

Corporate notes — 6,193 11,691 75,926 4,550 63,810 162,170

Total $ 678,366 $ 1,004,141 $ 75,463 $ 78,109 $ 4,550 $ 63,810 $ 1,904,439

December 31, 2023 AAA AA A BBB BB Not Rated Total

Treasury and federal agencies $ — $ 287,259 $ — $ — $ — $ — $ 287,259

State and municipal 285,748 730,907 69,658 2,186 — — 1,088,499

Federal agency collateralized mortgage obligations 51,325 — — — — — 51,325

Federal agency mortgage-backed pools 323,649 — — — — — 323,649

Private labeled mortgage-backed pools 32,329 — — — — — 32,329

Corporate notes — 4,260 11,831 78,197 4,556 63,890 162,734

Total $ 693,051 $ 1,022,426 $ 81,489 $ 80,383 $ 4,556 $ 63,890 $ 1,945,795

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

The following table details activity in the allowance for credit losses on held-to-maturity securities during the three and six months ended June 30, 2024 and 2023.

Three Months Ended Six Months Ended

June 30 June 30

2024 2023 2024 2023

Beginning balance $ 158 $ — $ 157 $ —

Credit loss expense (benefit) — — 1 —

Ending balance $ 158 $ — $ 158 $ —

Accrued interest receivable on available for sale debt securities and held to maturity securities totaled $ 14.4 million at June 30, 2024 and $ 14.7 million at December 31, 2023 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.

4 unchanged sentences

In addition, the Company does not intend to sell these securities prior to the recovery of the amortized cost, which may not occur until maturity.

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

Three Months Ended

Information regarding security proceeds, gross gains and gross losses, based on specific identification method, are presented below.

Three Months Ended Six Months Ended

June 30 June 30

2024 2023 2024 2023

Sales of securities available for sale

2 unchanged sentences

Gross losses — ( 66 ) — ( 695 )

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 3 – Loans

11 unchanged sentences

Indirect auto

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses.

2 unchanged sentences

Construction loans are reviewed and rewritten prior to being originated as a term loan.

The following table presents total loans outstanding by portfolio class, as of March 31, 2024 and December 31, 2023:

The following table presents total loans outstanding by portfolio class, as of June 30, 2024 and December 31, 2023:

2024 December 31,

16 unchanged sentences

Net loans $ 4,770,625 $ 4,367,601

Total loans include net deferred loan costs of $ 22.9 million at March 31, 2024 and $ 21.9 million at December 31, 2023, respectively.

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

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower.

The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value.

Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee;

however, some short-term loans may be made on an unsecured basis.

In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

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

Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan.

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

The properties securing the Company’s commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit.

Management monitors and evaluates commercial real estate loans based on collateral, cash flow and risk grade criteria.

As a general rule, the Company avoids financing

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

single purpose projects unless other underwriting factors are present to help mitigate risk.

In addition, management tracks the level of owner occupied commercial real estate loans versus non-owner occupied loans.

Real Estate and Consumer

With respect to residential loans that are secured by 1-4 family residences and are generally owner occupied, the Company generally establishes a maximum loan-to-value ratio and may require private mortgage insurance if that ratio is exceeded.

Home equity loans are typically secured by a subordinate interest in 1-4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles.

Some consumer loans are unsecured such as small installment loans and certain lines of credit.

Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels.

Repayment can also be impacted by changes in property values on residential properties.

Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon’s mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank.

Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon’s agreement with the mortgage company.

Each mortgage loan funded by Horizon undergoes an underwriting review by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company.

In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan.

At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement.

Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company.

When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees.

The remaining balance from the sale is forwarded to the mortgage company.

These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days.

Interest income is accrued during this period and collected at the time each loan is sold.

Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on the agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note.

Horizon also has the option to request that the mortgage company reacquire an individual mortgage.

Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company.

Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.

Total loans include net deferred loan costs of $ 21.2 million at June 30, 2024 and $ 21.9 million at December 31, 2023, respectively.

HORIZON BANCORP, INC.

3 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, 2024:

March 31, 2024

The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loans at June 30, 2024:

June 30, 2024

Non–accrual Loans Past

38 unchanged sentences

Total $ 19,710 $ 559 $ 3,668

There was no interest income recognized on non–accrual loans during the three months ended March 31, 2024 and 2023, respectively, 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, 2024 and 2023, respectively, while the loans were in non-accrual status.

The amount of accrued interest receivable written off by the Company by reversing interest income was not material for the three and six months ended June 30, 2024 and June 30, 2023, respectively.

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 at March 31, 2024:

March 31, 2024

The following table presents the payment status by class of loan at June 30, 2024:

June 30, 2024

Current 30–59 Days

48 unchanged sentences

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 three months ended March 31, 2024 and March 31, 2023, the Company did not modify any troubled loans.

For the three and six months ended June 30, 2024, the Company did not have material modifications of loans with borrowers experiencing financial difficulty.

Similarly, the Company did not modify any loans with borrowers experiencing financial difficulty for the three and six months ended June 30, 2023.

HORIZON BANCORP, INC.

8 unchanged sentences

However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

The tables below present the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses, at March 31, 2024 and December 31, 2023.

March 31, 2024

Real Estate Accounts Receivable/Equipment Other Total ACL

June 30, 2024

Real Estate Accounts Receivable/Equipment Other Total (1)

Owner occupied real estate $ 2,558 $ — $ — $ 2,558 $ 221

Non–owner occupied real estate 462 — — 462 —

Residential spec homes — — — — —

Development & spec land 593 — — 593 —

2 unchanged sentences

Total collateral dependent loans $ 4,176 $ 38 $ 20 $ 4,234 $ 822

(1) Collateral dependent loans had a collateral fair value of $ 5.1 million at June 30, 2024

December 31, 2023

Real Estate Accounts Receivable/Equipment Other Total ACL

Real Estate Accounts Receivable/Equipment Other Total (1)

Owner occupied real estate $ 2,636 $ — $ — $ 2,636 $ 190

1 unchanged sentence

Residential spec homes — — — — —

Development & spec land 617 — — 617 —

Commercial and industrial 563 42 20 625 604

1 unchanged sentence

Total collateral dependent loans $ 7,301 $ 42 $ 20 $ 7,363 $ 1,493

(1) Collateral dependent loans had a collateral fair value of $ 6.3 million at December 31, 2023

As of June 30, 2024, the Company had a carrying value of $ 1.2 million of repossessed assets.

As of June 30, 2024, the Company had a recorded net investment of $ 0.4 million of consumer mortgage loans in which foreclosure proceedings have commenced.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Credit Quality Indicators

5 unchanged sentences

When circumstances warrant a change in the credit quality grade, loan officers are required to notify the Credit Department of the change in the credit quality grade.

Downgrades are accepted immediately, however, lenders must present their factual information to the Credit

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Department when recommending an upgrade.

Downgrades are accepted immediately, however, lenders must present their factual information to the Credit Department when recommending an upgrade.

Downgrades to impaired status require the concurrence of the CCBO and the Senior Workout Loan Manager.

24 unchanged sentences

Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions;

loans with some weakness but offsetting features of other support are readily available;

loans with some weakness but

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

offsetting features of other support are readily available;

loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges.

4 unchanged sentences

• During the period that the loan has been outstanding, there has been no evidence of any credit weakness.

Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

covenants, or the borrower is in an industry known to be experiencing problems.

Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems.

If any of these credit weaknesses is observed, a lower risk grade may be warranted.

27 unchanged sentences

• The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

• Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

7 unchanged sentences

• The borrower meets defined key financial metric ranges.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Risk Grade 7:

12 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, 2024.

March 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

The following tables present loans by credit grades and origination year at June 30, 2024.

June 30, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

Owner occupied real estate

4 unchanged sentences

Total owner occupied real estate $ 31,421 $ 76,408 $ 94,621 $ 80,066 $ 39,759 $ 214,130 $ 84,482 $ 11,313 $ 632,200

Gross charge–offs during period $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1

Non–owner occupied real estate

4 unchanged sentences

Total non–owner occupied real estate $ 108,356 $ 117,129 $ 223,439 $ 139,667 $ 103,404 $ 411,314 $ 326,424 $ 9,776 $ 1,439,509

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

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Residential spec homes

4 unchanged sentences

Total residential spec homes $ 420 $ 504 $ — $ 420 $ — $ — $ 4,111 $ 7,024 $ 12,479

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

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Development & spec land

4 unchanged sentences

Total development & spec land $ 722 $ 4,992 $ 804 $ 492 $ 359 $ 2,448 $ 23,465 $ 302 $ 33,584

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

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Commercial & industrial

4 unchanged sentences

Total commercial & industrial $ 103,027 $ 121,111 $ 139,875 $ 83,638 $ 11,249 $ 74,403 $ 69,946 $ 183,539 $ 786,788

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

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ 108 $ — $ 108

HORIZON BANCORP, INC.

2 unchanged sentences

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

March 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

June 30, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

Residential mortgage

2 unchanged sentences

Total residential mortgage $ 32,178 $ 149,858 $ 168,696 $ 149,196 $ 81,404 $ 198,562 $ — $ — $ 779,894

Gross charge–offs during period $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ 2 $ — $ — $ 2

Residential construction

2 unchanged sentences

Total residential construction $ — $ — $ — $ — $ — $ — $ 18,062 $ — $ 18,062

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

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Mortgage warehouse

2 unchanged sentences

Total mortgage warehouse $ — $ — $ — $ — $ — $ — $ — $ 68,917 $ 68,917

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

March 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ — $ — $ — $ — $ — $ — $ —

June 30, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total

Performing $ 7,313 $ 67,399 $ 11,372 $ 6,496 $ 3,410 $ 7,555 $ 34 $ 2,054 $ 105,633

1 unchanged sentence

Total installment $ 7,313 $ 67,712 $ 11,372 $ 6,551 $ 3,410 $ 7,580 $ 36 $ 2,054 $ 106,028

Gross charge–offs during period $ — $ 18 $ 124 $ 1 $ 17 $ 21 $ — $ — $ 181

Gross charge–offs for the six months ended June 30, 2024 $ 61 $ 32 $ 124 $ 1 $ 17 $ 21 $ — $ — $ 256

Indirect auto

2 unchanged sentences

Total indirect auto $ 31,985 $ 84,056 $ 160,644 $ 64,931 $ 26,218 $ 14,245 $ — $ — $ 382,079

Gross charge–offs during period $ — $ 43 $ 222 $ 81 $ 77 $ 42 $ — $ — $ 465

Gross charge–offs for the six months ended June 30, 2024 $ — $ 145 $ 606 $ 224 $ 77 $ 67 $ — $ — $ 1,119

Performing $ 6,882 $ 24,730 $ 18,674 $ 2,784 $ 2,146 $ 11,205 $ 17,990 $ 474,355 $ 558,766

1 unchanged sentence

Total home equity $ 6,882 $ 24,757 $ 19,005 $ 2,784 $ 2,196 $ 11,597 $ 21,724 $ 474,355 $ 563,300

Gross charge–offs during period $ — $ 52 $ 88 $ — $ 37 $ — $ — $ — $ 177

Gross charge–offs for the six months ended June 30, 2024 $ — $ — $ 52 $ 88 $ — $ 38 $ — $ 11 $ 189

HORIZON BANCORP, INC.

10 unchanged sentences

Total owner occupied real estate $ 72,110 $ 102,110 $ 83,466 $ 45,033 $ 43,992 $ 191,380 $ 93,962 $ 8,678 $ 640,731

Gross charge-offs during period $ — $ — $ — $ — $ — $ 3 $ 401 $ — $ 404

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ 3 $ 401 $ — $ 404

Non–owner occupied real estate

4 unchanged sentences

Total non–owner occupied real estate $ 117,397 $ 213,837 $ 150,874 $ 105,030 $ 84,239 $ 346,014 $ 246,569 $ 9,878 $ 1,273,838

Gross charge-offs during period $ — $ — $ — $ — $ — $ 9 $ — $ — $ 9

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ 9 $ — $ — $ 9

Residential spec homes

4 unchanged sentences

Total residential spec homes $ — $ — $ 498 $ — $ — $ — $ 5,852 $ 7,139 $ 13,489

Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ 29 $ — $ 29

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ 29 $ — $ 29

Development & spec land

4 unchanged sentences

Total development & spec land $ 5,133 $ 1,477 $ 990 $ 390 $ 247 $ 3,250 $ 22,382 $ 170 $ 34,039

Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ —

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Commercial & industrial

4 unchanged sentences

Total commercial & industrial $ 124,998 $ 153,276 $ 94,197 $ 14,502 $ 21,384 $ 62,750 $ 72,777 $ 168,979 $ 712,863

Gross charge-offs during period $ — $ 33 $ — $ 123 $ 25 $ 72 $ 344 $ — $ 597

Gross charge–offs for the year ended December 31, 2023 $ — $ 33 $ — $ 123 $ 25 $ 72 $ 344 $ — $ 597

HORIZON BANCORP, INC.

7 unchanged sentences

Total residential mortgage $ 41,038 $ 156,394 $ 158,228 $ 85,418 $ 31,111 $ 182,106 $ — $ — $ 654,295

Gross charge-offs during period $ — $ 28 $ — $ — $ — $ 20 $ — $ — $ 48

Gross charge–offs for the year ended December 31, 2023 $ — $ 28 $ — $ — $ — $ 20 $ — $ — $ 48

Residential construction

2 unchanged sentences

Total residential construction $ — $ — $ — $ — $ — $ — $ 26,841 $ — $ 26,841

Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ —

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ — $ — $ —

Mortgage warehouse

2 unchanged sentences

Total mortgage warehouse $ — $ — $ — $ — $ — $ — $ — $ 45,078 $ 45,078

Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ —

Gross charge–offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ — $ — $ —

December 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Term Loans Revolving Loans Total

2 unchanged sentences

Total installment $ 14,835 $ 13,491 $ 7,869 $ 4,246 $ 4,476 $ 5,081 $ 6 $ 2,362 $ 52,366

Gross charge-offs during period $ 33 $ 28 $ 31 $ 10 $ 32 $ 27 $ 6 $ — $ 167

Gross charge–offs for the year ended December 31, 2023 $ 33 $ 28 $ 31 $ 10 $ 32 $ 27 $ 6 $ — $ 167

Indirect auto

2 unchanged sentences

Total indirect auto $ 65,309 $ 192,295 $ 81,085 $ 36,224 $ 16,814 $ 8,219 $ — $ — $ 399,946

Gross charge-offs during period $ 86 $ 1,388 $ 708 $ 137 $ 58 $ 74 $ — $ — $ 2,451

Gross charge–offs for the year ended December 31, 2023 $ 86 $ 1,388 $ 708 $ 137 $ 58 $ 74 $ — $ — $ 2,451

Performing $ 26,376 $ 21,379 $ 5,121 $ 2,447 $ 3,885 $ 9,987 $ 12,713 $ 478,673 $ 560,581

1 unchanged sentence

Total home equity $ 26,376 $ 21,591 $ 5,121 $ 2,501 $ 4,062 $ 10,247 $ 15,573 $ 478,673 $ 564,144

Gross charge-offs during period $ — $ 10 $ — $ 103 $ — $ 91 $ 13 $ — $ 217

Gross charge–offs for the year ended December 31, 2023 $ — $ 10 $ — $ 103 $ — $ 91 $ 13 $ — $ 217

HORIZON BANCORP, INC.

3 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, 2024 and 2023:

Three Months Ended March 31, 2024

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, 2024 and 2023:

Three Months Ended June 30, 2024

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 30,514 $ 2,655 $ 659 $ 16,559 $ 50,387

Credit loss expense (recovery) 606 147 178 ( 262 ) 669

Credit loss expense (reversal) 1,484 ( 71 ) 77 925 2,415

PCD loan charge–offs ( 3 ) — — — ( 3 )

2 unchanged sentences

Balance, end of period $ 31,941 $ 2,588 $ 736 $ 16,950 $ 52,215

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 31,156 $ 4,447 $ 798 $ 13,125 $ 49,526

Credit loss expense (recovery) ( 1,031 ) ( 1,136 ) ( 222 ) 1,984 ( 405 )

Credit loss expense (reversal) ( 684 ) ( 809 ) 95 2,139 741

PCD loan charge–offs ( 17 ) — — — ( 17 )

2 unchanged sentences

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

Six Months Ended June 30, 2024

Commercial Real Estate Mortgage Warehouse Consumer Total

Balance, beginning of period $ 29,736 $ 2,503 $ 481 $ 17,309 $ 50,029

Credit loss expense (reversal) 2,090 76 255 663 3,084

PCD loan charge–offs 112 — — — 112

Charge–offs ( 109 ) ( 2 ) — ( 1,564 ) ( 1,675 )

Recoveries 112 11 — 542 665

Balance, end of period $ 31,941 $ 2,588 $ 736 $ 16,950 $ 52,215

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 (reversal) ( 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

The accrued interest receivable on our loan receivables is excluded from the allowance for credit loss estimate and is included in interest receivable on our consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the accrued interest on our loan portfolio was $ 28.1 million and $ 23.7 million, respectively.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

The Company utilized the Cumulative Loss Rate method in determining expected future credit losses.

18 unchanged sentences

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

Liability for Commitments to Extend Credit and Standby Letters of Credit

The following tables represent, by loan portfolio segment, a summary of changes in the activity in the liability for commitments to extend credit and standby letters of credit (please see note 14):

Three Months Ended

June 30, 2024 June 30, 2023

Balance, beginning of period Credit loss expense (reversal) Ending balance Balance, beginning of period Credit loss expense (reversal) Ending balance

Commercial $ — $ — $ — $ — $ — $ —

Real Estate 46 ( 5 ) 41 83 ( 22 ) 61

Mortgage Warehouse — — — — — —

Consumer 704 ( 40 ) 664 966 ( 38 ) 928

Total $ 750 $ ( 45 ) $ 705 $ 1,049 $ ( 60 ) $ 989

Six Months Ended

June 30, 2024 June 30, 2023

Balance, beginning of period Credit loss expense (reversal) Ending balance Balance, beginning of period Credit loss expense (reversal) Ending balance

Commercial $ — $ — $ — $ — $ — $ —

Real Estate 64 ( 23 ) 41 161 ( 100 ) 61

Mortgage Warehouse — — — — — —

Consumer 551 113 664 242 686 928

Total $ 615 $ 90 $ 705 $ 403 $ 586 $ 989

Note 5 – Loan Servicing

Loans serviced for others are not included in the accompanying condensed consolidated balance sheets.

The unpaid principal balances of loans serviced for others totaled approximately $ 1.460 billion and $ 1.479 billion at March 31, 2024 and December 31, 2023.

The unpaid principal balances of loans serviced for others totaled approximately $ 1.451 billion and $ 1.479 billion at June 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023.

Three Months Ended

March 31, March 31,

Mortgage servicing rights are included in other assets on the balance sheets as of June 30, 2024 and December 31, 2023.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Three Months Ended Six Months Ended

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

2024 2023 2024 2023

Mortgage servicing rights

12 unchanged sentences

Note 6 – Goodwill

The carrying amount of goodwill was $ 155.2 million as of March 31, 2024 and December 31, 2023, respectively.

There were no changes in the carrying amount of goodwill for the three months ended March 31, 2024 and 2023.

The carrying amount of goodwill was $ 155.2 million as of June 30, 2024 and December 31, 2023, respectively.

There were no changes in the carrying amount of goodwill for the three and six months ended June 30, 2024 and 2023.

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.

No goodwill impairment charges were recorded for the three months ended March 31, 2024 and 2023.

No goodwill impairment charges were recorded for the three and six months ended June 30, 2024 and 2023.

During the first quarters of 2024 and 2023, Horizon considered the amount by which fair value exceeded book value by performing a quantitative analysis.

1 unchanged sentence

These valuation approaches required certain assumptions such as the discount rate, economic conditions impacting interest and growth rates, the control premium, and a relative weighting given to the fair value derived by each of the valuation approaches used.

At the conclusion of the assessment, the Company determined that as of March 31, 2024, it was more likely than not that the fair value of goodwill exceeded its carrying value.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

At the conclusion of the assessment, the Company determined that as of June 30, 2024, it was more likely than not that the fair value of goodwill exceeded its carrying value.

Note 7 – Repurchase Agreements

2 unchanged sentences

The securities underlying the agreement remained under the Company’s control.

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

March 31, 2024

June 30, 2024

Remaining Contractual Maturity of the Agreements

13 unchanged sentences

Total borrowings $ 136,030 $ — $ — $ — $ 136,030

Securities sold under agreements to repurchase are secured by securities with a carrying amount of $ 147.6 million and $ 145.2 million at March 31, 2024 and December 31, 2023, respectively.

Securities sold under agreements to repurchase are secured by securities with a carrying amount of $ 144.0 million and $ 145.2 million at June 30, 2024 and December 31, 2023, respectively.

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.

2 unchanged sentences

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 unsecured subordinated obligations, and rank pari passu, or equally, with all of Horizon's future unsecured

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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.

2 unchanged sentences

On December 8, 2023, Horizon cancelled $ 3.5 million of the $ 60.0 million in Notes at a price of 89.5 recording a gain of $ 368,000 .

The balance net of unamortized issuance costs of the Notes was $ 55.6 million and $ 55.5 million at March 31, 2024 and December 31, 2023, respectively.

The balance net of unamortized issuance costs of the Notes was $ 55.7 million and $ 55.5 million at June 30, 2024 and December 31, 2023, respectively.

Note 9 – Derivative Financial Instruments

Our hedging policy allows the use of interest rate derivative instruments to manage our exposure to interest rate risk or hedge specified assets and liabilities.

All derivative instruments are carried on the balance sheet at their estimated fair value and are recorded in other assets or other liabilities, as appropriate.

Cash Flow Hedges

9 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.

Additionally, the Company entered into fair value hedges for certain of our fixed rate AFS municipal securities.

The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the hedged item attributable to changes in the SOFR swap rate, the designated benchmark interest rate.

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, 2024, 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.

The change in fair value of both the hedge instruments and the underlying hedged item are recorded as gains or losses in non–interest income.

At June 30, 2024, 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.

Other Derivative Instruments

From time to time, we may enter into certain interest rate swaps that are not designated as hedging instruments.

These interest rate derivative contracts relate to transactions in which we enter into an interest rate swap with a customer while concurrently entering into an offsetting interest rate swap with a third-party financial institution.

We agree to pay interest to the customer on a notional amount at a variable rate and receive interest from the customer on a similar notional amount at a fixed interest rate.

At the same time, we agree to pay a third-party financial institution the same fixed interest rate on the

HORIZON BANCORP, INC.

2 unchanged sentences

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

Other Derivative Instruments

same notional amount and receive the same variable interest rate on the same notional amount.

These interest rate derivative contracts allow our customers to effectively convert a variable rate loan to a fixed rate loan.

The Company enters into non–hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business.

At March 31, 2024, 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, 2024, 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.

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

The following tables summarize the fair value of our derivative financial instruments utilized by Horizon on a gross basis for the periods indicated.

Asset Derivatives Liability Derivatives

March 31, 2024 March 31, 2024

June 30, 2024 June 30, 2024

Value Notional

Derivatives not designated as hedging instruments

Derivatives designated as hedging instruments

Interest rate contracts – fair value hedges $ 52,097 $ 3,364 $ — $ —

Total derivatives designated as hedging instruments 52,097 3,364 — —

Derivatives not designated as hedging instruments

Interest rate contracts – customer accommodation 529,613 30,986 529,613 30,986

Mortgage loan contracts — — 2,348 7

2 unchanged sentences

Total derivatives $ 582,010 $ 34,358 $ 531,961 $ 30,993

Total derivatives subject to enforceable master netting arrangements, gross $ 582,010 $ 34,358 $ 531,961 $ 30,993

Gross amounts offset — — — —

Total derivatives subject to enforceable master netting arrangements, net $ 582,010 $ 34,358 $ 531,961 $ 30,993

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Asset Derivatives Liability Derivatives

1 unchanged sentence

Value Notional

Derivatives not designated as hedging instruments

Derivatives designated as hedging instruments

Interest rate contracts – fair value hedges $ 53,468 $ 2,950 $ — $ —

Total derivatives designated as hedging instruments 53,468 2,950 — —

Derivatives not designated as hedging instruments

Interest rate contracts – customer accommodation 504,696 23,606 514,881 24,024

Mortgage loan contracts 4,844 33 — —

2 unchanged sentences

Total derivatives $ 567,359 $ 26,714 $ 514,881 $ 24,024

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

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

Total derivatives subject to enforceable master netting arrangements, gross $ 567,359 $ 26,714 $ 514,881 $ 24,024

Gross amounts offset — — — —

Total derivatives subject to enforceable master netting arrangements, net $ 567,359 $ 26,714 $ 514,881 $ 24,024

While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company has elected to not offset derivative assets and liabilities under these agreements on its consolidated balance sheets.

Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities.

At June 30, 2024, the Company pledged marketable securities as collateral with a carrying value of $ 19.0 million.

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

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

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Derivatives in cash flow hedging relationship

Interest rate contracts $ — $ ( 1,119 ) $ — $ ( 1,561 )

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 derivatives in cash flow hedging relationships on the condensed consolidated statements of income for 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, 2024 March 31, 2023

Derivative designated as hedging instruments

recognized Amount of Gain (Loss) Recognized

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Derivatives in cash flow hedging relationship

Interest rate contracts – cash flow hedges Interest expense – Borrowings $ — $ 1,624 $ — $ 1,832

Total $ — $ 209

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:

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

The effect of the derivative and the hedged item in fair value hedging relationships on the condensed consolidated statements of income for 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, 2024 March 31, 2023

Derivatives not designated as hedging instruments

recognized on derivative and hedged item Amount of Gain (Loss) Recognized on Derivative and Hedged Item

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Derivatives designated as hedging instruments

Interest rate contracts - fair value hedge Interest income - loans receivable $ 330 $ 314 $ 665 $ 434

Hedged item ( 330 ) ( 314 ) ( 665 ) ( 434 )

Interest rate contracts - fair value hedge Interest income - investment securities 21 61 92 110

Hedged item ( 21 ) ( 61 ) ( 92 ) ( 110 )

Total $ — $ — $ — $ —

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

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

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Derivatives not designated as hedging instruments

Mortgage loan contracts Non-interest income - Gain on sale of loans $ 15 $ ( 119 ) $ ( 39 ) $ ( 32 )

Commitments to originate mortgage loans Non-interest income - Gain on sale of loans ( 49 ) ( 88 ) ( 76 ) ( 153 )

Total $ 344 $ 285

Totals $ ( 34 ) $ ( 207 ) $ ( 115 ) $ ( 185 )

HORIZON BANCORP, INC.

11 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, 2024.

There have been no significant changes in the valuation techniques during the period ended June 30, 2024.

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

10 unchanged sentences

In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features.

Certain fixed rate loans have been converted to variable rate loans by entering into interest rate swap agreements.

The fair value of those fixed rate loans is based on discounting the estimated cash flows using interest rates determined by the respective interest rate swap agreement.

Loans are classified within Level 2 of the valuation hierarchy based on the unobservable inputs used.

Interest rate swap agreements

5 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, 2024

June 30, 2024

Fair Value Quoted Prices in Active Markets

11 unchanged sentences

Commitments to originate mortgage loans 8 — 8 —

Mortgage loan contracts 9 — 9 —

Mortgage loan contracts liability ( 7 ) — ( 7 ) —

Interest rate swap agreements liability ( 30,986 ) — ( 30,986 ) —

24 unchanged sentences

(Level 2) Significant

March 31, 2024

June 30, 2024

Collateral dependent loans $ 599 $ — $ — $ 599

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, 2024

June 30, 2024

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, 2024 and December 31, 2023.

The disclosed fair value estimates are limited to Horizon’s significant financial instruments at June 30, 2024 and December 31, 2023.

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

1 unchanged sentence

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

Cash and Due from Banks – The carrying amounts approximate fair value.

Interest-earning time deposits – The fair values of the Company’s interest–earning time deposits are estimated using discounted cash flow analyses based on current rates for similar types of interest–earning time deposits.

Cash and Cash Equivalents – Cash and cash equivalents are composed of:

cash and due from banks, interest earning deposits, and federal funds sold.

The carrying amounts approximate fair value.

Interest-Earning Time Deposits – The carrying amounts approximate fair value.

Held–to–Maturity Securities – For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes.

3 unchanged sentences

FHLB Stock – Fair value of FHLB stock is based on the price at which it may be resold to the FHLB.

Interest Receivable/Payable – The carrying amounts approximate fair value.

Interest Payable – The carrying amounts approximate fair value.

Deposits – The fair value of demand deposits, savings accounts, interest bearing checking accounts and money market deposits is the amount payable on demand at the reporting date and are classified within Level 1.

12 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, 2024

June 30, 2024

Amount Quoted Prices in Active Markets

3 unchanged sentences

Cash and due from banks $ 106,691 $ 106,691 $ — $ —

Interest earning deposits 4,957 4,957 — —

Federal funds sold 34,453 34,453 — —

Cash and cash equivalents 146,101 146,101 —

Interest earning time deposits 1,715 — 1,715 —

3 unchanged sentences

Stock in FHLB 53,826 — 53,826 —

Interest receivable 40,008 — 40,008 —

Non–interest bearing deposits $ 1,087,040 $ 1,087,040 $ — $ —

4 unchanged sentences

Interest payable 11,240 — 11,240 —

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

December 31, 2023

4 unchanged sentences

Cash and due from banks $ 112,772 $ 112,772 $ — $ —

Interest earning deposits 12,071 12,071 — —

Federal funds sold 401,672 401,672 — —

Cash and cash equivalents 526,515 526,515 — —

Interest earning time deposits 2,205 — 2,190 —

3 unchanged sentences

Stock in FHLB 34,509 — 34,509 —

Interest receivable 38,710 — 38,710 —

Non–interest bearing deposits $ 1,116,005 $ 1,116,005 $ — $ —

4 unchanged sentences

Interest payable 22,249 — 22,249 —

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)

Note 12 – Stockholders' Equity

On June 18, 2024, the Company declared a quarterly dividend to common shareholders of $ 0.16 per share, which was paid on July 19, 2024 to shareholders of record on July 5, 2024.

Dividends declared were $ 0.16 and $ 0.32 per share during the three and six months ended June 30, 2024 and $ 0.16 and $ 0.32 per share during the three and six months ended June 30, 2023.

Accumulated Other Comprehensive Income (Loss)

2024 December 31,

2 unchanged sentences

Total accumulated other comprehensive income (loss) $ ( 73,985 ) $ ( 66,609 )

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

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

Note 13 – Regulatory Capital

9 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, 2024 and December 31, 2023, 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 2024 that management believes have changed the Bank’s classification as well capitalized.

As of June 30, 2024, March 31, 2024 and December 31, 2023, 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 2024 that management believes have changed the Bank’s classification as well capitalized.

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

This incorrect classification affected the Company's regulatory capital disclosures in certain prior period filings with the SEC, as those disclosures were sourced from the Regulatory Filings.

The Company has amended its Regulatory Filings for the periods ended March 31, 2024 and December 31, 2023 to reclassify the subordinated notes balance from Tier 1 capital into Tier 2 capital.

The Company continues to exceed regulatory proxy ratios to be considered “well capitalized”, plus the capital conservation buffer, at June 30, 2024.

The following table presents Horizon and the Bank’s actual and required capital ratios as of June 30, 2024, March 31, 2024 and December 31, 2023, as well as the revisions to Horizon's regulatory capital ratios to reflect the correction of the capital computations for the foregoing periods:

HORIZON BANCORP, INC.

2 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, 2024 and December 31, 2023 were as follows:

Actual Required for Capital

4 unchanged sentences

Well Capitalized

Under Prompt Corrective Action

Corrective Action

Provisions (1)

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

March 31, 2024

June 30, 2024

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

7 unchanged sentences

Bank 679,381 11.38 268,741 4.50 418,041 7.00 388,181 6.50

Tier 1 capital (to average assets) (1)

Tier 1 capital (to total assets) (1)

Consolidated 693,807 9.02 307,743 4.00 307,743 4.00 N/A N/A

Bank 679,381 8.84 307,335 4.00 307,335 4.00 384,168 5.00

December 31, 2023

March 31, 2024

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

Consolidated $ 786,436 14.11 % $ 446,000 8.00 % $ 585,374 10.50 % N/A N/A

Consolidated (As Revised)* $ 789,786 13.75 % $ 459,485 8.00 % $ 603,074 10.50 % N/A N/A

Consolidated (As Reported) 793,567 13.82 459,485 8.00 603,074 10.50 N/A N/A

Bank 721,018 12.59 458,163 8.00 601,338 10.50 $ 572,703 10.00 %

Tier 1 capital (to risk-weighted assets) (1)

Consolidated 735,792 13.20 % 334,500 6.00 % 473,874 8.50 % N/A N/A

Consolidated (As Revised)* 683,015 11.89 344,614 6.00 488,203 8.50 N/A N/A

Consolidated (As Reported) 742,430 12.93 344,614 6.00 488,203 8.50 N/A N/A

Bank 669,881 11.70 343,622 6.00 486,798 8.50 458,163 8.00

2 unchanged sentences

Bank 669,881 11.70 257,716 4.50 400,892 7.00 372,257 6.50

Tier 1 capital (to average assets) (1)

Consolidated 735,792 9.36 % 314,306 4.00 % 314,306 4.00 % N/A N/A

Tier 1 capital (to total assets) (1)

Consolidated (As Revised)* 683,015 8.91 306,716 4.00 306,716 4.00 N/A N/A

Consolidated (As Reported) 742,430 9.68 306,716 4.00 306,716 4.00 N/A N/A

Bank 669,881 8.63 310,592 4.00 310,592 4.00 388,240 5.00

(1) As defined by regulatory agencies

*Prior periods have been revised (see disclosures above)

HORIZON BANCORP, INC.

2 unchanged sentences

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

Note 14 – General Litigation

Actual Required for Capital

Adequacy Purposes (1)

Required For Capital

Adequacy Purposes

with Capital Buffer (1)

Well Capitalized

Corrective Action

Provisions (1)

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

December 31, 2023

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

Consolidated (As Revised)* $ 782,598 14.04 % $ 446,000 8.00 % $ 585,374 10.50 % N/A N/A

Consolidated (As Reported) 786,436 14.11 446,000 8.00 585,374 10.50 N/A N/A

Bank 714,402 12.87 444,147 8.00 582,943 10.50 $ 555,184 10.00 %

Tier 1 capital (to risk-weighted assets) (1)

Consolidated (As Revised)* 676,411 12.13 334,500 6.00 473,874 8.50 N/A N/A

Consolidated (As Reported) 735,792 13.20 334,500 6.00 473,874 8.50 N/A N/A

Bank 663,758 11.96 333,111 6.00 471,907 8.50 444,147 8.00

Common equity tier 1 capital (to risk-weighted assets) (1)

Consolidated 619,153 11.11 250,875 4.50 390,250 7.00 N/A N/A

Bank 663,758 11.96 249,833 4.50 388,629 7.00 360,870 6.50

Tier 1 capital (to average assets) (1)

Consolidated (As Revised)* 676,411 8.61 314,306 4.00 314,306 4.00 N/A N/A

Consolidated (As Reported) 735,792 9.36 314,306 4.00 314,306 4.00 N/A N/A

Bank 663,758 8.41 315,550 4.00 315,550 4.00 394,438 5.00

(1) As defined by regulatory agencies

*Prior periods have been revised (see disclosures above)

Note 14 – Off-Balance Sheet Arrangements, Commitments, and Contingencies

Legal Proceedings

As of April 20, 2023, a putative class action lawsuit entitled Chad Key, et al.

8 unchanged sentences

Based on our initial review of these actions, management believes that the Company has strong defenses to the claims and intends to vigorously defend against them.

As of March 31, 2024, no liabilities related to the above matters were recorded because we have concluded such liabilities are not probable and the amounts of such liabilities are not reasonably estimable.

As of June 30, 2024, no liabilities related to the above matters were recorded because we have concluded such liabilities are not probable and the amounts of such liabilities are not reasonably estimable.

In addition to the matters described above, from time to time, Horizon and its subsidiaries are involved in various legal proceedings incidental to the conduct of their business.

4 unchanged sentences

And Results of Operations

For the Three Months ended March 31, 2024 and 2023

For the Three and Six Months ended June 30, 2024 and 2023

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its clients.

These financial instruments include commitments to extend credit and standby letters of credit.

These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the consolidated balance sheets.

Commitments to extend credit are legally binding agreements to lend to a client, so long as there is no violation of any condition established in the commitment contract.

Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third party.

The credit risk involved in issuing letters of credit is essentially the same as the credit risk involved in extending loan facilities to clients.

The Company’s policy for obtaining collateral, and determining the nature of such collateral, is essentially the same as in the Company’s policies for making commitments to extend credit.

The methodology for estimating the liability for unfunded loan commitments is consistent with the allowance for credit losses on loans.

The following table represents the commitments to extend credit and standby letters of credit as of June 30, 2024 and December 31, 2023, respectively:

June 30, 2024 December 31, 2023

Commitments to extend credit $ 1,103,746 $ 1,118,417

Standby letters of credit 18,969 16,493

Total $ 1,122,715 $ 1,134,910

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Six Months ended June 30, 2024 and 2023

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