What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-08 · 173 added, 92 removed, 330 unchanged (45% of the section changed)

19 unchanged sentences

• the increasing use of Bitcoin and other crypto currencies and/or stable coin and the possible impact these alternative currencies may have on deposit disintermediation and income derived from payment systems;

• risks related to the development and use of artificial intelligence (AI);

• the effect of interest rates on net interest rate margin and their impact on mortgage loan volumes and the outflow of deposits;

3 unchanged sentences

• volatility and disruption in financial markets;

• changes in prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets;

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

• changes in prepayment speeds, loan originations, credit losses and market values, collateral securing loans and other assets;

• changes in sources of liquidity;

12 unchanged sentences

federal government to manage federal debt limits;

• the potential influence on the U.S.

financial markets and economy from the effects of climate change and social justice initiatives;

• the risks of expansion through mergers and acquisitions, including unexpected credit quality problems with acquired loans, difficulty integrating acquired operations and material differences in the actual financial results of such transactions compared with Horizon’s initial expectations, including the full realization of anticipated cost savings;

• acts of terrorism, war and global conflicts, such as the Russia-Ukraine and Israel-Hamas conflicts, and the potential impact they may have on supply chains, the availability of commodities, commodity prices, inflationary pressure and the overall U.S.

• acts of terrorism, war and global conflicts, such as the Russia-Ukraine conflict and continued unrest in the Middle East, and the potential impact they may have on supply chains, the availability of commodities, commodity prices, and the overall U.S.

and global financial markets.

13 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

Results of Operations

Net income increased $9.9 million to $23.9 million, or $0.54 per diluted share, during the three months ended March 31, 2025 when compared to $14.0 million, or $0.32 per diluted share, for the s ame period in 2024.

Net income increased $6.5 million to $20.6 million, or $0.47 per diluted share, during the three months ended June 30, 2025 when compared to $14.1 million, or $0.32 per diluted share, for the s ame period in 2024.

The increase in net income from the prior year period reflects an increase in interest income of $4.5 million, a decrease of in interest expense of $5.6 million and an increase in non-interest income of $0.4 million.

The increase was partially offset by an increase in non-interest expense of $1.9 million and an increase in tax expense of $2.0 million.

Net income increased $16.5 million to $44.6 million, or $1.01 per diluted share, during the six months ended June 30, 2025 when compared to $28.1 million, or $0.64 per share, for the same period in 2024 .

The increase from the year ago period was primarily a result of a decrease in interest expense of $10.6 million, an increase in interest income of $8.4 million and an increase in non-interest income of $7.0 million.

The increase was partially offset by an increase in non-interest expense of $4.1 million.

Net Interest Income

Net interest income increased $9.0 million, or 20.7% during the three months ended March 31, 2025, to $52.3 million, when compared to the same period in 2024.

While average earning assets decreased, the reported net FTE interest margin 1 increased by 54 basis points, to 3.04% for the three months ended March 31, 2025 compared to the year ago period, attributable to the favorable mix shift in both average interest earning assets toward higher-yielding loans and the funding mix toward lower cost deposit liabilities.

Net interest income increased $10.1 million, or 22.3% during the three months ended June 30, 2025 , to $55.4 million, when compared to the same period in 2024.

While average earning assets decreased, the reported net FTE interest margin 1 increased by 59 basis points, to 3.23% for the three months ended June 30, 2025 compared to the prior year period, attributable to the favorable mix shift in both average interest earning assets toward higher-yielding loans, and the funding mix toward lower cost deposit liabilities.

Additionally, loan yields have expanded while deposit costs have declined when compared with the comparable year ago period.

Interest accretion from the fair value of acquired loans did not contribute significantly to the first quarter net interest income, or net FTE interest margin 1 .

Net interest income increased $19.1 million during the six months ended June 30, 2025, to $107.6 million when compared to the same period in 2024.

While average earning asset balances declined slightly, the reported net FTE interest margin 1 increased by 57 basis points, to 3.14% for the six months ended June 30, 2025 when compared to the prior year period.

The primary driver of the increase in net interest income compared with the prior year period is attributable to the favorable mix shift in both average interest earning assets toward higher-yielding loans, and the funding mix toward lower cost deposit liabilities.

Additionally, loan yields have expanded while deposit costs have declined when compared with the comparable year ago period.

1 Non-GAAP financial metric.

4 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

Following are the average balance sheets for the three months ended (dollars in thousands):

2 unchanged sentences

Three Months Ended

March 31, 2025 March 31, 2024

Interest Average

June 30, 2025 June 30, 2024

Interest earning assets

49 unchanged sentences

See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

(6) Average balances are calculated on a daily average basis

HORIZON BANCORP, INC.

AND SUBSIDIARIES

Management’s Discussion and Analysis of Financial Condition

And Results of Operations

For the Three and Six months ended June 30, 2025 and 2024

Following are the average balance sheets for the six months ended (dollars in thousands):

Average Balance Sheet

(Dollars in Thousands, Unaudited)

Six Months Ended

June 30, 2025 June 30, 2024

Interest earning assets

Interest earning deposits (incl.

Fed Funds Sold) 147,656 3,317 4.53 % 193,444 5,235 5.47 %

Federal Home Loan Bank stock (1)

48,573 2,086 8.66 % 45,888 2,304 10.10 %

Investment securities - taxable (2)

966,632 9,894 2.06 % 1,317,775 13,044 1.99 %

Investment securities - non-taxable (2)

1,110,436 15,544 2.82 % 1,141,011 16,238 2.86 %

Total investment securities 2,077,068 25,438 2.47 % 2,458,786 29,282 2.39 %

Loans receivable (3) (4)

4,906,496 153,840 6.32 % 4,555,224 139,515 6.16 %

Total interest earning assets 7,179,793 184,681 5.19 % 7,253,342 176,336 4.89 %

Non-interest earning assets

Cash and due from banks 87,460 107,057

Allowance for credit losses (52,214) (50,147)

Other assets 477,949 497,602

Total average assets $ 7,692,988 $ 7,807,854

Liabilities and Stockholders' Equity

Interest bearing liabilities

Interest bearing demand deposits 1,739,017 13,295 1.54 % 1,657,616 13,708 1.67 %

Saving and money market deposits 1,663,165 16,463 2.00 % 1,671,242 18,995 2.30 %

Time deposits 1,223,043 21,895 3.61 % 1,155,756 23,734 4.13 %

Total Deposits 4,625,225 51,653 2.25 % 4,484,614 56,437 2.54 %

Borrowings 909,338 16,550 3.67 % 1,192,450 21,182 3.57 %

Repurchase agreements 88,262 809 1.85 % 131,598 1,961 3.00 %

Subordinated notes 55,768 1,658 6.00 % 55,602 1,660 6.00 %

Junior subordinated debentures issued to capital trusts 57,524 2,360 8.27 % 57,307 2,438 8.56 %

Total interest bearing liabilities 5,736,117 73,030 2.57 % 5,921,571 83,678 2.84 %

Non-interest bearing liabilities

Demand deposits 1,100,485 1,078,929

Accrued interest payable and other liabilities 71,463 81,478

Stockholders' equity 784,923 725,876

Total average liabilities and stockholders' equity $ 7,692,988 $ 7,807,854

Net FTE interest income (Non-GAAP) (5)

111,651 92,658

Less FTE adjustments (5)

Net Interest Income $ 107,622 $ 88,567

Net FTE interest margin (Non-GAAP) (5)

3.14 % 2.57 %

(1) Includes dividend income on FHLB stock.

(2) Securities balances represent daily average balances for the fair value of securities.

The average rate is calculated based on the daily average balance for the amortized cost of securities.

(3) Includes fees on loans held for sale and held for investment.

The inclusion of loan fees does not have a material effect on the average interest rate.

(4) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding.

Loan totals are shown net of unearned income and deferred loan fees.

(5) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company's performance as a comparison of the returns between a tax-free investment and a taxable alternative.

The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate

(5) Non-GAAP financial metric.

See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

(6) Average balances are calculated on a daily average basis

3 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

The following table illustrates the impact of changes in the volume of interest earning assets and interest bearing liabilities and interest rates on net interest income for the periods indicated.

Three Months Ended March 31, 2025 vs.

Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 vs.

Three Months Ended June 30, 2024 Six Months Ended June 30, 2025 vs.

Six Months Ended June 30, 2024

Change Change

Volume Change

Change Change

Volume Change

Interest Income

18 unchanged sentences

Non-Interest Income

Three Months Ended

March 31, March 31,

(Dollars in Thousands) 2025 2024 $ Change % Change

Three Months Ended Six Months Ended

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

(Dollars in Thousands) 2025 2024 $ Change % Change 2025 2024 $ Change % Change

Non-interest Income

9 unchanged sentences

Total non-interest income $ 10,920 $ 10,485 $ 435 4 % $ 27,419 $ 20,414 $ 7,005 34 %

Total non-interest income increased $6.6 million for the three months ended March 31, 2025 compared to the same period in 2024.

Total non-interest income increased $0.4 million for the three months ended June 30, 2025 compared to the same period in 2024 and increased $7.0 million for the six months ended June 30, 2025 compared to the same period in 2024.

The primary components of the change were as follows:

Gain on sale of mortgage loans increased by $0.4 million, or 71.9%, for the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by higher volumes of sold loans.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

Other income, which includes various miscellaneous income items as well as fair market value adjustments to certain other assets, increased by $6.4 million during the three months ended March 31, 2025 primarily due to the gain on sale of the Company's mortgage warehouse business to an unrelated third party, which resulted in a pre-tax gain of $7.0 million.

For the Three and Six months ended June 30, 2025 and 2024

Interchange fees decreased $0.4 million, or 11.1%, for the three months ended June 30, 2025 compared to the same period in 2024, and decreased by $0.3 million, or 4.2%, for the six months ended June 30, 2025, as compared to the same periods in 2024.

The decrease was primarily driven by decreases in merchant and debit card fees.

Gain on sale of mortgage loans increased by $0.3 million, or 36.1%, for the three months ended June 30, 2025 compared to the same period in 2024, and increased by $0.8 million for the six months ended June 30, 2025, as compared to the same periods in 2024.

The increase was primarily driven by higher volumes of sold loans.

Mortgage servicing income net of impairment decreased by $0.1 million, or 14.5%, for the six months ended June 30, 2025, as compared to the same periods in 2024.

The decrease was primarily driven by a decrease in servicing fees due lower balances of loans services for others, and modestly higher levels of amortization expense on the asset balance of mortgage servicing rights.

Other income, which includes various miscellaneous income items as well as fair market value adjustments to certain other assets, increased by $7.1 million during the six months ended June 30, 2025 primarily due to the gain on sale of the Company's mortgage warehouse business to an unrelated third party in the first quarter of 2025, which resulted in a pre-tax gain of $7.0 million .

Non-Interest Expense

Three Months Ended

March 31, March 31,

(Dollars in Thousands) 2025 2024 $ Change % Change

Three Months Ended Six Months Ended

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

(Dollars in Thousands) 2025 2024 $ Change % Change 2025 2024 $ Change % Change

Non-interest Expense

11 unchanged sentences

Total non-interest expense $ 39,417 $ 37,522 $ 1,895 5 % $ 78,723 $ 74,629 $ 4,094 6 %

Non-interest expense increased $2.2 million for the three months ended March 31, 2025 compared to the same period in 2024.

The primary components of the change were as follows:

Salaries and employee benefits expense increased by $2.1 million for the three months ended March 31, 2025 when compared to the same period a year ago.

The increase is partially attributable to growth in salary expense related to ongoing hiring efforts in revenue generating roles in commercial lending, equipment finance and treasury management.

Additionally, the prior comparable period benefited from from a favorable expense adjustment on a legacy compensation program that was terminated in the fourth quarter of 2024.

Other expenses, which includes corporate and other service expenses, decreased by $1.0 million for the three months ended March 31, 2025 when compared to the same period in 2024 partially due to decreases in marketing and advertising expenses.

Non-interest expense increased $1.9 million for the three months ended June 30, 2025 compared to the same period in 2024.

Non-interest expense increased $4.1 million for the six months ended June 30, 2025 compared to the same period in 2024, the primary components of the change were as follows:

Salaries and employee benefits expense increased by $2.1 million for the three months ended June 30, 2025 when compared to the same period a year ago.

Salaries and employee benefits expense increased by $4.3 million for the six months ended June 30, 2025 compared to the same period in 2024.

T he increase is partially attributable to growth in salary expense related to ongoing hiring efforts in revenue generating roles in commercial lending, equipment finance and treasury management.

Additionally, the prior comparable period benefited from a favorable expense adjustment on a legacy compensation program that was terminated in the fourth quarter of 2024.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

Provision and Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments

Three Months Ended

March 31, 2025 March 31, 2024

For the Three and Six months ended June 30, 2025 and 2024

Other expenses, which includes corporate and other service expenses, decreased by $0.6 million for the three months ended June 30, 2025 when compared to the same period a year ago and $1.6 million for the six months ended June 30, 2025 compared to the same period in 2024.

This decrease was partially due to decreases in marketing and advertising expenses.

Provision and Allowance for Credit Losses

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Allowance for Credit Losses on Loans

6 unchanged sentences

Consumer (118) (534) (1,081) (1,022)

Total net loan charge-offs $ (869) $ (311)

Total net loan (charge-offs) recoveries $ (254) $ (587) $ (1,123) $ (898)

Balance at end of period $ 54,399 $ 52,215 $ 54,399 $ 52,215

5 unchanged sentences

Horizon assesses the adequacy of its Allowance for Credit Losses (“ACL”) by regularly reviewing the performance of its loan portfolio against various economic backdrops, which periodically change.

During the three months ended March 31, 2025, the Company recorded a provision for credit losses on loans of $1.5 million.

During the three months ended June 30, 2025, the Company recorded a provision for credit losses on loans of $2.0 million.

This compares to a provision for credit losses on loans of $2.4 million compared to the same period in 2024.

The increase in the provision for credit losses when compared to the year ago period was primarily attributable to loan growth experienced during the quarter.

For the three months ended March 31, 2025, net loan charge-offs increased by $0.6 million to $0.9 million, compared to $0.3 million to the same period in 2024.

The increase in charge-offs was primarily due to increases in the consumer portfolio as a result of the run-off of the indirect auto portfolio.

The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.07% at March 31, 2025, compared to 1.09% at March 31, 2024.

As of March 31, 2025, the liability for unfunded lending commitments was $2.0 million compared to $0.8 million as of March 31, 2024.

The increase in liability for unfunded lending commitments was due to increases in unfunded lending commitments outstanding when compared to the prior period.

The Company’s income tax expense for the three months ended March 31, 2025 was $4.1 million c ompared to $1.3 million for the same period in 2024 , resulting in effective tax rates of 14.7% and 8.6%, respectively.

The increase in the effective tax rate for the for the three months ended March 31, 2025 was primarily due to expectations of higher pre-tax income in first quarter of 2025 as compared to 2024 , causing tax preferential items to have a less favorable impact.

The effective income tax rates differed from the U.S.

statutory federal income tax rates of 21% during the comparable periods primarily due to the effect of tax exempt income from securities, loans, and life insurance policies, and net tax benefits from tax credit investments.

The decrease in the provision for credit losses on loans when compared to the year ago period was primarily attributable to a decrease in specific reserves related to the sale of the mortgage warehouse portfolio and payoffs of specific loans.

The provision for credit losses in total was $2.5 million for three months ended June 30, 2025 compared to $2.4 million for the same period in 2024.

The increase to the total provision is driven by an increase in provision for credit losses on unfunded lending commitments of $0.4 million and an increase in provision for credit losses on AFS securities of $0.2 million for three months ended June 30, 2025 compared to the same period in 2024, respectively.

For the three months ended June 30, 2025, net loan charge-offs decreased by $0.3 million to $0.3 million, compared to $0.6 million during the same period in 2024.

The decrease in charge-offs was primarily due to decreases in the consumer portfolio, and partially as a result of the run-off of the indirect auto portfolio.

The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.09% at June 30, 2025, compared to 1.08% at June 30, 2024.

As of June 30, 2025, the liability for unfunded lending commitments was $2.3 million compared to $0.7 million as of June 30, 2024.

The Company’s income tax expense for the three months ended June 30, 2025 was $3.8 million compared to $1.7 million for the same period in 2024, resulting in effective tax rates of 15.4% and 10.9%, respectively.

The Company’s income tax

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

expense for the six months ended June 30, 2025 was $7.9 million compared to $3.0 million for the same period in 2024, resulting in effective tax rates of 15.0% and 9.8%, respectively.

The increase in the effective tax rate for the comparative periods was primarily due to expectations of higher pre-tax income in 2025 as compared to 2024 , causing tax preferential items to have a less favorable impact, and the Company's decision to discontinue further investment in certain tax credit structures.

The effective income tax rates differed from the U.S.

Financial Condition

Total assets decreased by $172.5 million, or 2.2%, as of March 31, 2025, from $7.8 billion as of December 31, 2024.

The decrease in total assets is primarily due to decreases in cash and cash equivalents of $123.8 million, or 42.2%, to $169.7 million as of March 31, 2025, and a decrease in loans held for sale of $64.3 million, to $3.3 million as a result of the Company's sale of its mortgage warehouse business.

Total assets decreased by $149.1 million, or 1.9%, as of June 30, 2025, from $7.8 billion as of December 31, 2024.

The decrease in total assets is primarily due to decreases in cash and cash equivalents of $155.5 million, or 53.0%, to $137.9 million as of June 30, 2025, and a decrease in loans held for sale of $64.6 million, to $3.0 million as a result of the Company's sale of its mortgage warehouse business.

The decrease was partially offset by increase in loans HFI of $136.1 million or 2.8% to $4.9 billion.

Total investment securities decreased $26.1 million, or 1.2%, to $2.1 billion as of March 31, 2025 when compared to balances as of December 31, 2024.

The decrease is primarily a result of amortization and maturities, as well as the sale of one corporate debt security.

There were no purchases of investment securities during the three months ended March 31, 2025.

Total loans HFI increased to $4.9 billion as of March 31, 2025 compared to $4.8 billion as of December 31, 2024, led by organic commercial loan growth of $103.3 million.

Total investment securities decreased $50.3 million, or 2.4%, to $2.1 billion as of June 30, 2025 when compared to balances as of December 31, 2024.

The decrease is primarily a result of amortization and maturities, as well as the sale of one corporate debt security in the first quarter.

There were no purchases of investment securities during the six months ended June 30, 2025.

Total loans HFI increased to $4.9 billion as of June 30, 2025 compared to $4.8 billion as of December 31, 2024, led by organic commercial loan growth of $220.5 million.

The company continues to maintain a balanced growth profile across various geographies, products and industries, and holds a diverse lending portfolio consisting primarily of commercial real estate, consumer, residential and commercial and industrial portfolios.

Total deposit balances increased by $165.1 million, or 2.9%, to $5.8 billion on March 31, 2025 when compared to balances as of December 31, 2024.

Total deposit balances increased by $99.1 million, or 1.8%, to $5.7 billion as of June 30, 2025 when compared to balances as of December 31, 2024, driven by growth in non-interest-bearing and time deposit balances, partially offset by declines in other interest-bearing balances.

The Company maintains a granular and tenured deposit base, with a continued focus on core commercial and consumer deposit gathering.

Total borrowings decreased by $332.2 million, or 27.0%, to $900.1 million as of March 31, 2025 when compared to balances as of December 31, 2024, primarily related to repayment of a portion of Federal Home Loan Bank advances.

Total borrowings decreased by $256.8 million, or 20.8%, to $975.4 million as of June 30, 2025 when compared to balances as of December 31, 2024, primarily related to repayment of a portion of Federal Home Loan Bank advances.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

Investment securities are comprised of the following as of (dollars in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Value Amortized

13 unchanged sentences

Total held to maturity investment securities $ 1,819,229 $ 1,536,980 $ 1,867,848 $ 1,566,268

Investment securities available for sale decreased $2.2 million since December 31, 2024 to $231.4 million and securities held to maturity decreased $23.8 million since December 31, 2024 to $1.8 billion as of March 31, 2025.

The decrease in total investments was due to sale of certain corporate debt securities and maturities on investment securities.

There were no purchases of investment securities through the three months ended March 31, 2025.

Investment securities available for sale decreased $1.7 million since December 31, 2024 to $232.0 million and securities held to maturity, net of the allowance for credit losses, decreased $48.6 million since December 31, 2024 to $1.8 billion as of June 30, 2025.

The decrease in total investments was primarily due to normal maturities and amortization of investment securities.

There were no purchases of investment securities during the six months ended June 30, 2025.

Credit Quality

The ACL balance at March 31, 2025 was $52.7 million, or 1.07% of period-end loans HFI compared to an ACL balance of $52.0 million at December 31, 2024 or 1.07% of loans HFI.

The increase in the ACL was primarily due to the growth in commercial loans.

As of March 31, 2025, total non-accrual loans increased by $3.0 million, or 11.7%, from December 31, 2024, to 0.59% of total loans HFI.

Total non-performing assets increased $4.0 million, or 14.8%, from December 31, 2024, to 0.41% of total assets.

During the three months ended March 31, 2025, net charge-offs were $0.9 million, or 7 basis points annualized of average loans in the period, an increase from $0.3 million, or 4 basis point annualized of average loans in the year ago comparable period.

The ACL balance at June 30, 2025 was $54.4 million, or 1.09% of period-end loans HFI compared to an ACL balance of $52.0 million at December 31, 2024 or 1.07% of loans HFI.

The increase in the ACL was primarily due to the growth in commercial loans and a modestly less favorable baseline economic outlook.

As of June 30, 2025, total non-accrual loans decreased by $1.5 million, or 5.8%, from December 31, 2024, to 0.49% of total loans HFI.

Total non-performing assets increased $3.1 million, or 11%, from December 31, 2024, to 0.40% of total asset s.

During the six months ended June 30, 2025, net charge-offs were $1.1 million , or 5 basis points annualized of average loans in the period, a change from $0.9 million , or 4 basis point annualized of average loans in the year ago comparable period.

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the Three and Six months ended June 30, 2025 and 2024

Credit Quality

1 unchanged sentence

Quarter Ended

March 31, December 31,

June 30, December 31,

Non-accrual loans

10 unchanged sentences

Total other real estate owned $ 1,119 $ 424

Other non-performing assets (1)

Total non-performing assets $ 30,463 $ 27,382

14 unchanged sentences

Allowance for credit losses to HFI loans 1.09 % 1.07 %

Allowance for credit losses to nonaccrual loans 173.25 % 192.82 %

The Bank maintains a stable base of core deposits provided by long–standing relationships with individuals and local businesses.

These deposits are the principal source of liquidity for Horizon.

Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, proceeds from the sale of residential mortgage loans, unpledged investment securities and borrowing relationships with correspondent banks, including the FHLB.

Allowance for credit losses to non-performing loans 206.00 % 192.82 %

(1) Other non-performing assets consist of available for sale debt security placed on non-accrual status

HORIZON BANCORP, INC.

2 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

2025, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.78 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $1.70 billion at December 31, 2024.

The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash, cash equivalents and restricted cash of $123.8 million during the three months ended March 31, 2025, as reported in the consolidated statements of cash flows in this report.

For the Three and Six months ended June 30, 2025 and 2024

The Bank maintains a stable base of core deposits provided by long–standing relationships with individuals and local businesses.

These deposits are the principal source of liquidity for Horizon.

At June 30, 2025, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.75 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $1.70 billion at December 31, 2024.

The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash, cash equivalents and restricted cash of $155.5 million during the six months ended June 30, 2025, as reported in the consolidated statements of cash flows in this report.

Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of $34.7 million and have historically been a stable source of funds.

Investing activities, which occur mainly in the loan and investment securities portfolios, provided cash of $38.9 million mainly due to growth in the loan portfolio, which used cash of $47.2 million.

Financing activities used cash of $177.9 million, largely resulting from the repayment of long-term borrowings of $530.1 million and $7.1 million in dividends paid on common stock during the first nine months of 2024.

Investing activities, which occur mainly in the loan and investment securities portfolios, used cash of $14.5 million mainly due to growth in the loan portfolio, which used cash of $122.9 million.

Financing activities used cash of $175.8 million, largely resulting from the repayment of long-term borrowings of $632.0 million and $14.2 million in dividends paid on common stock during the first six months of 2025.

Capital Resources

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at March 31, 2025.

Stockholders’ equity totaled $776.1 million as of March 31, 2025, compared to $763.6 million as of December 31, 2024.

For the three months ended March 31, 2025, the ratio of average stockholders’ equity to average assets was 10.06% compared to 9.25% for same period in 2024.

The increase in stockholders’ equity during the period was due to changes in accumulated other comprehensive loss related to unrealized gains on available-for-sale securities and retention of earnings, which is primarily offset by cash dividend payments on outstanding common stock.

As of March 31, 2025, the ratio of total stockholders’ equity to total assets is 10.17%.

The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at June 30, 2025.

Stockholders’ equity totaled $790.9 million as of June 30, 2025, compared to $763.6 million as of December 31, 2024.

The increase in stockholders’ equity during the period was due to an increase in retained earnings, driven by higher net income during the period, which is primarily offset by cash dividend payments on outstanding common stock.

As of June 30, 2025, the ratio of total stockholders’ equity to total assets is 10.34%.

Book value per common share was $18.06, increasing $0.59 compared to December 31, 2024.

Tangible common equity 1 totaled $611.4 million at March 31, 2025, and the ratio of tangible common equity to tangible assets 1 was 8.19% at March 31, 2025.

Tangible common equity 1 totaled $627.0 million at June 30, 2025, and the ratio of tangible common equity to tangible assets 1 was 8.37% at June 30, 2025.

Tangible book value, which excludes intangible assets from total equity, per common share 1 was $14.32, increasing $0.64 compared to December 31, 2024.

Horizon declared common stock dividends in the amount of $0.16 per share during the three months ended March 31, 2025 and $0.16 per share for the same period in 2024.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 29.09% and 50.00% for the three months ended March 31, 2025 and 2024, respectively.

Horizon declared common stock dividends in the amount of $0.16 per share during the three months ended June 30, 2025 and $0.16 per share for the same period in 2024.

The dividend payout ratio (dividends as a percent of basic earnings per share) was 31.37% and 50.00% for the six months ended June 30, 2025 and 2024, respectively.

For additional information regarding dividends, see Horizon’s 2024 Annual Report on Form 10–K.

5 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the six months ended June 30, 2025 and 2024

Use of Non-GAAP Financial Measures

4 unchanged sentences

(Dollars in Thousands, Unaudited)

Three Months Ended

March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Interest income (GAAP) (A) $ 91,477 $ 86,981 $ 180,652 $ 172,246

3 unchanged sentences

Loan receivable (2)

382 328 765 681

Total taxable-equivalent adjustment (3)

14 unchanged sentences

And Results of Operations

For the three months ended March 31, 2025 and 2024

For the six months ended June 30, 2025 and 2024

Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets

1 unchanged sentence

Three Months Ended

March 31, 2025 December 31, 2024

June 30, 2025 June 30, 2024

Total stockholders' equity (GAAP) (A) $ 790,852 $ 726,665

8 unchanged sentences

Three Months Ended

March 31, 2025 December 31, 2024

June 30, 2025 June 30, 2024

Total stockholders' equity (GAAP) (A) $ 790,852 $ 726,665

6 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis