HORIZON BANCORP INC /IN/ 10-Q

ITEM 1 – FINANCIAL STATEMENTS HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollar Amounts in Thousands) March 31, 2025 December 31, 2024 Assets Cash and due from banks $ 89,643 $ 92,300 Interest-bearing deposits in banks 80,023 201,131 Total cash and cash equivalents 169,666 293,431 Interest earning time deposits — 735 Investment securities, available for sale 231,431 233,677 Investment securities, held to maturity (fair value of $ 1,550,127 and $ 1,566,268 ) 1,843,851 1,867,690 Loans held for sale 3,253 67,597 Loans, net of allowance for credit losses of $ 52,654 and $ 51,980 4,857,161 4,795,060 Premises and equipment, net 93,499 93,864 Federal Home Loan Bank stock 45,412 53,826 Goodwill 155,211 155,211 Other intangible assets 9,407 10,223 Interest receivable 38,663 39,747 Cash value of life insurance 37,409 37,450 Other assets 143,675 152,635 Total assets $ 7,628,638 $ 7,801,146 Liabilities Deposits Non-interest bearing $ 1,127,324 $ 1,064,818 Interest bearing 4,638,459 4,535,834 Total deposits 5,765,783 5,600,652 Short and long term borrowings 900,069 1,232,252 Subordinated notes 55,772 55,738 Junior subordinated debentures issued to capital trusts 57,531 57,477 Interest payable 11,441 11,137 Other liabilities 61,981 80,308 Total liabilities 6,852,577 7,037,564 Commitments and contingent liabilities Stockholders’ Equity Preferred stock, Authorized, 1,000,000 shares, Issued 0 shares — — Common stock, no par value, Authorized 99,000,000 shares — — 44,097,291 and 44,226,819 shares issued at March 31, 2025 and December 31, 2024, respectively Additional paid-in capital 360,522 363,761 Retained earnings 452,945 436,122 Accumulated other comprehensive income (loss) ( 37,406 ) ( 36,301 ) Total stockholders’ equity 776,061 763,582 Total liabilities and stockholders’ equity $ 7,628,638 $ 7,801,146 See notes to condensed consolidated financial statements 3 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (Unaudited) (Dollar Amounts in Thousands, Except Per Share Data) Three Months Ended March 31, 2025 March 31, 2024 Interest Income Interest and fees on loans $ 74,457 $ 66,954 Investment securities - taxable 6,039 7,362 Investment securities - tax exempt 6,192 6,451 Other 2,487 4,497 Total interest income 89,175 85,264 Interest Expense Deposits 25,601 27,990 Short and long term borrowings 9,188 11,930 Subordinated notes 829 831 Junior subordinated debentures issued to capital trusts 1,290 1,225 Total interest expense 36,908 41,976 Net Interest Income 52,267 43,288 Credit loss expense 1,376 805 Net Interest Income after Provision for Loan Losses 50,891 42,483 Non-interest Income Service charges on deposit accounts 3,208 3,214 Wire transfer fees 71 101 Interchange fees 3,241 3,109 Fiduciary activities 1,326 1,315 Loss on sale of investment securities ( 407 ) — Gain on sale of mortgage loans 1,076 626 Mortgage servicing income net of impairment 385 439 Increase in cash value of bank owned life insurance 335 298 Other income 7,264 827 Total non-interest income 16,499 9,929 Non-interest Expense Salaries and employee benefits 22,414 20,268 Net occupancy expenses 3,702 3,546 Data processing 2,872 2,464 Professional fees 826 607 Outside services and consultants 3,265 3,359 Loan expense 689 719 FDIC insurance expense 1,288 1,320 Core deposit intangible amortization 816 872 Merger related expense 305 — Other losses 228 16 Other expense 2,901 3,936 Total non-interest expense 39,306 37,107 Income Before Income Taxes 28,084 15,305 Income tax expense 4,141 1,314 Net Income Available to Common Shareholders $ 23,943 $ 13,991 Basic Earnings Per Share $ 0.55 $ 0.32 Diluted Earnings Per Share $ 0.54 $ 0.32 See notes to condensed consolidated financial statements 4 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Dollar Amounts in Thousands) Three Month Ended March 31 2025 2024 Net Income $ 23,943 $ 13,991 Other Comprehensive Income (Loss) Change in securities: Unrealized gain (loss) for the period on AFS securities ( 1,640 ) ( 5,748 ) Amortization from transfer of securities from available for sale to held to maturity securities ( 166 ) ( 160 ) Reclassification adjustment for securities (gains) losses realized in income 407 — Income tax effect 294 1,241 Unrealized gains (losses) on securities ( 1,105 ) ( 4,667 ) Other Comprehensive Income (Loss), Net of Tax ( 1,105 ) ( 4,667 ) Comprehensive Income $ 22,838 $ 9,324 See notes to condensed consolidated financial statements 5 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (Dollar Amounts in Thousands, Except Per Share Data) Three Months Ended Three Months Ended Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balances, January 1, 2024 $ — $ — $ 356,400 $ 429,021 $ ( 66,609 ) $ 718,812 Net income — — — 13,991 — 13,991 Other comprehensive loss, net of tax — — — — ( 4,667 ) ( 4,667 ) Amortization of unearned compensation — — 907 — — 907 Net settlement of share awards — — ( 708 ) — — ( 708 ) Cash dividends on common stock ($ 0.16 per share) — — — ( 7,085 ) — ( 7,085 ) Balances, March 31, 2024 $ — $ — $ 356,599 $ 435,927 $ ( 71,276 ) $ 721,250 Balances, January 1, 2025 — — 363,761 436,122 ( 36,301 ) 763,582 Net income — — — 23,943 — 23,943 Other comprehensive loss, net of tax — — — — ( 1,105 ) ( 1,105 ) Amortization of unearned compensation — — 459 — — 459 Net settlement of share awards — — ( 3,698 ) — — ( 3,698 ) Cash dividends on common stock ($ 0.16 per share) — — — ( 7,120 ) — ( 7,120 ) Balances, March 31, 2025 $ — $ — $ 360,522 $ 452,945 $ ( 37,406 ) $ 776,061 See notes to condensed consolidated financial statements 6 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (Dollar Amounts in Thousands) Three Months Ended March 31, 2025 March 31, 2024 Operating Activities Net income $ 23,943 $ 13,991 Items not requiring (providing) cash Provision for credit losses 1,376 805 Depreciation and amortization 2,475 2,649 Share based compensation 459 907 Amortization of mortgage servicing rights 507 476 Net amortization of premiums and discounts on securities 1,885 2,182 Loss on sale of investment securities 407 — Gain on sale of mortgage loans ( 1,076 ) ( 626 ) Gain on sale of portfolio loans ( 7,000 ) — Proceeds from sales of loans 26,073 21,432 Loans originated for sale ( 26,407 ) ( 20,517 ) Gain on cash value life insurance ( 335 ) ( 298 ) Gain on other real estate owned ( 13 ) ( 64 ) Net change in: Interest receivable 1,084 ( 1,298 ) Interest payable 304 ( 14,396 ) Other assets 9,741 ( 4,548 ) Other liabilities ( 18,178 ) 5,849 Net cash provided by operating activities $ 15,244 $ 6,544 Investing Activities Proceeds from sales of securities available for sale 4,132 — Proceeds from maturities, calls and principal repayments of securities available for sale 597 4,369 Proceeds from maturities of securities held to maturity 17,683 18,233 Net change in interest-earning time deposits 735 490 Purchase of FHLB stock — ( 19,317 ) Redemption of FHLB stock 8,414 — Purchase of loans — ( 153,743 ) Proceeds from sale of portfolio loans 54,990 — Net change in loans ( 47,159 ) ( 47,365 ) Proceeds on the sale of OREO and repossessed assets 221 369 Premises and equipment expenditures ( 1,129 ) ( 1,178 ) Proceeds from bank owned life insurance 376 22,917 Net cash provided by (used in) investing activities $ 38,860 $ ( 175,225 ) Financing Activities Net change in deposits 165,131 ( 85,023 ) Proceeds from borrowings 200,000 403,026 Repayment of borrowings ( 530,123 ) ( 400,235 ) Net change in repurchase agreements ( 2,060 ) 3,280 Net settlement of share awards ( 3,698 ) ( 708 ) Dividends paid on common stock ( 7,120 ) ( 7,086 ) Net cash used in financing activities $ ( 177,870 ) $ ( 86,746 ) Net Change in Cash and Cash Equivalents $ ( 123,765 ) $ ( 255,427 ) Cash and Cash Equivalents, Beginning of Period $ 293,431 $ 526,515 Cash and Cash Equivalents, End of Period $ 169,666 $ 271,088 Additional Supplemental Information Interest paid $ 36,605 $ 56,372 Income taxes paid 360 — Transfer of loans to other real estate and repossessed assets 1,034 253 Transfer of held to maturity securities to available for sale 4,539 — Cash dividends declared, not paid 7,088 7,156 See notes to condensed consolidated financial statements 7 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 1 - Accounting Policies Nature of Business and Basis of Reporting The accompanying unaudited condensed consolidated financial statements include the accounts of Horizon Bancorp, Inc. (“Horizon” or the “Company”) and its wholly-owned subsidiaries, including Horizon Bank (“Horizon Bank” or the “Bank”), which is an Indiana commercial bank. All inter–company balances and transactions have been eliminated. The results of operations for the periods ended March 31, 2025 and March 31, 2024 are not necessarily indicative of the operating results for the full year of 2025 or 2024. 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. Those adjustments consist only of normal recurring adjustments. Certain information and note disclosures normally included in Horizon’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form 10–K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission on March 14, 2025 (the “2024 Annual Report on Form 10–K”).. The condensed consolidated balance sheet of Horizon as of December 31, 2024 has been derived from the audited balance sheet as of that date. Horizon Bancorp has one reportable segment. Business activities are managed on a consolidated basis and revenues are derived primarily through commercial banking, offering retail banking and private wealth management from North America. Horizon Bancorp’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM assesses performance and allocates resources based on consolidated net income, as reported on the Consolidated Statement of Income , and the same accounting policies are applied as described in the Note 1 - Nature of Operations and Su mmary of Significant Accounting Policies included in Horizon’s 2024 Annual Report on Form 10–K. The CODM uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the business or distribute dividends to shareholders. The CODM also uses net income in competitive analysis by benchmarking against Horizon Bancorp’s competitors. The competitive analysis, along with the monitoring of budgeted versus actual results, is used in assessing performance of the segment and in establishing management’s compensation On July 16, 2019, the Board of Directors of the Company authorized a stock repurchase program for up to 2,250,000 shares of Horizon’s issued and outstanding common stock, no par value. As of March 31, 2025 , Horizon had repurchased a total of 803,349 shares at an average price per share of $ 16.89 . Basic earnings per share is computed by dividing net income available to common shareholders (net income less dividend requirements for preferred stock and accretion of preferred stock discount) by the weighted–average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. 8 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table shows computation of basic and diluted earnings per share. Three Months Ended (dollar amounts in thousands, except per share) March 31, 2025 March 31, 2024 Basic earnings per share Net income $ 23,943 $ 13,991 Weighted average common shares outstanding 43,777,109 43,663,610 Basic earnings per share $ 0.55 $ 0.32 Diluted earnings per share Net income available to common shareholders 23,943 13,991 Weighted average common shares outstanding 43,777,109 43,663,610 Effect of dilutive securities: Restricted stock 176,245 205,054 Stock options 810 5,372 Weighted average common shares outstanding 43,954,164 43,874,036 Diluted Earnings per Share $ 0.54 $ 0.32 There were 202,139 shares for the three months ended March 31, 2025 which were not included in the computation of diluted earnings per share because they were non–dilutive. 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. 9 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 2 – Securities The fair value of securities is as follows: March 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. Treasury, federal agencies, and government sponsored agencies $ 2,258 $ — $ ( 408 ) $ 1,850 State and municipal 243,099 — ( 43,670 ) 199,429 U.S. government agency mortgage-backed securities 17,394 — ( 2,932 ) 14,462 Corporate notes 18,258 — ( 2,568 ) 15,690 Total available for sale investment securities $ 281,009 $ — $ ( 49,578 ) $ 231,431 March 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity U.S. Treasury, federal agencies, and government sponsored agencies $ 275,854 $ — $ ( 34,442 ) $ 241,412 State and municipal 1,039,749 880 ( 191,006 ) 849,623 U.S. government agency mortgage-backed securities 343,057 — ( 47,415 ) 295,642 Private labeled mortgage–backed pools 28,558 — ( 3,489 ) 25,069 Corporate notes 156,773 — ( 18,392 ) 138,381 Total held to maturity investment securities $ 1,843,991 $ 880 $ ( 294,744 ) $ 1,550,127 Less: Allowance for credit losses ( 140 ) Held to maturity securities, net of allowance for credit losses $ 1,843,851 December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available for sale U.S. Treasury, federal agencies, and government sponsored agencies $ 2,258 $ — $ ( 457 ) $ 1,801 State and municipal 243,521 — ( 41,687 ) 201,834 U.S. government agency mortgage-backed securities 17,984 — ( 3,441 ) 14,543 Corporate notes 18,259 — ( 2,760 ) 15,499 Total available for sale investment securities $ 282,022 $ — $ ( 48,345 ) $ 233,677 10 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Held to maturity U.S. Treasury, federal agencies, and government sponsored agencies $ 278,383 $ — $ ( 39,253 ) $ 239,130 State and municipal 1,048,862 958 ( 183,114 ) 866,706 U.S. government agency mortgage-backed securities 349,726 — ( 54,904 ) 294,822 Private labeled mortgage–backed pools 29,278 — ( 3,958 ) 25,320 Corporate notes 161,599 — ( 21,309 ) 140,290 Total held to maturity investment securities $ 1,867,848 $ 958 $ ( 302,538 ) $ 1,566,268 Less: Allowance for credit losses ( 158 ) Held to maturity securities, net of allowance for credit losses $ 1,867,690 The amortized cost and fair value of securities available for sale and held to maturity at March 31, 2025 and December 31, 2024, 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, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Available for sale Within one year $ — $ — $ — $ — One to five years 190 164 — — Five to ten years 183,815 149,725 173,533 141,915 After ten years 79,610 67,080 90,505 77,219 263,615 216,969 264,038 219,134 U.S. government agency mortgage-backed securities 17,394 14,462 17,984 14,543 Total available for sale investment securities $ 281,009 $ 231,431 $ 282,022 $ 233,677 Held to maturity Within one year $ 53,179 $ 52,656 $ 59,129 $ 58,304 One to five years 290,483 274,198 298,362 278,007 Five to ten years 369,687 316,976 366,493 312,748 After ten years 759,027 585,586 764,860 597,067 1,472,376 1,229,416 1,488,844 1,246,126 U.S. government agency mortgage-backed securities 343,057 295,642 349,726 294,822 Private labeled mortgage-backed pools 28,558 25,069 29,278 25,320 Total held to maturity investment securities $ 1,843,991 $ 1,550,127 $ 1,867,848 $ 1,566,268 11 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following 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, 2025 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for Sale Investment Securities U.S. Treasury, federal agencies, and government sponsored agencies $ — $ — $ 1,850 $ ( 408 ) $ 1,850 $ ( 408 ) State and municipal — — 199,429 ( 43,670 ) 199,429 ( 43,670 ) U.S. government agency mortgage-backed securities — — 14,462 ( 2,932 ) 14,462 ( 2,932 ) Corporate notes — — 15,690 ( 2,568 ) 15,690 ( 2,568 ) Total available for sale investment securities $ — $ — $ 231,431 $ ( 49,578 ) $ 231,431 $ ( 49,578 ) December 31, 2024 Less than 12 Months 12 Months or More Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Available for Sale Investment Securities U.S. Treasury, federal agencies, and government sponsored agencies $ — $ — $ 1,801 $ ( 457 ) $ 1,801 $ ( 457 ) State and municipal — — 201,834 ( 41,687 ) 201,834 ( 41,687 ) U.S. government agency mortgage-backed securities — — 14,543 ( 3,441 ) 14,543 ( 3,441 ) Corporate notes — — 15,499 ( 2,760 ) 15,499 ( 2,760 ) Total available for sale investment securities $ — $ — $ 233,677 $ ( 48,345 ) $ 233,677 $ ( 48,345 ) Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. As of March 31, 2025 and December 31, 2024, the Company had 2,082 and 2,115 securities, respectively, with market values below their cost basis. The total fair value of these investments at March 31, 2025 and December 31, 2024 remained consistent at $ 1.8 billion, which is approximately 86.0 % of the Company's available for sale and held to maturity securities portfolio. No allowance for credit losses for available for sale debt securities was recorded at March 31, 2025 or December 31, 2024. 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 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 considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Government-sponsored treasuries, agency and mortgage-backed securities, all these securities are issued by a U.S. government-sponsored entity and have an implicit or explicit government guarantee; therefore, no allowance for credit losses has been recorded for these securities. With regard to obligations of states and 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 12 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) 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, 2025 and December 31, 2024, there were no past due principal and interest payments associated with these securities. An allowance for credit loss of $ 140 thousand and $ 158 thousand was recorded on these securities based on applying the long-term historical rating agency credit loss rate for similarly rated securities at March 31, 2025 and December 31, 2024, respectively. 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 $ 119.1 million as of March 31, 2025, and $ 125.0 million as of December 31, 2024. The following table summarizes credit ratings of our held-to-maturity securities at amortized cost for the periods indicated: March 31, 2025 AAA AA A BBB BB Not Rated Total U.S. Treasury, federal agencies, and government sponsored agencies $ — $ 275,854 $ — $ — $ — $ — $ 275,854 State and municipal 271,635 694,742 68,297 3,204 — 1,871 1,039,749 U.S. government agency mortgage-backed securities 343,057 — — — — — 343,057 Private labeled mortgage-backed pools 28,558 — — — — — 28,558 Corporate notes — 6,167 11,478 75,439 — 63,689 156,773 Total $ 643,250 $ 976,763 $ 79,775 $ 78,643 $ — $ 65,560 $ 1,843,991 December 31, 2024 AAA AA A BBB BB Not Rated Total U.S. Treasury, federal agencies, and government sponsored agencies $ — $ 278,383 $ — $ — $ — $ — $ 278,383 State and municipal 273,629 698,428 66,079 10,726 — — 1,048,862 U.S. government agency mortgage-backed securities 349,726 — — — — — 349,726 Private labeled mortgage-backed pools 29,278 — — — — — 29,278 Corporate notes — 6,176 11,549 75,603 4,543 63,728 161,599 Total $ 652,633 $ 982,987 $ 77,628 $ 86,329 $ 4,543 $ 63,728 $ 1,867,848 13 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table details activity in the allowance for credit losses on held-to-maturity securities during the three months ended March 31, 2025 and 2024. March 31, 2025 March 31, 2024 Beginning balance $ 158 $ 157 Credit loss expense (benefit) ( 18 ) 1 Ending balance $ 140 $ 158 Accrued interest receivable on available for sale debt securities and held to maturity secur ities totaled $ 12.4 million at March 31, 2025 and $ 12.7 million at December 31, 2024 and is excluded from the estimate of credit losses. The U.S. government sponsored entities and agencies and mortgage–backed securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major credit rating agencies, and have a long history of no credit losses. Therefore, for those securities, we do not record expected credit losses. Based on an evaluation of available evidence, management believes the unrealized losses on available for sale state and municipal securities, private labeled mortgage–backed pools and corporate notes were due to changes in interest rates. Due to the contractual terms, the issuers of state and municipal securities are not allowed to settle for less than the amortized cost of the security. In addition, the Company does not intend to sell these securities prior to the recovery of the amortized cost, which may not occur until maturity. No allowance for credit losses was recognized for available for sale debt securities at March 31, 2025 and December 31, 2024. During the three months ended March 31, 2025, the Company transferred and sold one corporate debt security classified as held-to-maturity as a result of a significant downgrade in the published credit rating in February 2025. The net carrying amount and fair value of the transferred and sold security at the time of transfer was $ 4.6 million and $ 4.1 million, respectively, and resulted in a realized loss of $ 0.4 million upon sale that was recorded in losses on sale of investment securities within the condensed consolidated statement of income for the three months ended March 31, 2025. Information regarding security proceeds, gross gains and gross losses are presented below. March 31, 2025 March 31, 2024 Sales of securities available for sale Proceeds $ 4,132 $ — Gross gains — — Gross losses ( 407 ) — The tax benefit of the proceeds from the sale of securities available for sale was $ 0.1 million and zero for the three months ended March 31, 2025 and 2024. The Company pledges securities related to borrowings capacity at the Federal Reserve and Federal Home Loan Bank. The following table represents the fair value and amortized costs of these pledged securities. March 31, 2025 December 31, 2024 Fair Value Amortized Cost Fair Value Amortized Cost Pledge securities for borrowing availability at the Federal Reserve $ 832,429 $ 1,026,315 $ 851,384 $ 1,032,916 Pledge securities for FHLB borrowings $ 280,180 $ 327,837 $ 279,136 $ 333,613 14 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 3 – Loans The table below identifies the Company’s loan portfolio segments and classes. Portfolio Segment Class of Financing Receivable Commercial Owner occupied real estate Non-owner occupied real estate Residential spec homes Development & spec land Commercial and industrial Residential real estate Residential mortgage Residential construction Consumer Installment Indirect auto Home equity Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity’s method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Construction loans are reviewed and rewritten prior to being originated as a term loan. The following table presents outstanding loans held for investment by portfolio class, as of March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Commercial Owner occupied real estate $ 686,043 $ 667,165 Non–owner occupied real estate 1,541,293 1,501,456 Residential spec homes 16,961 15,611 Development & spec land 18,613 18,627 Commercial and industrial 918,541 875,297 Total commercial 3,181,451 3,078,156 Real estate Residential mortgage 781,507 783,961 Residential construction 20,219 18,948 Total real estate 801,726 802,909 Consumer Direct installment 92,323 97,190 Indirect installment 267,718 303,901 Home equity 566,597 564,884 Total consumer 926,638 965,975 Total loans 4,909,815 4,847,040 Allowance for credit losses ( 52,654 ) ( 51,980 ) Net loans $ 4,857,161 $ 4,795,060 Total loans include net unearned discounts and deferred loan costs of $ 13.5 million at March 31, 2025 and $ 14.9 million at December 31, 2024, respectively. 15 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) 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, 2025: March 31, 2025 Total Non-accrual Loans Past Due Over 90 Days Still Accruing Non-accruing Loans with no Allowance for Credit Losses Commercial Owner occupied real estate $ 4,541 $ 239 $ 1,475 Non–owner occupied real estate 433 — 433 Residential spec homes — — — Development & spec land 537 — 537 Commercial and industrial 2,661 95 1,635 Total commercial 8,172 334 4,080 Real estate Residential mortgage 12,763 — — Residential construction — — — Total real estate 12,763 — — Consumer Direct installment 264 327 — Indirect installment 1,586 130 — Home equity 6,025 791 — Total consumer 7,875 1,248 — Total $ 28,810 $ 1,582 $ 4,080 16 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loan at December 31, 2024: December 31, 2024 Total Non-accrual Loans Past Due Over 90 Days Still Accruing Non-accruing Loans with no Allowance for Credit Losses Commercial Owner occupied real estate $ 2,448 $ — $ 1,419 Non–owner occupied real estate 444 — 444 Residential spec homes — — — Development & spec land 534 — 534 Commercial and industrial 2,232 — 1,239 Total commercial 5,658 — 3,636 Real estate Residential mortgage 11,215 — — Residential construction — — — Total real estate 11,215 — — Consumer Direct installment 338 128 — Indirect installment 1,542 358 — Home equity 7,039 680 — Total consumer 8,919 1,166 — Total $ 25,792 $ 1,166 $ 3,636 There was no interest income recognized on non-accrual loans during the three months ended March 31, 2025 and 2024, 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 during the three months ended March 31, 2025 and 2024, respectively. 17 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents the payment status by class of loan at March 31, 2025: March 31, 2025 Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Total Loans Commercial Owner occupied real estate $ 680,066 $ 1,085 $ 389 $ 4,503 $ 5,977 $ 686,043 Non–owner occupied real estate 1,540,379 914 — — 914 1,541,293 Residential spec homes 16,961 — — — — 16,961 Development & spec land 18,613 — — — — 18,613 Commercial and industrial 913,898 1,040 1,505 2,098 4,643 918,541 Total commercial 3,169,917 3,039 1,894 6,601 11,534 3,181,451 Real estate Residential mortgage 773,142 3,105 688 4,572 8,365 781,507 Residential construction 20,219 — — — — 20,219 Total real estate 793,361 3,105 688 4,572 8,365 801,726 Consumer Direct installment 90,649 938 334 402 1,674 92,323 Indirect installment 263,194 3,369 394 761 4,524 267,718 Home equity 554,203 7,061 1,104 4,229 12,394 566,597 Total consumer 908,046 11,368 1,832 5,392 18,592 926,638 Total $ 4,871,324 $ 17,512 $ 4,414 $ 16,565 $ 38,491 $ 4,909,815 18 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents the payment status by class of loan at December 31, 2024: December 31, 2024 Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due Total Past Due Total Loans Commercial Owner occupied real estate $ 665,875 $ 1,195 $ — $ 95 $ 1,290 $ 667,165 Non–owner occupied real estate 1,500,229 931 — 296 1,227 1,501,456 Residential spec homes 15,611 — — — — 15,611 Development & spec land 18,627 — — — — 18,627 Commercial and industrial 872,893 2,155 70 179 2,404 875,297 Total commercial 3,073,235 4,281 70 570 4,921 3,078,156 Real estate Residential mortgage 773,214 — 4,163 6,584 10,747 783,961 Residential construction 18,948 — — — — 18,948 Total real estate 792,162 — 4,163 6,584 10,747 802,909 Consumer Direct installment 95,337 1,325 181 347 1,853 97,190 Indirect installment 298,048 4,179 806 868 5,853 303,901 Home equity 551,483 7,143 1,537 4,721 13,401 564,884 Total consumer 944,868 12,647 2,524 5,936 21,107 965,975 Total $ 4,810,265 $ 16,928 $ 6,757 $ 13,090 $ 36,775 $ 4,847,040 The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Modified Loans The following tables detail the amortized cost at March 31, 2025 of loans that were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and the amortized cost at March 31, 2024, of loans that were modified to borrowers experiencing financial difficulty during the three ended March 31, 2024: Three Months Ended March 31, 2025 Term Extension Interest Rate Reduction Other-Than-Insignificant Payment Delay Term Extension and Interest Rate Reduction Total % of Loans Held for Investment Commercial Owner occupied real estate $ — $ — $ 653 $ — $ 653 0.10 % Non-owner occupied real estate 433 — — — 433 0.03 % Development spec & land 537 — — — 537 2.89 % Commercial and industrial 363 — 752 — 1,115 0.12 % Total $ 1,333 $ — $ 1,405 $ — $ 2,738 0.06 % 19 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Three Months Ended March 31, 2024 Term Extension Interest Rate Reduction Other-Than-Insignificant Payment Delay Term Extension and Interest Rate Reduction Total % of Loans Held for Investment Commercial Owner occupied real estate $ 1,948 $ — $ — $ — $ 1,948 0.30 % Non-owner occupied real estate — — — — — — % Development spec & land 863 — — — 863 2.60 % Commercial and industrial 479 — 25 40 544 0.07 % Total $ 3,290 $ — $ 25 $ 40 $ 3,355 0.07 % The following tables summarize the financial impacts of loan modifications and payment deferrals, as applicable, during the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 Weighted Average Term Extension (In Months) Weighted average interest rate reduction (In Percentage Terms) Weighted Average Payment Delay (In Months) Term Extension (In Months) & Rate Reduction (In Percentage Terms) Commercial Owner occupied real estate — — 6 — Non-owner occupied real estate 14 — — — Development spec & land 18 — — — Commercial and industrial 11 — 6 — Three Months Ended March 31, 2024 Weighted Average Term Extension (In Months) Weighted average interest rate reduction (In Percentage Terms) Weighted Average Payment Delay (In Months) Term Extension (In Months) & Rate Reduction (In Percentage Terms) Commercial Owner occupied real estate 9 — — — Non-owner occupied real estate — — — — Development spec & land 3 — — — Commercial and industrial 6 — 3 Weighted average term extension of 99 months & Weighted average interest rate reduction of 4.85 % The financial impacts of the modifications did not significantly impact our determination of the allowance for credit losses during the periods presented above. 20 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents the amortized cost basis at March 31, 2025 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months: March 31, 2025 Current 30-89 Days Past Due 90 Days Past Due Total Commercial Owner occupied real estate $ 3,070 $ 651 $ 2,038 $ 5,759 Non-owner occupied real estate 927 — — 927 Development spec & land 537 — — 537 Commercial and industrial 3,959 136 — 4,095 Total $ 8,493 $ 787 $ 2,038 $ 11,318 The following table presents the amortized cost basis at March 31, 2024 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months: March 31, 2024 Current 30-89 Days Past Due 90 Days Past Due Total Commercial Owner occupied real estate $ 748 $ — $ — $ 748 Non-owner occupied real estate 2,090 — 966 3,056 Development spec & land 17 — — 17 Commercial and industrial 3,690 287 — 3,977 Total $ 6,545 $ 287 $ 966 $ 7,798 The following table provides the $ 2.8 million amortized cost basis of financing receivables that were modified in the form of term extension and other than significant payment delay in the last twelve months and were in payment default at March 31, 2025. March 31, 2025 Other-than-Insignificant Payment Delay Term Extension Total Commercial and Industrial $ — $ 136 $ 136 Owner Occupied 651 2,038 2,689 Total $ 651 $ 2,174 $ 2,825 The following table provides the $ 1.3 million amortized cost basis of financing receivables that were modified in the form of term extension and term extension & rate reduction in the last twelve months and were in payment default at March 31, 2024. March 31, 2024 Term Extension Term Extension & Rate Reduction Total Commercial and Industrial $ 219 $ 69 $ 287 Owner Occupied 966 — 966 Total $ 1,184 $ 69 $ 1,253 For purposes of this disclosure, the Company considers “default” to mean 30 days or more past due of contractual interest or principal. 21 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Collateral Dependent Financial Assets A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with the loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent. The tables below present the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses, at March 31, 2025 and December 31, 2024. March 31, 2025 Real Estate Accounts Receivable/ Equipment Other Total ACL Allocation Commercial Owner occupied real estate $ 4,541 $ — $ — $ 4,541 $ 320 Non–owner occupied real estate 433 — — 433 — Development & spec land 537 — — 537 — Commercial and industrial 1,611 1,049 — 2,660 661 Total commercial 7,122 1,049 — 8,171 981 Total collateral dependent loans $ 7,122 $ 1,049 $ — $ 8,171 $ 981 (1) Collateral dependent loans had a collateral fair value of $ 5.6 million at March 31, 2025 December 31, 2024 Real Estate Accounts Receivable/ Equipment Other Total ACL Allocation Commercial Owner occupied real estate $ 2,448 $ — $ — $ 2,448 $ 224 Non–owner occupied real estate 444 — — 444 — Development & spec land 534 — — 534 — Commercial and industrial 1,756 476 — 2,232 731 Total commercial 5,182 476 — 5,658 955 Total collateral dependent loans $ 5,182 $ 476 $ — $ 5,658 $ 955 (1) Collateral dependent loans had a collateral fair value of $ 6.3 million at December 31, 2024 As of March 31, 2025, the Company had a carrying value of $ 1.0 million of repossessed assets. As of March 31, 2025, the Company had a recorded net investment of $ 0.9 million o f consumer mortgage loans in which foreclosure proceedings have commenced. Repossessed assets are a component of other assets within the condensed consolidated balance sheet. Credit Quality Indicators Horizon Bank’s processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re–evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the credit quality grade. • For new and renewed commercial loans, the Bank’s Credit Department, which acts independently of the loan 22 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) officer, assigns the credit quality grade to the loan. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective regions (ranging from $ 3,000,000 to $ 6,000,000 ) are validated by the Loan Committee, which is chaired by the Chief Commercial Banking Officer (“CCBO”). • Commercial loan officers are responsible for reviewing their loan portfolios and promptly assessing any adverse change in credit quality and revising the risk rating appropriately. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the Credit Department of the change in the credit quality grade. Downgrades are accepted immediately, however, lenders must present their factual information to the Credit Department when recommending an upgrade. Downgrades to impaired status require the concurrence of the CCBO and the Senior Workout Loan Manager. • The CCBO, or a designee, meets periodically with loan officers to discuss the status of past due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade. • Monthly, senior management meets as members of the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, loan modifications, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management’s analysis of the adequacy of the Allowance for Credit Losses on Loans and Leases. For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non–accrual, or are classified as modified loans are graded “Substandard.” After being 90 to 120 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non–accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass. Horizon Bank employs a nine–grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below. Risk Grade 1: Excellent (Pass) Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents or loans to any publicly held company with a current long–term debt rating of A or better and meeting defined key financial metric ranges. Risk Grade 2: Good (Pass) Loans to businesses that have strong financial statements containing an unqualified opinion from a CPA firm and at least three years consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five consecutive years of profits, a five year satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities with required margins where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit histories; or loans to publicly held companies with current long–term debt ratings of Baa or better and meeting defined key financial metric ranges. Risk Grade 3: Satisfactory (Pass) Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply: • At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory; 23 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) • At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss. • The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance. • During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted. Risk Grade 4: Satisfactory/Monitored Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory rated loans and meet defined key financial metric ranges. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank’s minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization. Risk Grade 4W: Management Watch Loans in this category are considered to be of acceptable quality and meet defined key financial metric ranges, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion. Commercial construction loans are graded as 4W Management Watch until the projects are completed and stabilized. Risk Grade 5: Special Mention Loans which possess some temporary (normally less than one year) credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,” impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength and must meet defined key financial metric ranges. Risk Grade 6: Substandard One or more of the following characteristics may be exhibited in loans classified Substandard: • Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss. • Loans are inadequately protected by the current net worth and paying capacity of the obligor. • The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees. • Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected. • Unusual courses of action are needed to maintain a high probability of repayment. • The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments. • The lender is forced into a subordinated or unsecured position due to flaws in documentation. • Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms. 24 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) • The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan. • There is a significant deterioration in market conditions to which the borrower is highly vulnerable. • The borrower meets defined key financial metric ranges. Risk Grade 7: Doubtful One or more of the following characteristics may be present in loans classified Doubtful: • Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable. • The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment. • The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known. • The borrower meets defined key financial metric ranges. Risk Grade 8: Loss Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future. 25 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following tables present loans by credit grades and origination year at March 31, 2025. March 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Term Loans Revolving Loans Total Commercial Owner occupied real estate Pass $ 25,795 $ 74,871 $ 75,303 $ 86,940 $ 67,176 $ 212,165 $ 95,697 $ 18,180 $ 656,127 Special Mention — 358 — — 1,746 4,341 2,581 100 9,126 Substandard — 2,969 8,737 3,677 — 4,907 — 500 20,790 Doubtful — — — — — — — — — Total owner occupied real estate $ 25,795 $ 78,198 $ 84,040 $ 90,617 $ 68,922 $ 221,413 $ 98,278 $ 18,780 $ 686,043 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Non–owner occupied real estate Pass $ 47,872 $ 187,693 $ 112,711 $ 240,275 $ 126,788 $ 432,610 $ 322,229 $ 11,852 $ 1,482,030 Special Mention — — 5,091 16,410 1,227 31,129 — — 53,857 Substandard — 83 — — — 5,323 — — 5,406 Doubtful — — — — — — — — — Total non–owner occupied real estate $ 47,872 $ 187,776 $ 117,802 $ 256,685 $ 128,015 $ 469,062 $ 322,229 $ 11,852 $ 1,541,293 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Residential spec homes Pass $ — $ 360 $ — $ — $ 420 $ — $ 12,041 $ 4,140 $ 16,961 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total residential spec homes $ — $ 360 $ — $ — $ 420 $ — $ 12,041 $ 4,140 $ 16,961 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Development & spec land Pass $ 672 $ 818 $ 4,094 $ 777 $ 1,012 $ 2,312 $ 7,677 $ 404 $ 17,766 Special Mention — — — — — 310 — — 310 Substandard — — — — — — 537 — 537 Doubtful — — — — — — — — — Total development & spec land $ 672 $ 818 $ 4,094 $ 777 $ 1,012 $ 2,622 $ 8,214 $ 404 $ 18,613 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial Pass $ 145,152 $ 163,615 $ 94,714 $ 132,654 $ 66,821 $ 57,939 $ 43,633 $ 166,859 $ 871,387 Special Mention 1,467 892 596 659 28 984 11,636 12,797 29,059 Substandard — 1,505 7,675 854 95 2,806 1,144 4,016 18,095 Doubtful — — — — — — — — — Total commercial and industrial $ 146,619 $ 166,012 $ 102,985 $ 134,167 $ 66,944 $ 61,729 $ 56,413 $ 183,672 $ 918,541 Gross charge-offs during period $ — $ — $ — $ — $ — $ 2 $ 5 $ — $ 7 Total commercial $ 220,958 $ 433,164 $ 308,921 $ 482,246 $ 265,313 $ 754,826 $ 497,175 $ 218,848 $ 3,181,451 26 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) March 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Term Loans Revolving Loans Total Real estate Residential mortgage Performing $ 20,825 $ 68,770 $ 133,286 $ 158,514 $ 137,623 $ 249,726 $ — $ — $ 768,744 Non–performing — 329 3,437 1,938 1,451 5,608 — — 12,763 Total residential mortgage $ 20,825 $ 69,099 $ 136,723 $ 160,452 $ 139,074 $ 255,334 $ — $ — $ 781,507 Gross charge-offs during period $ — $ — $ — $ — $ — $ 2 $ — $ — $ 2 Residential construction Performing $ — $ — $ — $ — $ — $ — $ 20,219 $ — $ 20,219 Non–performing — — — — — — — — — Total residential construction $ — $ — $ — $ — $ — $ — $ 20,219 $ — $ 20,219 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Total real estate $ 20,825 $ 69,099 $ 136,723 $ 160,452 $ 139,074 $ 255,334 $ 20,219 $ — $ 801,726 March 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Term Loans Revolving Loans Total Consumer Direct installment Performing $ 3,333 $ 9,187 $ 56,629 $ 8,678 $ 4,705 $ 7,337 $ 34 $ 1,830 $ 91,732 Non–performing — 1 465 43 50 32 — — 591 Total direct installment $ 3,333 $ 9,188 $ 57,094 $ 8,721 $ 4,755 $ 7,369 $ 34 $ 1,830 $ 92,323 Gross charge-offs during period $ — $ 27 $ 15 $ 26 $ 6 $ — $ 4 $ — $ 78 Indirect installment Performing $ — $ 24,257 $ 63,841 $ 115,978 $ 42,833 $ 19,093 $ — $ — $ 266,002 Non–performing — 45 302 772 302 295 — — 1,716 Total indirect installment $ — $ 24,302 $ 64,143 $ 116,750 $ 43,135 $ 19,388 $ — $ — $ 267,718 Gross charge-offs during period $ — $ 135 $ 174 $ 297 $ 58 $ 82 $ — $ — $ 746 Home equity Performing $ 3,287 $ 13,105 $ 20,460 $ 15,387 $ 4,972 $ 10,160 $ 25,997 $ 466,413 $ 559,781 Non–performing — 48 481 460 — 296 5,531 — 6,816 Total home equity $ 3,287 $ 13,153 $ 20,941 $ 15,847 $ 4,972 $ 10,456 $ 31,528 $ 466,413 $ 566,597 Gross charge-offs during period $ — $ — $ — $ 7 $ — $ 4 $ 618 $ — $ 629 Total consumer $ 6,620 $ 46,643 $ 142,178 $ 141,318 $ 52,862 $ 37,213 $ 31,562 $ 468,243 $ 926,638 27 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following tables present loans by credit grades and origination year at December 31, 2024. December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total Commercial Owner occupied real estate Pass $ 75,649 $ 74,305 $ 90,872 $ 68,978 $ 36,778 $ 178,936 $ 92,227 $ 12,365 $ 630,110 Special Mention 129 — 1,724 1,769 142 8,759 — 100 12,623 Substandard 2,970 8,761 1,051 6,307 — 4,843 — 500 24,432 Doubtful — — — — — — — — — Total owner occupied real estate $ 78,748 $ 83,066 $ 93,647 $ 77,054 $ 36,920 $ 192,538 $ 92,227 $ 12,965 $ 667,165 Gross charge-offs during period $ — $ — $ — $ — $ — $ 1 $ — $ — $ 1 Non–owner occupied real estate Pass $ 194,167 $ 115,378 $ 244,266 $ 133,689 $ 100,688 $ 344,558 $ 298,288 $ 11,726 $ 1,442,760 Special Mention — 4,211 16,409 1,249 — 31,083 — — 52,952 Substandard 83 297 — — — 5,364 — — 5,744 Doubtful — — — — — — — — — Total non–owner occupied real estate $ 194,250 $ 119,886 $ 260,675 $ 134,938 $ 100,688 $ 381,005 $ 298,288 $ 11,726 $ 1,501,456 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Residential spec homes Pass $ 362 $ — $ — $ 420 $ — $ — $ 10,986 $ 3,843 $ 15,611 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total residential spec homes $ 362 $ — $ — $ 420 $ — $ — $ 10,986 $ 3,843 $ 15,611 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Development & spec land Pass $ 819 $ 4,139 $ 788 $ 1,133 $ 328 $ 2,039 $ 7,931 $ 599 $ 17,776 Special Mention — — — — — 317 — — 317 Substandard — — — — — — 534 — 534 Doubtful — — — — — — — — — Total development & spec land $ 819 $ 4,139 $ 788 $ 1,133 $ 328 $ 2,356 $ 8,465 $ 599 $ 18,627 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial and industrial Pass $ 242,562 $ 105,877 $ 128,707 $ 73,008 $ 6,954 $ 54,764 $ 48,313 $ 179,370 $ 839,555 Special Mention 1,246 324 1,245 28 1 1,573 9,519 9,281 23,217 Substandard 843 2,599 318 217 266 3,170 1,003 4,109 12,525 Doubtful — — — — — — — — — Total commercial and industrial $ 244,651 $ 108,800 $ 130,270 $ 73,253 $ 7,221 $ 59,507 $ 58,835 $ 192,760 $ 875,297 Gross charge-offs during period $ — $ — $ — $ — $ — $ 45 $ 108 $ — $ 153 Total commercial $ 518,830 $ 315,891 $ 485,380 $ 286,798 $ 145,157 $ 635,406 $ 468,801 $ 221,893 $ 3,078,156 28 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total Real estate Residential mortgage Performing $ 69,264 $ 145,927 $ 160,780 $ 140,310 $ 78,563 $ 177,902 $ — $ — $ 772,746 Non–performing 201 1,619 2,125 1,472 706 5,092 — — 11,215 Total residential mortgage $ 69,465 $ 147,546 $ 162,905 $ 141,782 $ 79,269 $ 182,994 $ — $ — $ 783,961 Gross charge-offs during period $ — $ — $ — $ — $ — $ 5 $ — $ — $ 5 Residential construction Performing $ — $ — $ — $ — $ — $ — $ 18,948 $ — $ 18,948 Non–performing — — — — — — — — — Total residential construction $ — $ — $ — $ — $ — $ — $ 18,948 $ — $ 18,948 Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Mortgage warehouse Performing $ — $ — $ — $ — $ — $ — $ — $ — $ — Non–performing — — — — — — — — — Total mortgage warehouse $ — $ — $ — $ — $ — $ — $ — $ — $ — Gross charge-offs during period $ — $ — $ — $ — $ — $ — $ — $ — $ — Total real estate $ 69,465 $ 147,546 $ 162,905 $ 141,782 $ 79,269 $ 182,994 $ 18,948 $ — $ 802,909 December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Term Loans Revolving Loans Total Consumer Direct installment Performing $ 11,306 $ 59,850 $ 9,510 $ 5,398 $ 2,679 $ 6,003 $ 60 $ 1,918 $ 96,724 Non–performing 1 374 46 19 — 26 — — 466 Total direct installment $ 11,307 $ 60,224 $ 9,556 $ 5,417 $ 2,679 $ 6,029 $ 60 $ 1,918 $ 97,190 Gross charge-offs during period $ 72 $ 93 $ 169 $ 1 $ 35 $ 78 $ 9 $ — $ 457 Indirect installment Performing $ 26,839 $ 70,143 $ 130,610 $ 49,458 $ 17,647 $ 7,304 $ — $ — $ 302,001 Non–performing — 425 800 304 242 129 — — 1,900 Total indirect installment $ 26,839 $ 70,568 $ 131,410 $ 49,762 $ 17,889 $ 7,433 $ — $ — $ 303,901 Gross charge-offs during period $ 161 $ 449 $ 1,345 $ 527 $ 188 $ 99 $ — $ — $ 2,769 Home equity Performing $ 13,552 $ 21,845 $ 16,136 $ 5,110 $ 1,902 $ 9,210 $ 18,657 $ 470,753 $ 557,165 Non–performing — 421 426 — 30 296 6,465 81 7,719 Total home equity $ 13,552 $ 22,266 $ 16,562 $ 5,110 $ 1,932 $ 9,506 $ 25,122 $ 470,834 $ 564,884 Gross charge-offs during period $ — $ 23 $ 52 $ 88 $ — $ 39 $ 110 $ 11 $ 323 Total consumer $ 51,698 $ 153,058 $ 157,528 $ 60,289 $ 22,500 $ 22,968 $ 25,182 $ 472,752 $ 965,975 29 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 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, 2025 and 2024: Three Months Ended March 31, 2025 Commercial Real Estate Mortgage Warehouse Consumer Total Balance, beginning of period $ 30,953 $ 2,715 $ — $ 18,312 $ 51,980 Credit loss expense (recovery) 1,640 405 — ( 502 ) 1,543 Charge-offs ( 7 ) ( 2 ) — ( 1,453 ) ( 1,462 ) Recoveries 54 49 — 490 593 Balance, end of period $ 32,640 $ 3,167 $ — $ 16,847 $ 52,654 Three Months Ended March 31, 2024 Commercial Real Estate Mortgage Warehouse Consumer Total Balance, beginning of period $ 29,736 $ 2,503 $ 481 $ 17,309 $ 50,029 Credit loss expense (recovery) 606 147 178 ( 262 ) 669 Charge-offs 114 ( 1 ) — ( 823 ) ( 710 ) Recoveries 58 6 — 335 399 Balance, end of period $ 30,514 $ 2,655 $ 659 $ 16,559 $ 50,387 The accrued interest receivable on our loan receivables is excluded from the allowance for credit loss estimate and is included in interest receivable on our consolidated balance sheets. As of March 31, 2025 and December 31, 2024, the accrued interest on our loan portfolio was $ 25.1 million and 25.6 million, respectively. The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge–offs, net of recoveries, (“loan losses”) recognized over the life of a closed pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”). To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date. The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company’s historical look–back period includes January 2009 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data. The Company supplemented data for 2009 and 2010 with the use of adjusted Uniform Bank Performance Report peer group data. Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit–related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible. The Company’s CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized Moody's economic forecast scenarios including both National and Regional econometrics, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, 30 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) and qualitative adjustments were utilized to reflect the forecast and other relevant factors. The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns. Liability for Commitments to Extend Credit and Standby Letters of Credit The following tables represent, by loan portfolio segment, a summary of changes in the activity in the liability for commitments to extend credit and standby letters of credit (please see note 14): Three Month Ended March 31, 2025 45382 March 31, 2024 Balance, beginning of period Credit loss expense (reversal) Ending balance Balance, beginning of period Credit loss expense (reversal) Ending balance Commercial $ 1,385 $ ( 253 ) $ 1,132 $ — $ — $ — Real Estate 61 11 72 64 ( 18 ) 46 Mortgage Warehouse — — — — — — Consumer 703 93 796 551 153 704 Total $ 2,149 $ ( 149 ) $ 2,000 $ 615 $ 135 $ 750 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 $ 1.42 billion and $ 1.44 billion at March 31, 2025 and December 31, 2024. Activity for mortgage servicing rights and the related impairment allowance were as follows: Three Month Ended March 31, 2025 March 31, 2024 Mortgage servicing rights Balances, January 1 $ 18,195 $ 18,807 Servicing rights capitalized 245 207 Amortization of servicing rights ( 507 ) ( 476 ) Ending balance 17,933 18,538 Impairment allowance Beginning balance — — Additions — — Reductions — — Ending balance — — Mortgage servicing rights, net $ 17,933 $ 18,538 Fair value, beginning of period $ 19,766 $ 19,891 Fair value, end of period 18,811 19,149 Fair value at March 31, 2025 was determined using a discounted cash flow analysis with the discount rates ranging from 9.0 % to 11.5 % and prepayment speeds ranging from 5.9 % to 13.5 %, depending on the stratification of the specific type. Fair value at March 31, 2024 was determined using a discounted cash flow analysis with a discount rate of 11.0 % and prepayment speeds ranging from 6.0 % to 12.0 %, depending on the stratification of the specific type. 31 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 6 – Goodwill The carrying amount of goodwill was $ 155.2 million as of March 31, 2025 and December 31, 2024, respectively. There were no changes in the carrying amount of goodwill for the three months ended March 31, 2025 and 2024. Goodwill is assessed for impairment annually, or more frequently if events occur or circumstances change that indicate an impairment may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment. No goodwill impairment charges were recorded for the three months ended March 31, 2025 and 2024. Note 7 – Repurchase Agreements The Company transfers various securities to customers in exchange for cash at the end of each business day and agrees to acquire the securities at the end of the next business day for the cash exchanged plus interest. The process is repeated at the end of each business day until the agreement is terminated. The securities underlying the agreement remained under the Company’s control. The following tables show repurchase agreements accounted for as secured borrowings and the related securities, at fair value, pledged for repurchase agreements: March 31, 2025 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total Repurchase Agreements and repurchase-to-maturity transactions U.S. Treasury federal agencies $ 34,751 $ — $ — $ — $ 34,751 U.S. government agency mortgage-backed securities 53,101 — — — 53,101 Private labeled mortgage-backed pools — — — — — Total Repurchase Agreements $ 87,852 $ — $ — $ — $ 87,852 Repurchase Agreements subject to offsetting arrangements — December 31, 2024 Remaining Contractual Maturity of the Agreements Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total Repurchase Agreements and repurchase-to-maturity transactions U.S. Treasury federal agencies $ 34,191 $ — $ — $ — $ 34,191 U.S. government agency mortgage-backed securities 55,721 — — — 55,721 Private labeled mortgage-backed pools $ — $ — $ — $ — $ — Total Repurchase Agreements $ 89,912 $ — $ — $ — $ 89,912 Repurchase Agreements subject to offsetting arrangements — 32 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Securities sold under agreements to repurchase are secured by securities with a carrying amount of $ 97.9 million and $ 96.8 million at March 31, 2025 and December 31, 2024, respectively. Note 8 – Subordinated Notes On June 24, 2020, Horizon issued $ 60.0 million in aggregate principal amount of 5.625 % fixed–to–floating rate subordinated notes (the “Notes”). The Notes were offered in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Notes mature on July 1, 2030 (the “Maturity Date”). From and including the date of original issuance to, but excluding, July 1, 2025 or the date of earlier redemption (the “fixed rate period”), the Notes bear interest at an initial rate of 5.625 % per annum, payable semi–annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2021. The last interest payment date for the fixed rate period will be July 1, 2025. From and including July 1, 2025 to, but excluding, the Maturity Date or the date of earlier redemption (the “floating rate period”), the Notes bear interest at a floating rate per annum equal to the benchmark rate, which is expected to be Three–Month Term SOFR (the “Benchmark Rate”), plus 549 basis points, payable quarterly in arrears on January 1, April 1, July 1, and October 1 of each year, commencing on October 1, 2025. Notwithstanding the foregoing, in the event that the Benchmark Rate is less than zero, the Benchmark Rate shall be deemed to be zero. Horizon may, at its option, beginning with the interest payment date of July 1, 2025 and on any interest payment date thereafter, redeem the Notes, in whole or in part. The Notes will not otherwise be redeemable by Horizon prior to maturity, unless certain events occur. The redemption price for any redemption is 100 % of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any early redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital regulations. The Notes are unsecured subordinated obligations, and rank pari passu, or equally, with all of Horizon's future unsecured subordinated debt and are junior to all existing and future senior debt. The Notes are structurally subordinated to all existing and future liabilities of Horizon's subsidiaries, including the deposit liabilities and claims of other creditors of Horizon Bank, and are effectively subordinated to Horizon’s existing and future secured indebtedness. There is no sinking fund for the Notes. The Notes are obligations of Horizon only and are not obligations of, and are not guaranteed by, any of Horizon’s subsidiaries. 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 $ 55.8 million and $ 55.7 million at March 31, 2025 and December 31, 2024, respectively. Unamortized debt issuance costs were $ 0.7 million and $ 0.8 million million at March 31, 2025 and December 31, 2024, 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, and in the net change in each of these financial statement line items in the accompanying consolidated statement of cash flows. Fair Value Hedges Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company previously entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. The Company also previously entered into interest rate swap agreements on individual investment securities, converting the fixed rate security to a variable rate. During the year ended December 31, 2024, the Company terminated the fair value hedges on loans and securities, recording a deferred gain of $ 2.3 million on the loan termination that will be accreted into interest income over the remaining life of the underlying loans, and a mark-to-market adjustment of $ 0.3 million that was recorded in non-interest income on the termination of the fair value hedges against investment securities. The change in fair value of both the hedge instruments and the underlying loan and security agreements are recorded as gains or losses in non–interest income. The fair value hedges are considered to be highly effective. 33 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) 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 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, 2025, 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 our derivative financial instruments utilized by Horizon on a gross basis for the periods indicated. Asset Derivatives Liability Derivatives March 31, 2025 March 31, 2025 Notional Amount Fair Value Notional Amount Fair Value Derivatives not designated as hedging instruments Interest rate contracts -customer accommodation $ 514,001 $ 21,153 $ 514,001 $ 21,153 Mortgage loan contracts — — 15,988 46 Commitments to originate mortgage loans 15,123 509 — — Total derivatives not designated as hedging instruments 529,124 21,662 529,989 21,199 Total derivatives subject to enforceable master netting arrangements, gross $ 529,124 $ 21,662 $ 529,989 $ 21,199 Less: Gross amounts offset — — — — Total derivatives subject to enforceable master netting arrangements, net $ 529,124 $ 21,662 $ 529,989 $ 21,199 34 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Asset Derivatives Liability Derivatives December 31, 2024 December 31, 2024 Notional Amount Fair Value Notional Amount Fair Value Derivatives not designated as hedging instruments Interest rate contracts - customer accommodation $ 521,520 $ 28,817 $ 521,520 $ 28,817 Mortgage loan contracts 6,155 27 — — Commitments to originate mortgage loans 6,856 202 — — Total derivatives not designated as hedging instruments 534,531 29,046 521,520 28,817 Total derivatives subject to enforceable master netting arrangements, gross $ 534,531 $ 29,046 $ 521,520 $ 28,817 Less: Gross amounts offset — — — — Total derivatives subject to enforceable master netting arrangements, net $ 534,531 $ 29,046 $ 521,520 $ 28,817 While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company has elected to not offset derivative assets and liabilities under these agreements on its consolidated balance sheets. Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities. At March 31, 2025, the Company pledged marketable securities as collateral with a carrying value of $ 5.8 million. The effect of the derivative and the hedged item in fair value hedging relationships on the condensed consolidated statements of income for three month periods ended March 31, 2025 and March 31, 2024 is as follows: Location of gain (loss) recognized on derivative and Hedge item Amount of Gain (Loss) Recognized on Derivative and Hedged Item Three Month Ended March 31, 2025 March 31, 2024 Derivatives designated as hedging instruments Interest rate contracts - fair value hedge Interest income - loans receivable $ — $ 335 Hedged item — ( 335 ) Interest rate contracts - fair value hedge Interest income - investment securities — ( 71 ) Hedged item — 71 Total $ — $ — The effect of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the three month periods ended March 31, 2025 and March 31, 2024 is as follows: 35 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Location of gain (loss) recognized on derivative Amount of Gain (Loss) Recognized on Derivative Three Month Ended March 31, 2025 March 31, 2024 Derivative not designated as hedging relationship Mortgage loan contracts Non-interest income-Gain on sale of loans 509 ( 24 ) Commitments to originate mortgage loans Non-interest income-Gain on sale of loans ( 46 ) ( 38 ) Total $ 463 $ ( 62 ) 36 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 10 – Disclosures about Fair Value of Assets and Liabilities The Fair Value Measurements topic of the FASB ASC defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. There are three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2025. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Available for sale securities When quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Treasury and federal agency securities, state and municipal securities, U.S. government agency mortgage-backed securities, corporate notes. Level 2 securities are valued by a third party pricing service commonly used in the banking industry utilizing observable inputs. Observable inputs include dealer quotes, market spreads, cash flow analysis, the U.S. Treasury yield curve, trade execution data, market consensus prepayment spreads and available credit information and the bond’s terms and conditions. The pricing provider utilizes evaluated pricing models that vary based on asset class. These models incorporate available market information including quoted prices of securities with similar characteristics and, because many fixed–income securities do not trade on a daily basis, apply available information through processes such as benchmark curves, benchmarking of like securities, sector grouping, and matrix pricing. In addition, model processes, such as an option adjusted spread model, is used to develop prepayment and interest rate scenarios for securities with prepayment features. Equity securities The fair value of the Company's equity investments is estimated by a third party utilizing readily determinable fair values quoted on an active market. Interest rate swap agreements The fair value of the Company’s interest rate swap agreements is estimated by a third party using inputs that are primarily unobservable including a yield curve, adjusted for liquidity and credit risk, contracted terms and discounted cash flow analysis, and therefore, are classified within Level 2 of the valuation hierarchy. Commitments to originate mortgage loans and mortgage loan contract assets/liabilities The Company’s forward commitments are valued based on quoted prices for similar assets in an active market with inputs that are observable. 37 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents the 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, 2025 Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Available for sale securities U.S. Treasury and federal agencies $ 1,850 $ — $ 1,850 $ — State and municipal 199,429 — 199,429 — U.S. government agency mortgage-backed securities 14,462 — 14,462 — Corporate notes 15,690 — 15,690 — Total available for sale securities 231,431 — 231,431 — Equity securities 572 572 — — Interest rate swap agreements asset 21,153 — 21,153 — Commitments to originate mortgage loans 509 — 509 — Liabilities: Mortgage loans contracts ( 46 ) — ( 46 ) — Interest rate swap agreements liability ( 21,153 ) — ( 21,153 ) — December 31, 2024 Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Available for sale securities U.S. Treasury and federal agencies $ 1,801 $ — $ 1,801 $ — State and municipal 201,834 — 201,834 — U.S. government agency mortgage-backed securities 14,543 — 14,543 — Corporate notes 15,499 — 15,499 — Total available for sale securities 233,677 — 233,677 — Equity securities 595 595 — — Interest rate swap agreements asset 28,817 — 28,817 — Commitments to originate mortgage loans 202 — 202 — Mortgage loan contracts 27 — 27 — Liabilities: Interest rate swap agreements liability ( 28,817 ) — ( 28,817 ) — 38 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Certain other assets are measured at fair value on a non-recurring basis in the ordinary course of business and are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment): Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2025 Collateral dependent loans $ 6,532 $ — $ — $ 6,532 December 31, 2024 Collateral dependent loans $ 3,797 $ — $ — $ 3,797 Collateral Dependent Loans: For loans identified as collateral dependent, the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. Loans Transferred to Held for Sale: Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value, less estimated costs to sell. At the time of transfer into held for sale classification, any amount by which cost exceeds fair value is accounted for as a valuation allowance. This activity generally pertains to loans with observable inputs, and therefore, are classified within Level 2 of the fair value hierarchy. However, should these loans include adjustments for changes in loan characteristics based on unobservable inputs, the loans would then be classified within Level 3 of the fair value hierarchy. As of March 31, 2025 and December 31, 2024, there were zero and $ 64.8 million loans transferred to held for sale on the accompanying Consolidated Balance Sheets, respectively. The following table presents qualitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements,. March 31, 2025 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Collateral dependent loans $ 6,532 Collateral based measurement Discount to reflect current market conditions and ultimate collectability 16.1 %- 86.0 % ( 39.4 %) December 31, 2024 Fair Value Valuation Technique Unobservable Inputs Range (Weighted Average) Collateral dependent loans $ 3,797 Collateral based measurement Discount to reflect current market conditions and ultimate collectability 16.1 %- 40.1 %( 36.6 %) Note 11 – Fair Value of Financial Instruments The estimated fair value amounts of the Company’s financial instruments were determined using available market information, current pricing information applicable to Horizon and various valuation methodologies. Where market quotations were not available, considerable management judgment was involved in the determination of estimated fair values. Therefore, the estimated fair value of financial instruments shown below may not be representative of the amounts at which they could be exchanged in a current or future transaction. Due to the inherent uncertainties of expected cash flows of financial instruments, the use of alternate valuation assumptions and methods could have a significant effect on the estimated fair value amounts. 39 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table does not include certain financial instruments that are recorded at fair value on a recurring basis, including some non-recurring financial instruments. See Note 10 for more details. The estimated fair values of financial instruments, as shown below, are not intended to reflect the estimated liquidation or market value of Horizon taken as a whole. The disclosed fair value estimates are limited to Horizon’s significant financial instruments at March 31, 2025 and December 31, 2024. These include financial instruments recognized as assets and liabilities on the condensed consolidated balance sheets as well as certain off–balance sheet financial instruments. The estimated fair values shown below do not include any valuation of assets and liabilities, which are not financial instruments as defined by the FASB ASC fair value hierarchy. The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Cash and Cash Equivalents – Cash and cash equivalents are composed of: cash and due from banks, interest bearing deposits in banks, and federal funds sold. The carrying amounts approximate fair value. Interest-Earning Time Deposits – The carrying amounts approximate fair value. Held–to–Maturity Securities – For debt securities held to maturity, fair values are based on quoted market prices or dealer quotes. For those securities where a quoted market price is not available, carrying amount is a reasonable estimate of fair value based upon comparison with similar securities. Loans Held for Sale – For mortgage loans, the fair value is derived from third party pricing models, based on active quotes. For non-mortgage loans, the assets are carried at the lower of cost or fair value. Net Loans – The fair value of net loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. FHLB Stock – Fair value of FHLB stock is based on the price at which it may be resold to the FHLB. Interest Payable – The carrying amounts approximate fair value. Deposits – The fair value of demand deposits, savings accounts, interest bearing checking accounts and money market deposits is the amount payable on demand at the reporting date and are classified within Level 1. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturity and are classified within Level 2. Borrowings – Rates currently available to Horizon for debt with similar terms and remaining maturities are used to estimate fair values of existing borrowings. Subordinated Notes – The fair value of subordinated notes is based on discounted cash flows based on current borrowing rates for similar types of instruments. Junior Subordinated Debentures to Capital Trusts – Rates currently available for debentures with similar terms and remaining maturities are used to estimate fair values of existing debentures. 40 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following 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, 2025 Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Cash and due from banks $ 89,643 $ 89,643 $ — $ — Interest- bearing deposits in banks 80,023 80,023 — — Cash and cash equivalents 169,666 169,666 — — Investment securities, held to maturity 1,843,851 — 1,550,127 — Loans held for sale 3,253 — — 3,253 Loans, net 4,857,161 — — 4,687,773 Stock in FHLB 45,412 — 45,412 — Liabilities Non-interest bearing deposits $ 1,127,324 $ 1,127,324 $ — $ — Interest bearing deposits 4,638,459 3,393,371 1,241,557 — Borrowings 900,069 — 900,292 — Subordinated notes 55,772 — 56,316 — Junior subordinated debentures issued to capital trusts 57,531 — 49,487 — Interest payable 11,441 — 11,441 — 41 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) December 31, 2024 Carrying Amount Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Cash and due from banks $ 92,300 $ 92,300 $ — $ — Interest-earning deposits 201,131 201,131 — — Federal funds sold — — — — Cash and cash equivalents 293,431 293,431 — — Interest earnings time deposits 735 — 735 — Investment securities, held to maturity 1,867,690 — 1,566,268 — Loans held for sale 67,597 — 64,824 2,773 Loans (excluding loan level hedges), net 4,795,060 — — 4,611,702 Stock in FHLB 53,826 — 53,826 — Liabilities Non-interest bearing deposits $ 1,064,818 $ 1,064,818 $ — $ — Interest bearing deposits 4,535,834 3,446,680 1,084,986 — Borrowings 1,232,252 — 1,230,860 — Subordinated notes 55,738 — 55,284 — Junior subordinated debentures issued to capital trusts 57,477 — 48,559 — Interest payable 11,137 — 11,137 — Note 12 – Stockholders' Equity The components of accumulated other comprehensive loss, net of tax included in capital are as follows: Accumulated Other Comprehensive Income (Loss) March 31, 2025 December 31, 2024 Unrealized gain (loss) on securities available for sale $ ( 39,167 ) $ ( 38,193 ) Unamortized gain (loss) on securities held to maturity, previously transferred from AFS 1,761 1,892 Total accumulated other comprehensive income (loss) $ ( 37,406 ) $ ( 36,301 ) Note 13 – Regulatory Capital Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd–Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off–balance–sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance 42 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) with the Basel III–based regulations. As allowed under Basel III rules, the Company made the decision to opt–out of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below. In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk–based, Tier I risk–based, common equity Tier I risk–based and Tier I leverage ratios as set forth in the table below. As of March 31, 2025 and December 31, 2024, 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 2025 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well capitalized status for bank holding companies. 43 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) The following table presents Horizon and the Bank’s actual and required capital ratios as of March 31, 2025 and December 31, 2024, as well as the revisions to Horizon's regulatory capital ratios to reflect the correction of the capital computations for the foregoing periods: Actual Required for Capital Adequacy Purposes (1) Required For Capital Adequacy Purposes with Capital Buffer (1) Well Capitalized Under Prompt Corrective Action Provisions (1) Amount Ratio Amount Ratio Amount Ratio Amount Ratio March 31, 2025 Total capital (to risk-weighted assets) 1 Consolidated $ 815,504 14.26 % $ 457,564 8.00 % $ 600,553 10.50 % N/A N/A Bank 737,823 12.93 456,510 8.00 599,169 10.50 $ 570,637 10.00 % Tier 1 capital1(to risk-weighted assets) Consolidated 704,937 12.33 343,173 6.00 486,162 8.50 N/A N/A Bank 683,028 11.97 342,382 6.00 485,042 8.50 456,510 8.00 Common equity tier 1 capital1(to risk-weighted assets) Consolidated 647,406 11.32 257,380 4.50 400,369 7.00 N/A N/A Bank 683,028 11.97 256,787 4.50 399,446 7.00 370,914 6.50 Tier 1 capital (to average assets) 1 Consolidated 704,937 9.25 304,754 4.00 304,754 4.00 N/A N/A Bank 683,028 8.98 304,288 4.00 304,288 4.00 380,360 5.00 Actual Required for Capital Adequacy Purposes (1) Required For Capital Adequacy Purposes with Capital Buffer (1) Well Capitalized Under Prompt Corrective Action Provisions (1) Amount Ratio Amount Ratio Amount Ratio Amount Ratio December 31, 2024 Total capital (to risk-weighted assets) (1) Consolidated $ 800,209 13.91 % $ 460,266 8.00 % $ 604,099 10.50 % N/A N/A Bank 725,383 12.64 % 459,039 8.00 % 602,489 10.50 % 573,799 10.00 % Tier 1 capital(1)(to risk-weighted assets) Consolidated 690,183 12.00 % 345,199 6.00 % 489,033 8.50 % N/A N/A Bank 671,095 11.70 % 344,279 6.00 % 487,729 8.50 % 459,039 8.00 % Common equity tier 1 capital(1)(to risk-weighted assets) Consolidated 632,760 11.11 % 258,900 4.50 % 402,733 7.00 % N/A N/A Bank 671,095 11.70 % 258,209 4.50 % 401,659 7.00 % 372,969 6.50 % Tier 1 capital(to average assets) (1) Consolidated 690,183 8.88 % 310,825 4.00 % 310,825 4.00 % N/A N/A Bank 671,095 8.64 % 310,539 4.00 % 310,539 4.00 % 388,174 5.00 % (1) As defined by regulatory agencies 44 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (Table Dollar Amounts in Thousands, Except Per Share Data) Note 14 – Off-Balance Sheet Arrangements, Commitments, and Contingencies In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk to meet the financing needs of its clients. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of amounts recorded in the consolidated balance sheets. Commitments to extend credit are legally binding agreements to lend to a client, so long as there is no violation of any condition established in the commitment contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third party. The credit risk involved in issuing letters of credit is essentially the same as the credit risk involved in extending loan facilities to clients. The Company’s policy for obtaining collateral, and determining the nature of such collateral, is essentially the same as in the Company’s policies for making commitments to extend credit. The methodology for estimating the liability for unfunded loan commitments is consistent with the allowance for credit losses on loans. The following table represents the commitments to extend credit and standby letters of credit as of March 31, 2025 and December 31, 2024 , respectively: March 31, 2025 December 31, 2024 Commitments to extend credit $ 1,046,675 $ 1,018,302 Standby letters of credit 26,096 23,457 Total $ 1,072,771 $ 1,041,759 Note 15 - Subsequent Events The Company does not have any reportable subsequent events from March 31, 2025 to the reporting date. 45 Table of Contents HORIZON BANCORP, INC. AND SUBSIDIARIES Management’s Discussion and Analysis of Financial Condition And Results of Operations For the three months ended March 31, 2025 and 2024