HBNC 10-K & 10-Q changes, risk factors and insider trading
Horizon Bancorp Inc. · Nasdaq · State Commercial Banks · CIK 706129 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Due to the development of new technologies and regulatory actions encouraging the use of these technologies, consumers may decide not to use banks to complete their financial transactions.”
New heading “We are subject to litigation, regulatory examinations, supervisory actions, and other legal proceedings that could result in significant costs, restrict our operations, and adversely affect our financial condition and results of operations.”
Removed heading “The financial services industry and broader economy may be subject to new or changing legislation, regulation, and government policy.”
Removed heading “As a public company, we face the risk of shareholder lawsuits and other related or unrelated litigation, particularly if we experience declines in the price of our common stock. We have been named as a party to purported class action and derivative lawsuits, and we may be named in additional litigation, all of which could require significant management time and attention and result in significant legal expenses.”
Largest changes
“As a public company, we face the risk of shareholder lawsuits and other related or unrelated litigation, particularly if we experience declines in the price of our common stock. We have been named as a party to purported class action and derivative lawsuits, and we may be named in additional litigation, all of which could require significant management time and attention and result in significant legal expenses.”see in full comparison
“As described in detail below in “Item 3 - Legal Proceedings,” on April 20, 2023, a putative class action lawsuit was filed against the Company and two of its officers in the U.S. District Court for the Eastern District of New York, which asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 alleging, among other things, the Company made materially false and misleading statements and failed to disclose material adverse facts which allegedly resulted in harm to a putative class of purchasers of our securities from March 9, 2022 and March 10, 2023. …”see in full comparison
“In addition, we operate in a highly regulated industry. As a bank holding company and financial institution, we are subject to extensive oversight by federal and state regulators, whose examinations may result in supervisory actions, enforcement proceedings, fines, penalties, or other remedial requirements. Areas of focus may include capital adequacy, anti‑money laundering and Bank Secrecy Act compliance, consumer compliance, cybersecurity and data privacy, fair lending, and overall risk management practices. …”see in full comparison
“We are subject to litigation, regulatory examinations, supervisory actions, and other legal proceedings that could result in significant costs, restrict our operations, and adversely affect our financial condition and results of operations.”see in full comparison
“The financial services industry and broader economy may be subject to new or changing legislation, regulation, and government policy.”see in full comparison
“Due to the development of new technologies and regulatory actions encouraging the use of these technologies, consumers may decide not to use banks to complete their financial transactions.”see in full comparison
Full comparison: every changed paragraph (18)
We have a large percentage of commercial, residential mortgage and consumer loans. At December 31, 20242025 $3.08$3.43 billion or 63.5%70.4% of our loan portfolio consisted of commercial loans. Commercial loans generally have greater credit risk than residential mortgage and consumer loans because repayment of these loans often depends on the successful business operations of the borrowers. At December 31, 20242025 $802.9$772.4 million or 16.6%15.8% of our loan portfolio consisted of commercial real estate loans. Commercial real estate loans generally have greater risk because repayment of these loans is often dependent upon income being generated in amounts sufficient to cover operating costs and debt service. Both types of commercial loans also typically have much larger loan balances than residential mortgage and consumer loans. At December 31, 20242025 $966.0$671.7 million or19.9%or 13.8% of our loan portfolio consisted of consumer loansloans. Consumer loans generally involve greater risk than residential mortgage loans because they are unsecured or secured by assets that depreciate in value. Although we undertake a variety of underwriting, monitoring and reserving protections with respect to these types of loans, there can be no guarantee that we will not suffer unexpected losses. Residential mortgage loans and consumer loans may present increase risk during periods of unemployment rates and increasing interest rates, which may adversely affect the underlying real estate and other collateral values and the ability of our borrowers to repay their loans on scheduled terms. At December 31, 2024,2025, nonperforming commercial loans, commercial real estate loans, and consumer loans totaled $26,958$34,946 and 0.6%,0.7%, respectively.
Our remaining indirect lending operationsexposures are subject to a higher fraud risk than our other lending operations.
We no longer originate auto loans through automobile dealers.dealers, but a small amount dealer-originated auto loans remain on our books. Because we must relyrelied on automobile dealers in making and documenting these loans, there is an increased risk of fraud to us on the part of the third–party originators and the underlying borrowers. In order to guard against this increased risk, we performperformed investigations on third parties who originateoriginated loans we purchase, and we reviewreviewed the loan files and loan documents we purchasepurchased to attempt to detect any irregularities or legal noncompliance. However, there is no guarantee that our procedures will detectdetected all cases of fraud or legal noncompliance.
Due to the development of new technologies and regulatory actions encouraging the use of these technologies, consumers may decide not to use banks to complete their financial transactions.
Technology and other changes are allowing parties to complete financial transactions through alternative methods that historically have involved banks. For example, consumers can now maintain funds that would have historically been held as bank deposits in brokerage accounts, mutual funds, or general-purpose reloadable prepaid cards. Consumers can complete transactions, such as paying bills and/or transferring funds directly without the assistance of banks. Transactions utilizing digital assets, including cryptocurrencies, stablecoins, and other similar assets, have increased substantially over the course of the last several years. For example, the enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act) provides a legal framework for stablecoins to be issued in the United States, which may allow new and existing competitors to compete for funds that may have otherwise been deposited with banks, such as Horizon Bank.
Certain characteristics of digital asset transactions, such as the speed with which such transactions can be conducted, the ability to transact without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, and the anonymous nature of the transactions, are appealing to certain consumers notwithstanding the various risks posed by such transactions as illustrated by the current and ongoing market volatility. Accordingly, digital asset service providers, which at present are not subject to supervision and regulation comparable to that which is faced by banking organizations and other financial institutions, have become active competitors for our customers’ banking business. The Trump Administration, through executive actions and public announcements, has established a more relaxed regulatory framework for cryptocurrencies, digital assets, and financial technology firms, and created a more favorable environment for those asset classes and firms.
The process of eliminating banks as intermediaries, known as disintermediation, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. On October 22, 2024, the CFPB adopted a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties upon request certain covered transaction, account, and payment information. However, in August 2025, the CFPB issued an advanced notice of proposed rulemaking to reconsider its final rule and, in October 2025, a district court issued a preliminary injunction preventing the CFPB from enforcing the final rule until the CFPB has completed its reconsideration of the rule. A final rule, if implemented, could lead to greater competition for products and services among banks and nonbanks alike. The loss of these revenue streams and the lower cost of deposits as a source of funds could have a material adverse effect on our financial condition and results of operations.
The financial services industry and broader economy may be subject to new or changing legislation, regulation, and government policy.
At this time, it is difficult to predict the legislative and regulatory changes that will result from both houses of Congress having majority memberships from the Republican Party and President Trump’s election. President Trump and certain members of Congress have advocated for the reduction of regulation of the financial services industry. The new Congress and administration may also cause broader economic changes due to their governing ideology, which differs from that of the previous Congress and administration. New appointments to the FRB could affect monetary policy and interest rates. Additionally, changes in trade and fiscal policy could affect the economy and banking industry, including our business and results of operations, in ways that are difficult to predict. Our results of operations could be adversely affected by changes in laws and regulations and in the way existing statutes and regulations are interpreted or applied by courts and government agencies.
HighRecent high–profile 2023 bank failures can generate significant market volatility among publicly traded bank holding companies and, in particular, regional banks. These market developments may negatively impact customer confidence in the safety and soundness of financial institutions, as well as cause significant disruption, volatility and reduced valuations of equity and other securities of banks in the capital markets. These market developments may cause general uncertainty and concern regarding the liquidity adequacy of the banking industry and in particular, regional banks like Horizon. As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short–term fixed income securities, all of which could materially adversely impact our liquidity, loan funding capacity, net interest margin, capital and results of operations. In connection with high–profile bank failures, uncertainty and concern may be compounded by advances in technology that increase the speed at which deposits can be moved, as well as the speed and reach of media attention, including social media, and its ability to disseminate concerns or rumors, in each case potentially exacerbating liquidity concerns. While the Department of the Treasury, the Federal Reserve, and the FDIC may take measures to reassure depositors when bank failures occur, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.
We are subject to litigation, regulatory examinations, supervisory actions, and other legal proceedings that could result in significant costs, restrict our operations, and adversely affect our financial condition and results of operations.
As a financial services company, we and our subsidiaries are regularly involved in a variety of legal and regulatory proceedings arising in the ordinary course of business. These matters may include claims and disputes related to lending practices, mortgage servicing, deposit account operations, fiduciary duties, employment matters, contractual obligations, shareholder actions, consumer protection statutes, fair lending laws, intellectual property rights, and other commercial issues. We may also face litigation or regulatory scrutiny associated with our role in originating, underwriting, or servicing loans; our use of third‑party vendors; and our offering of investment advisory or wealth management services.
In addition, we operate in a highly regulated industry. As a bank holding company and financial institution, we are subject to extensive oversight by federal and state regulators, whose examinations may result in supervisory actions, enforcement proceedings, fines, penalties, or other remedial requirements. Areas of focus may include capital adequacy, anti‑money laundering and Bank Secrecy Act compliance, consumer compliance, cybersecurity and data privacy, fair lending, and overall risk management practices. Changes in regulatory priorities or interpretations can increase the likelihood of governmental actions or private litigation.
Defending against claims, responding to regulatory inquiries, or complying with enforcement actions can be expensive and time‑consuming and may divert management’s attention from our operations. Even when claims are without merit, the cost of defense, reputational impact, and potential operational restrictions may be significant. We also may not have insurance coverage for certain types of claims, coverage limits may be insufficient, or insurers may dispute coverage.
Adverse outcomes—whether through court judgments, settlements, consent orders, civil money penalties, or mandated operational changes—could harm our reputation, restrict our ability to grow or pursue strategic initiatives, and materially and adversely affect our business, financial condition, and results of operations.
Adverse outcomes—whether through court judgments, settlements, consent orders, civil money penalties, or mandated operational changes—could harm our reputation, restrict our ability to grow or pursue strategic initiatives, and materially and adversely affect our business, financial condition, and results of operations.
As a public company, we face the risk of shareholder lawsuits and other related or unrelated litigation, particularly if we experience declines in the price of our common stock. We have been named as a party to purported class action and derivative lawsuits, and we may be named in additional litigation, all of which could require significant management time and attention and result in significant legal expenses.
As described in detail below in “Item 3 - Legal Proceedings,” on April 20, 2023, a putative class action lawsuit was filed against the Company and two of its officers in the U.S. District Court for the Eastern District of New York, which asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 alleging, among other things, the Company made materially false and misleading statements and failed to disclose material adverse facts which allegedly resulted in harm to a putative class of purchasers of our securities from March 9, 2022 and March 10, 2023. Derivative lawsuits have also been filed against the Company, as nominal defendant, and two of our officers and ten of our directors arising from the same events, alleging, among other things, breach of the officers and directors' fiduciary duties. Regardless of the merits, the expense of defending such litigation may have a substantial impact if our insurance carriers fail to cover the full cost of the litigation, and the time required to defend the actions could divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations and cash flows. An unfavorable outcome in such litigation could have a material adverse effect on our business, financial condition, results of operations and cash flows. The derivative lawsuits have been consolidated and stayed pending resolution of any motion to dismiss in the putative class action. Based on our initial review of these actions, management believes that the Company has strong defenses to the claims and intends to vigorously defend against them.
Management's Discussion & Analysis (MD&A)
Removed heading “Allowance for Credit Losses on Off–Balance Sheet Credit Exposures”
Removed heading “Allowance for Credit Losses on Available for Sale Securities”
Removed heading “Allowance for Credit Losses on Held to Maturity Securities”
Removed heading “Valuation Measurements”
Largest changes
“For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For debt securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. …”see in full comparison
“Allowance for Credit Losses on Off–Balance Sheet Credit Exposures”see in full comparison
“For held to maturity securities, the Company conducts an assessment of its held to maturity securities at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from the Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. …”see in full comparison
Consolidated net loss was $150.5 million, or $(3.24) per diluted share, in 2025, compared to net incomesee in full comparisonwasof $35.4million,million or $0.80 per dilutedshare,share in 2024, and $28.0 million or $0.64 per diluted share in2023, and $93.4 million or $2.14 per diluted share in 2022.2023. Theincreasedecrease in net incomefromwhen compared with thepreviousprior year period reflectsan increase of total interest income of $44.2 million anda decrease in non-interest incometax expenseof$19.1$259.4 million,offsetofbywhichincreases$299.5inmillioninterestrelatedexpenseto a realized loss on sale of$31.3investmentmillion,securities,increasesand an increase in non-interest expense of$12.6$13.5 million,andprimarily owed to prepayment penalties on the redemption of borrowings, which was partially offset by a $40.9 million increase increditnetlossinterestexpenseincome and a net tax benefit of$2.9$42.6 million.
Full comparison: every changed paragraph (96)
•Strong performance of the core community banking model, combined with the successful completion of the balance sheet repositioning efforts, resulted in significant performance improvement for the quarter. The Company's return on average assets and return on average equity improved to 1.63% and 15.71%, respectively.
•Net interest income increasedof for the fifth consecutive quarter to $53.1$63.5 million for the three months ended December 31, 2024,2025 increased 8.7% compared towith $46.9$58.4 million for the three months ended September 30, 2024.2025, and 19.5% compared with $53.1 million in the year ago period. The net interest margin, on a fully taxable equivalent ("FTE") basis1, also expanded for the fifthninth consecutive quarter, to 2.97%4.29% for the three months ended December 31, 2025, compared with 2.66%3.52% for the three months ended September 30, 2025 and 2.97% for the three months ended December 31, 2024.
•Total loans held for investment ("HFI") increased 4.4% as of December 31, 2025 compared to the linked quarter annualized, with strong organic commercial loan growth of $75.8 million, or 9.1% annualized.
•Funding costs continued to trend favorably. Non-interest bearing deposits balances remained relatively flat, while declines in interest-bearing balances largely reflected the communicated planned exit of high-cost, transactional deposits. Total interest-bearing liability costs decreased by another 34 bps during the quarter.
•Credit quality remained strong, with annualized net charge offs of 0.08% of average loans during the fourth quarter. Non-performing assets remain well within expected ranges, with non-performing assets to total assets of 63 bps for the fourth quarter.
•Expenses were comparable to the third quarter when considering a select few items related to the balance sheet activities, displaying management's continued commitment to generate positive operating leverage through a more efficient expense base.
•As previously disclosed, the Company completed the repositioning of $332.2 million of available-for-sale securities during the fourth quarter. While the sale resulted in a pre-tax loss of $39.1 million, the Company redeployed the proceeds received into higher-yielding loans and continued to manage down higher cost funding sources.
•Total loans were $4.91 billion at December 31, 2024, up $108.6 million from September 30, 2024 balances. Consistent with the Company's stated growth strategy, the commercial portfolio showed continued organic growth momentum during the quarter, which was offset with planned run-off of lower-yielding indirect auto loans in the consumer loan portfolio. Loans held for sale (“HFS”) increased $65.5 million as a result of the Company’s transfer of its mortgage warehouse loan balances of $64.8 million at December 31, 2024.
•Total deposits declined by $126.4 million during the quarter, to $5.60 billion at period end, with the majority of the decline in time deposits, which declined by $131.5 million. The Company's non-maturity deposit base continued to display strength, growing for the third consecutive quarter, including another quarter of relatively stable non-interest bearing deposit balances and growth in core relationship consumer and commercial portfolios.
•Credit quality remained strong, with annualized net charge offs of 0.05% of average loans during the fourth quarter. Non-performing assets to total assets of 0.35% remains well within expected ranges, with no material change from the prior quarter. Provision for loan losses of $1.2 million reflects increased provision for unfunded commitments and net growth in commercial loans held for investment ("HFI"), partially offset by the elimination of the reserve associated with mortgage warehouse and the reduction of reserve related to the planned runoff of indirect auto in the current quarter, when compared with the prior quarter.
•Continued the process for the sale of the mortgage warehouse division during the quarter. Sold the business for a gain, effective January 17th, which will be recognized in Q1 2025 results.
•Net interest income increased to $229.5 million for the year ended December 31, 2025, compared to $188.6 million for the year ended December 31, 2024, compareddriven toby $175.7net millioninterest formargin expansion, as average earning asset balances declined year-over-year as a result of the yearbalance endedsheet Decemberrepositioning 31,efforts 2023.during Q3 2025. The net interest margin, on a fully taxable equivalent ("FTE")1 basis, also expanded to 2.68%3.49% compared with 2.54%2.68% for the year ended December 31, 2023.2024.
•The increase in FTE net interest margin iswas mainlyalso driven by the Company's balance sheet repositioning in Q3 2025, which resulted in a resultshift of the Company's earning asset mix shift towards higher yielding commercial loans and awayfunding frommix lower-yieldingtoward investmentrelationship-based securities,deposit which resultedfunding, in theaddition expansionto offavorable thetrends yieldloan onyields interest-earning assets outpacing the increase in the cost ofand interest-bearing liabilities.deposit costs. The Companyasset experiencedmix shift was a result of an increase in its overall average loan balances of $438.1$226.5 million or 10.3%,4.8%, from $4.2 billion for the year ended December 31, 2023 to $4.7 billion for the year ended December 31, 2024,2024 to $4.9 billion for the year ended December 31, 2025, while average balances of investment securities declined by $470.4$779.4 million, or 16.2%,32.1%, $2.4to billion$1.6 billion from $2.9$2.4 billion in the same period a year ago.
•As discussed above, the Company repositioned the investment securities portfolio during Q3 2025. The Company reclassified its held-to-maturity investment portfolio, with a carrying value of $1.8 billion and unrealized loss of $282.6 million, to the available-for-sale portfolio as part of the Company's balance sheet repositioning. Following the reclassification, the Company sold securities with a fair value of $1.4 billion, recognizing a pre-tax loss of $299.5 million, with a portion of the net proceeds reallocated back into the securities portfolio. As a result, the yield of the Company's investment portfolio increased 52 bps to 2.87% for the year ended December 31, 2025, compared to 2.35% for the year ended December 31, 2024.
•As discussed above, the Company repositioned the available for sale securities during Q4 2024. The yield of the Company's investment portfolio remained consistent at 2.35% compared to year ended December 31, 2023.
•Total loans, including loans held-for-sale, were $4.91$4.89 billion at December 31, 2024,2025, updown $495.6$28.3 million from December 31, 20232024 balances, or 11%(0.6)% year over year. Growth was led byStrong commercial loans,loan whichgrowth grewof by $403.2 million during the year, 15%, and residential mortgage, which grew by $129.7$354.3 million, or 20%.11.5%, Consistentwas withoffset it'sby previouslythe statedsale strategicof objectives,the mortgage warehouse portfolio in Q1 2025 and the indirect auto portfolio declinedof by$284.2 $96.0 million, or 24%million during the year.Q3 2025.
•Credit quality remains strong, with net charge offs of 0.04%0.06% of average loans for the year ended December 31, 2024. Non-performing assets to total assets of 0.35% remains well within expected ranges, with no material change from the prior year.2025. The provision for credit losses increaseddecreased by $2.9$3.5 million from prior year. This was mainly due to the 9.7%release loan growth experienced duringof the quarter.allowance related to the indirect auto portfolio, which was sold in Q3 2025. Allowance to total loans decreased from 1.13%1.07% to 1.07%1.05% during the period.
Allowance for Credit Losses on Loans
The allowance for credit losses is assessed at each balance sheet date and adjustments are recorded in the provision for credit losses. The allowance is estimated based on loan level characteristics using historical loss rates, a reasonable and supportable economic forecast. Loan losses are estimated using the fair value of collateral for collateral–dependent loans, or when the borrower is experiencing financial difficulty such that repayment of the loan is expected to be made through the operation or sale of the collateral. Loan balances considered uncollectible are charged–off against the ACL. Assets purchased with credit deterioration (“PCD”) represent assets that are acquired with evidence of more than insignificant credit quality deterioration since origination at the acquisition date. At 1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
is expected to be made through the operation or sale of the collateral. Loan balances considered uncollectible are charged–off against the ACL. Assets purchased with credit deterioration (“PCD”) represent assets that are acquired with evidence of more than insignificant credit quality deterioration since origination at the acquisition date. At acquisition, the allowance for credit losses on PCD assets is booked directly to the ACL. Any subsequent changes in the ACL on PCD assets is recorded through the provision for credit losses. Management believes that the ACL is adequate to absorb the expected life of loan credit losses on the portfolio of loans and leases as of the balance sheet date. Actual losses incurred may differ materially from our estimates.
Allowance for Credit Losses on Off–Balance Sheet Credit Exposures
The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The Company determines the estimated amount of expected credit extensions based on historical usage to calculate the amount of exposure for a loss estimate and has recorded an allowance.
Allowance for Credit Losses on Available for Sale Securities
For available for sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For debt securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recorded in other comprehensive income.
Changes in the ACL are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the available for sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met.
Allowance for Credit Losses on Held to Maturity Securities
For held to maturity securities, the Company conducts an assessment of its held to maturity securities at the time of purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and continue to perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers from the Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If this assessment indicates that a material credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss.
Valuation Measurements
Valuation methodologies often involve a significant degree of judgment, particularly when there are no observable active markets for the items being valued. Investment securities, mortgage derivatives, and deferred compensation plan assets and associated liabilities are carried at fair value, as defined in FASB ASC 820, which requires key judgments affecting how fair value for such assets and liabilities is determined.
Additionally, from time to time, other assets and liabilities may be recorded at fair value on a nonrecurring basis, such as impaired loans that have been measured based on the fair value of the underlying collateral, loans held-for-sale recorded at the lower of cost or market, other real estate (primarily foreclosed property), and certain other assets and liabilities. Nonrecurring fair value adjustments typically involve write-downs of individual assets or application of lower of cost or fair value accounting.
In addition, the outcomes of valuations have a direct bearing on the carrying amounts of other critical audit estimate, such as the allowance for credit losses and income tax valuation. To determine the values of these assets and liabilities, as well as the extent to which related assets may be impaired, management makes assumptions and estimates related to discount rates, asset returns, prepayment speeds and other factors. The use of different discount rates or other valuation assumptions could produce significantly different results, which could affect Horizon’s results of operations.
Consolidated net loss was $150.5 million, or $(3.24) per diluted share, in 2025, compared to net income wasof $35.4 million,million or $0.80 per diluted share,share in 2024, and $28.0 million or $0.64 per diluted share in 2023, and $93.4 million or $2.14 per diluted share in 2022.2023. The increasedecrease in net income fromwhen compared with the previousprior year period reflects an increase of total interest income of $44.2 million and a decrease in non-interest income tax expense of $19.1$259.4 million, offsetof bywhich increases$299.5 inmillion interestrelated expenseto a realized loss on sale of $31.3investment million,securities, increasesand an increase in non-interest expense of $12.6$13.5 million, andprimarily owed to prepayment penalties on the redemption of borrowings, which was partially offset by a $40.9 million increase in creditnet lossinterest expenseincome and a net tax benefit of $2.9$42.6 million.
Net interest income wasincreased $188.6$40.9 million induring the year ended December 31, 2024,2025, to $229.5 million when compared to $175.7the millionsame period in the2024. yearWhile endedaverage Decemberearning 31,asset 2023,balances driven by strong expansion ofdeclined, the Company'sreported net FTE interest margin1, while average interest earning assetsmargin1 increased by $75.781 million,basis orpoints, 1.04%to from the prior year. Horizon’s net FTE interest margin was 2.68%3.49% for the year ended December 31, 2024,2025 when compared to 2.54%the forprior year period. The primary driver of the increase in net interest income compared with the prior year endedperiod December 31, 2023,is attributable to the favorable volume and mix shift in both average interest earning assets toward higher-yielding loansloans, outpacingand the increasefunding inmix ratestoward onlower averagecost depositsdeposit drivenliabilities. byAdditionally, disciplinedloan pricingand strategiessecurities onyields bothhave sidesincreased ofwhile deposit costs have declined when compared with the balancecomparable sheet.year ago period.
1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
Total non-interest income decreased $9.0$259.4 million, to a net pre-tax loss of $256.5 million for the year ended December 31, 20242025 compared to the same period in 2023.2024. The primary components of the change were as follows:
Loss on sale of investment securities increased by $7.1$260.4 million for the year ended December 31, 20242025 compared to the same period in 2023.2024. The Companyincrease electedwas primarily due to sellthe certainsale lower yieldingof investment securities during Q4the 2024.third quarter of 2025 related to the Company's balance sheet repositioning efforts.
CashGain valueon sale of bankmortgage ownedloans lifeincreased insuranceby decreased $2.4$0.6 million for the year ended December 31, 2024,2025, as compared to the same periodperiods in 2023.2024, Thedriven declines were due toby the surrenderincreased volume of severalsold policies during the fourth quarter of 2023.loans.
Mortgage servicing income decreased $1.0$0.2 million for the year ended December 31, 2024,2025, as compared to the same periods in 2023.2024. The decrease was primarilya drivenresult byof lower gross servicing revenue and higher levels of amortization expense of mortgage servicing rights in the current period.
These decreases were partially offset by increases in serviceService charges on deposit accounts ofincreased $713by thousand$0.3 million for the year ended December 31, 2024,2025, as compared to the same period in 2023,2024, primarily as a result of higher transaction-based fee activity in the current period, as well as an increase in interchange fees of $938 thousand for the year ended December 31, 2024 compared to same period in 2023, primarily as a result of increased volumes in debit card activity and reduced merchant processing expenses.period.
Interchange fees decreased by $0.2 million for the year ended December 31, 2025 compared to same period in 2024, primarily as a result of decreased volumes in debit card activity.
Other income, which includes various miscellaneous income items as well as fair market value adjustments to certain other assets, increased by $0.5 million, compared to the same period in 2024. Other income for the year included the pre-tax gain of $7.0 million on the sale of the Company's mortgage warehouse business, a BOLI death benefit of $0.6 million and the pre-tax loss of $7.7 million on the sale of the Company's indirect auto portfolio.
The remaining changes were nominal amongst the remaining individual non-interest income accounts.
Non-interest expense increased $12.6 million for the year ended December 31, 2024 compared to the same period in 2023, primarily the result of higher expenses related to salaries and employee benefits, outside services and consultants, and FDIC insurance expense, which was partially mitigated by lower loan and data processing expenses.
Salaries and employee benefits expense increased by $7.4 million for the year ended December 31, 2024 when compared to the same period in 2023, partially attributable to ongoing hiring efforts in revenue generating roles in commercial lending, equipment finance and treasury management. In addition, the current period was unfavorably impacted by an expenses related to the termination of legacy benefits and compensation programs and additional performance based compensation expense relative to the prior periods.
Outside services and consultantNon-interest expense increased by $4.6$13.5 million for the year ended December 31, 2024 when2025 compared to the same period in 2023, primarily related to strategic initiatives undertaken during2024, the year.primary components of the change were as follows:
FDICSalaries insuranceand employee benefits expense increased by $1.2$1.5 million infor the year ended December 31, 20242025 when compared to the yearsame ago period. The increaseperiod in the2024, periodpartially relatedattributable to ongoing hiring efforts in revenue generating roles and higher incurredincentive assessmentcompensation rates.accruals.
Other expenses, which includes corporate and other service expenses, increased by $1.0 million for the year ended December 31, 2024 when compared to the same period in 2023.
Loan expense decreased by $904 thousand for the year ended December 31, 2024 when compared to the same period in 2023. This is primarily due to decreases in credit monitoring expenses. This is partially offset by increases in expenses related to repossessed assets.
Data processing expense decreasedincreased by $765$1.0 thousandmillion for the year ended December 31, 20242025 when compared to the same period in 2023.2024. This is primarily a result of reductionincreases in 3rddebit partycard vendorprocessing expenses,activity consistentand withsoftware strategic initiatives undertaken by the Company.maintenance.
Outside services and consultant expense decreased by $1.1 million for the year ended December 31, 2025 when compared to the same period in 2024, primarily related to strategic initiatives undertaken during the year to reduce reliance on third-party services.
Other expenses, which includes corporate and other service expenses, decreased by $2.2 million for the year ended December 31, 2025 when compared to the same period in 2024. This decrease was partially due to decreases in marketing and advertising expenses.
Professional fees increased by $0.7 million for the year ended December 31, 2025 when compared to the same period in 2024, largely a result of episodic legal fees related to certain legacy items that have been concluded.
Other losses for the year ended December 31, 2025 included the $0.7 million of one-time expense related to the write-off of the remaining unamortized issuance expense for the subordinated notes maturing in 2030 that were called on October 1, 2025.
Prepayment penalties increased $12.7 million for the year ended December 31, 2025 when compared to the same period in 2024. The increase was driven by a $12.7 million prepayment penalty related to the payoff of $700 million in FHLB advances during the third quarter as part of the Company's balance sheet repositioning.
Provision and Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments
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. For the year ended December 31, 2025, the Company recorded credit loss expense of $1.9 million. This compares to a provision for credit losses of $5.4 million for the year ended December 31, 2024. The decrease in the provision for credit losses on loans when compared to the year ago period was primarily attributable to the release of approximately $3.1 million in total allowance against the sold portion of the indirect auto portfolio, and well as the continued improvement in the Company's historical loss metrics. The total provision, other than on loans and unfunded lending commitments, benefitted from the release of the $0.2 million reserve against the previous held-to-maturity investment portfolio.
For the year ended December 31, 2024, the Company recorded credit loss expense of $5.4 million. This compares to a provision for credit losses of $2.5 million for the year ended December 31, 2023. The increase in the provision is primary attributable to the increase in the provision for unfunded commitments and net loan growth experienced in the commercial and real estate portfolio segment.
For the year ended December 31, 2024,2025, the loan portfolio excluding loans held for sale increased by $429.4$29.5 million, or 9.7%.0.6%. The loan growth experienced was mainly attributable to increased focus on the commercial and real estate portfolio segment. The commercial and real estate loan portfolio segmentssegment grew by $403.2$354.3 million, or 15.1% and $76.7 million, or 10.6%, respectively.11.5%. The growth is partially offset by a decrease in the transferconsumer loan portfolio of the$294.3 mortgagemillion, warehouseor portfolio(30.5)%, primarily related to held-for-sale and the runoffsale of the consumer indirect auto portfolio.portfolio as part of the balance sheet repositioning efforts in the third quarter of 2025.
The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.05% at December 31, 2025, compared to 1.07% at December 31, 2024.
The liability for unfunded lending commitments was $1.8 million at December 31, 2025, a decrease from $2.1 million at December 31, 2024.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the factors previously disclosed under Item 1A of Horizon's Annual Report on Form 10–K for the fiscal year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Other expenses, which includes corporate and other service expenses, increased by $3.6 million for the three months ended June 30, 2026 compared to the same period in 2025, and increased by $3.9 million for the six months ended June 30, 2026 compared to the same period in 2025. During the second quarter of 2026, the Company recorded a pre-tax expense accrual of $3.1 million related to a lawsuit stemming from 2018 related to a unique circumstance involving the repossession and credit reporting of a single vehicle financed through our legacy indirect auto business, as previously announced. …”see in full comparison
“Net interest income increased $18.1 million during the six months ended June 30, 2026, to $125.7 million when compared to the same period in 2025. While average earning asset balances decreased, owed to the balance sheet repositioning and deleveraging efforts in the third quarter of 2025, the reported net FTE interest margin1 increased by 119 basis points, to 4.33% for the six months ended June 30, 2026 when compared to the prior year period. …”see in full comparison
Total assets increased by $137.5 million, or 2.14%, as of June 30, 2026, from $6.4 billion as of December 31, 2025. The increase in total assets is primarily due to an increase in total cash and cash equivalents of $78.5 million, or 56.28%, and an increase in investment securities available-for-sale of $22.4 million, or 2.55%. The increase was partially offset by a decrease in FHLB stock of $38.3 million, or 83.77%, and a decrease in loans held for sale of $4.6 million, or 47.36%, Total loans HFI, net of ACL, increasedsee in full comparison$2.0$82.0 million, to$4.8$4.9 billion, as ofMarchJune31,30, 2026 compared to balances as of December 31, 2025, due to growth in commercial loans that wasmostlypartially offset by runoff within the consumerand residentialloanportfolios.portfolio. 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 $146.9 million, or 2.8%, to $5.4 billion as of March 31, 2026 when compared to balances as of December 31, 2025. The increase was driven by a $61.3 million increase in time deposits, a $60.8 million increase in non-interest-bearing demand deposits, and a $52.9 million increase in savings and money market balances, reflecting continued success in core deposit gathering efforts. These increases were partially offset by a $28.1 million decrease in interest-bearing deposits. …”see in full comparison
•the aggregate effects of elevated inflation levels in recentsee in full comparisonyearsyears, and continued inflation levels remaining above the Federal Reserve's 2% target;
Net Income increasedsee in full comparison$2.2$4.3 million, to$26.2$24.9 million, or$0.51$0.49 per diluted share, during the three months endedMarchJune31,30, 2026 when compared to net income of$23.9$20.6 million, or$0.54$0.47 per diluted share, for the same period in 2025. The increase in net income when compared with the prior year periodreflectsis the primary driven by an increase in net interest income of$10.0$8.1million andmillion, a decrease in provision expense of$1.0$1.5 million and an increase in non-interest income of $1.1 million. The increase was partially offset byaandecreaseincrease in non-interest expense ofnon-interest income of $5.3$4.4 million, driven primarily by the $3.1 million legal charge in the current period, and an increase in tax expense of$2.0 million and an increase in non-interest expense of $1.4$2.1 million.
Full comparison: every changed paragraph (45)
•the impact of continued partial shutdown of the U.S. government;
•the aggregate effects of elevated inflation levels in recent yearsyears, and continued inflation levels remaining above the Federal Reserve's 2% target;
Net Income increased $2.2$4.3 million, to $26.2$24.9 million, or $0.51$0.49 per diluted share, during the three months ended MarchJune 31,30, 2026 when compared to net income of $23.9$20.6 million, or $0.54$0.47 per diluted share, for the same period in 2025. The increase in net income when compared with the prior year period reflectsis the primary driven by an increase in net interest income of $10.0$8.1 million andmillion, a decrease in provision expense of $1.0$1.5 million and an increase in non-interest income of $1.1 million. The increase was partially offset by aan decreaseincrease in non-interest expense of non-interest income of $5.3$4.4 million, driven primarily by the $3.1 million legal charge in the current period, and an increase in tax expense of $2.0 million and an increase in non-interest expense of $1.4$2.1 million.
Net income increased $6.5 million to $51.1 million, or $1.00 per diluted share, during the six months ended June 30, 2026 when compared to $44.6 million, or $1.01 per share, for the same period in 2025. The increase from the year ago period was primarily a result of an increase in net interest income of $18.1 million and a decrease in provision expense of $2.5 million. The increase was partially offset by an increase in non-interest expense of $5.9 million, a decrease in non-interest income of $4.2 million and an increase in tax expense of $4.1 million.
Net interest income increased $10.0$8.1 million, or 19.1%14.7% during the three months ended MarchJune 31,30, 2026, to $62.2$63.5 million, when compared to the same period in 2025. While average earning assets decreased, owed to the balance sheet repositioning and deleveraging efforts in the third quarter of 2025, the reported net FTE interest margin1 increased by 125114 basis points, to 4.29%4.37% for the three months ended MarchJune 31,30, 2026 compared to the prior year period, driven by the favorable mix shift intoward bothhigher-yielding average interest earning assets toward higher-yielding loans,assets, and the funding mix toward lower cost deposit liabilities. Additionally, loan and securities yields have expanded while deposit costs have declined when compared with the comparable year ago period.
Net interest income increased $18.1 million during the six months ended June 30, 2026, to $125.7 million when compared to the same period in 2025. While average earning asset balances decreased, owed to the balance sheet repositioning and deleveraging efforts in the third quarter of 2025, the reported net FTE interest margin1 increased by 119 basis points, to 4.33% for the six months ended June 30, 2026 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 higher-yielding average interest earning assets, and the funding mix toward lower cost deposit liabilities. Additionally, loan and security yields have expanded while deposit costs have declined when compared with the comparable year ago period.
Following are the average balance sheets for the six months ended (dollars in thousands):
Total non-interest income decreasedincreased $5.3$1.1 million, to net income of $11.2$12.0 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and decreased $4.2 million for the six months ended June 30, 2026 compared to the same period in 2025. The primary components of the change were as follows:
Service charges on deposit accounts increased by $0.3$0.2 million for the three months ended MarchJune 31,30, 2026,2026 compared to the same period in 2025, and increased $0.5 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily related to higher transaction-based fee activity in the current period.
FiduciaryInterchange activitiesfees increased $0.2 million for the three months ended MarchJune 31,30, 2026,2026 compared to the same period in 2025, and increased by $0.3 million for the six months ended June 30, 2026, as compared to the same periods in 2025. The increase iswas primarily relateddriven toby an increaseincreases in trust fees in the current period related to increased volume in estate planningmerchant and annuitydebit sales.card fees.
Fiduciary activities increased $0.2 million for the three months ended June 30, 2026 compared to the same period in 2025, and increased $0.5 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily related to an increase in trust fees in the current period related to increased volume in estate planning and annuity sales.
Gain on sale of mortgage loans increased $0.4 million for the three months ended June 30, 2026 compared to the same period in 2025, and increased $0.4 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily driven by the increased volume of sold loans.
Other income, which includes various miscellaneous income items as well as fair market value adjustments to certain other assets, decreasedincreased by $6.3 million, to $1.0$0.2 million for the three months ended MarchJune 31,30, 2026,2026 compared to the same period in 2025.2025 and decreased by $6.1 million for the six months ended June 30, 2026. The decrease was primarily related to the pre-tax gain of $7.0 million on the sale of the Company's mortgage warehouse business in the first quarter of 2025, which did not recur.
Non-interest expense increased $1.4$4.4 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and increased $5.9 million for the six months ended June 30, 2026 compared to the same period in 2025. The primary components of the change were as follows:
Salaries and employee benefits expense increased by $0.8$1.5 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and increased $2.2 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is partially attributable to increased salary expense related to strategic hiring and annual merit increases, partially offset by a lower level of benefit expense compared with the year ago period.
Loan expense increased by $0.5 million for the three months ended March 31, 2026 compared to the same period in 2025. The increase is primarily related to a higher amount of production related expense in the current period and a higher amount of reimbursements in the year ago period.
Net occupancy expenses increased by $0.5$0.6 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and increased by $1.1 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily driven by increases in building maintenance expenses in the current period.
Data processing expense increased by $0.5$0.7 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and increased by $1.2 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily driven by increases in debit card processing activity and software maintenance.
Loan expense increased by $0.2 million for the three months ended June 30, 2026 compared to the same period in 2025, and increased by $0.7 million for the six months ended June 30, 2026 compared to the same period in 2025. The increase is primarily related to a higher amount of production related expense in the current period and a higher amount of reimbursements in the year ago period.
OutsideProfessional services and consultants expensefees decreased by $0.5$0.8 million for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, and decreased by $0.7 million for the six months ended June 30, 2026 compared to the same period in 2025. The decrease reflectsis management'sprimarily ongoing effortsrelated to reducea reimbursement of previously incurred legal fees and an overall reduction in gross expenses in the reliancecurrent on third party services.period.
Outside services and consultants expense decreased by $0.7 million for the three months ended June 30, 2026 compared to the same period in 2025, and decreased $1.2 million for the six months ended June 30, 2026 compared to the same period in 2025. The decrease reflects management's ongoing efforts to reduce the reliance on third party services.
Other expenses, which includes corporate and other service expenses, increased by $3.6 million for the three months ended June 30, 2026 compared to the same period in 2025, and increased by $3.9 million for the six months ended June 30, 2026 compared to the same period in 2025. During the second quarter of 2026, the Company recorded a pre-tax expense accrual of $3.1 million related to a lawsuit stemming from 2018 related to a unique circumstance involving the repossession and credit reporting of a single vehicle financed through our legacy indirect auto business, as previously announced. The accrual will remain in place until the Company has finalized the appeal process.
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 MarchJune 31,30, 2026, the Company recorded a provision for credit losses on loans of $0.6$1.2 million. This compares to a provision for credit losses on loans of $1.5$2.0 million compared to the same period in 2025. The decrease in the provision for credit losses on loans when compared to the year agoprior-year period was primarily attributabledriven by a reduction in forecasted credit losses related to modest net loan growth and slight changes in the baseline economic outlook.assumptions, partially offset by increases in specific reserves on certain loans. The total provision for credit losses, including the benefitreduction in reserve for credit losses on unfunded lending commitments of $0.2$0.3 million,million in the current period, was $0.4$0.9 million for three months ended MarchJune 31,30, 20262026, compared to a provision for credit losses of $1.4$2.5 million for the same period in 2025.
For the three months ended MarchJune 31,30, 2026, net loan charge-offs decreasedincreased by $0.2$0.4 million to $0.6 million, compared to $0.9$0.3 million during the same period in 2025. The decreaseincrease in charge-offs is due to decreasesmodest increases in charge-offs in the commercial and consumer portfolio,portfolios as a result ofduring the salecurrent of the indirect auto portfolio, which occurred in 2025.period.
The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.05% at MarchJune 31,30, 2026, compared to 1.07%1.09% at MarchJune 31,30, 2025.
As of MarchJune 31,30, 2026, the liability for unfunded lending commitments was $1.6$1.3 million compared to $2.0$2.3 million as of MarchJune 31,30, 2025.
The Company’s income tax expense for the three months ended MarchJune 31,30, 2026 was $6.2$5.8 million compared to $4.1$3.8 million for the same period in 2025, resulting in effective tax rates of 19.1%19.0% and 14.7%15.4% for those periods, respectively. The Company’s income tax expense for the six months ended June 30, 2026 was $12.0 million compared to $7.9 million for the same period in 2025, resulting in effective tax rates of 19.0% and 15.0%, respectively. The increase in the effective tax rate for three months ended MarchJune 31,30, 2026 was primarily due to expectations of higher pre-tax income in the first quarter of 2026 as compared to 2025, and less exposure to tax preferential assets in the investment portfolio.
Total assets increased by $127.6 million, or 2.0%, as of March 31, 2026, from $6.4 billion as of December 31, 2025. The increase in total assets is primarily due to an increase in total cash and cash equivalents of $119.6 million, or 85.8%, and an increase in investment securities available-for-sale of $6.8 million, or 0.8%, and an increase in other assets of $2.2 million, or 1.0%. The increase was partially offset by a decrease in premises and equipment of $2.0 million, or 2.2%.
Total assets increased by $137.5 million, or 2.14%, as of June 30, 2026, from $6.4 billion as of December 31, 2025. The increase in total assets is primarily due to an increase in total cash and cash equivalents of $78.5 million, or 56.28%, and an increase in investment securities available-for-sale of $22.4 million, or 2.55%. The increase was partially offset by a decrease in FHLB stock of $38.3 million, or 83.77%, and a decrease in loans held for sale of $4.6 million, or 47.36%, Total loans HFI, net of ACL, increased $2.0$82.0 million, to $4.8$4.9 billion, as of MarchJune 31,30, 2026 compared to balances as of December 31, 2025, due to growth in commercial loans that was mostlypartially offset by runoff within the consumer and residential loan portfolios.portfolio. 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 $146.9 million, or 2.8%, to $5.4 billion as of March 31, 2026 when compared to balances as of December 31, 2025. The increase was driven by a $61.3 million increase in time deposits, a $60.8 million increase in non-interest-bearing demand deposits, and a $52.9 million increase in savings and money market balances, reflecting continued success in core deposit gathering efforts. These increases were partially offset by a $28.1 million decrease in interest-bearing deposits. The Company maintains a granular and tenured deposit base, with a continued focus on core commercial and consumer deposit gathering.
Total borrowings decreased by $22.8 million, or 9.2%, to $225.8 million as of March 31, 2026 when compared to balances as of December 31, 2025, related to a decrease in repurchase agreements.
Total investment securities increased $6.8$22.4 million, or 0.8%,2.55%, to $882.2$897.8 million as of MarchJune 31,30, 2026 when compared to balances as of December 31, 2025. During the quarter,first six months of 2026, the Company purchased approximately $33.4$60.9 million of available for sale securities, which was offset by amortization and maturities within the portfolio and changes in market value.
Total deposit balances increased by $124.8 million, or 2.37%, to $5.4 billion as of June 30, 2026 when compared to balances as of December 31, 2025. The increase was driven by a $76.8 million increase in savings and money market deposits, reflecting continued success in core deposit gathering efforts, a $24.5 million increase in interest bearing deposits and a $21.6 million increase in non-interest bearing deposits. The Company maintains a granular and tenured deposit base, with a continued focus on core commercial and consumer deposit gathering.
Total borrowings decreased by $25.6 million, or 10.30%, to $223.0 million as of June 30, 2026 when compared to balances as of December 31, 2025, related to a decrease in repurchase agreements.
The ACL balance at MarchJune 31,30, 2026 was $51.3$51.9 million, or 1.05% of period-end loans HFI, compared to an ACL balance of $51.3 million at December 31, 2025, or 1.05% of loans HFI. The increase in the ACL wasis essentially unchanged,primarily due to modest net loan growth and immaterialan changesincrease in thespecific baselinereserves economicon outlook.select commercial loans.
As of MarchJune 31,30, 2026, total non-accrual loans increaseddecreased by $2.3$0.2 million, or 7.2%,0.48%, from December 31, 2025, to 0.71%0.65% of total loans HFI. Total non-performing assets increased $3.4$3.1 million, or 8.4%,7.54%, from December 31, 2025, to 0.67%0.66% of total assets.
During the threesix months ended MarchJune 31,30, 2026, net charge-offs were $0.6$1.2 million, or 5 basis points annualized of average loans in the period, a change from $0.9$1.1 million, or 75 basis point annualized of average loans in the year ago comparable period.
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. At MarchJune 31,30, 2026, in addition to liquidity available from the normal operating, funding, and investing activities of Horizon, the Bank had approximately $1.70$1.72 billion in unused credit lines with various money center banks, including the FHLB and the FRB Discount Window compared to $1.68 billion at December 31, 2025.
The cash flows from the operating, investing and financing activities of the Company resulted in a net increase in cash, cash equivalents and restricted cash of $119.6$78.5 million during the threesix months ended MarchJune 31,30, 2026, as reported in the consolidated statements of cash flows. Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of $20.8$53.9 million and have historically been a stable source of funds. Investing activities, which occur mainly in the loan and investment securities portfolios, used cash of $17.2$64.7 million mainly due to a net change in loans of $84.1 million and purchases of AFS securities of $33.4$60.9 million, which was partially offset by proceeds from maturities, calls and principal repayments of securities available for sale of $17.9$42.1 million and the redemption of FHLB stock of $38.3 million. Financing activities provided cash of $116.0$89.3 million, largely resulting from the proceeds from proceeds from borrowing of $156.2 million and the net change in deposits of $146.9$124.8 million, which was partially offset by the repayment of borrowings of $156.4 million, cash used in the net change in repurchase agreements of $22.5$19.2 million and $8.2$16.5 million in dividends paid on common stock, during the threesix months ended MarchJune 31,30, 2026.
The capital resources of Horizon and the Bank exceeded regulatory capital ratios for “well capitalized” banks at MarchJune 31,30, 2026. Stockholders’ equity totaled $699.0$726.2 million as of MarchJune 31,30, 2026, compared to $688.3 million as of December 31, 2025. The increase in stockholders’ equity during the period was due to an increase in retained earnings relatedof to$37.9 net incomemillion for the quartersix ofmonths $26.2ended million,June less30, cash2026, dividendand paymentsa on outstanding common stock of $8.2 million, partially offset by an increasedecrease in accumulated other comprehensive loss of $7.7$2.0 million.
As of MarchJune 31,30, 2026, the ratio of total stockholders’ equity to total assets is 10.65%.11.05%. Book value per common share was $13.69,$14.21, increasing $0.19$0.71 compared to December 31, 2025.
Tangible common equity1 totaled $537.3$565.1 million at MarchJune 31,30, 2026, and the ratio of tangible common equity to tangible assets1 was 8.39%8.81% at MarchJune 31,30, 2026. Tangible book value, which excludes intangible assets from total equity, per common share1 was $10.52,$11.06, increasing $0.20$0.74 compared to December 31, 2025.
Horizon declared common stock dividends in the amount of $0.16 per share during the three months ended MarchJune 31,30, 2026 and $0.16 per share for the same period in 2025. The dividend payout ratio (dividends as a percent of basic earnings per share) was 31.37%32% and 29.09%31% for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. For additional information regarding dividends, see Horizon’s 2025 Annual Report on Form 10–K.
For the threesix months ended MarchJune 31,30, 2026 and 2025
For the threesix months ended MarchJune 31,30, 2026 and 2025
HBNC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 1,306 shares, about $24.0K) and open-market sales in 1 filing (1 insider, 1 trade date, 8,000 shares, about $161.5K). Net open-market shares: -6,694 (purchases minus sales); net value about -$137.5K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-26 | Magnesen Larry S |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Walker Brian C |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Ritter Nicholas |
Grant/award | 1,223 | $20.45 | $25.0K |
| 2026-08-26 | Samuels Michele Annette |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Magnuson Michele M. |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Maass Brian W |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Blackhurst Eric P. |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Williams Vanessa Peterson |
Grant/award | 306 | $20.45 | $6.3K |
| 2026-08-26 | Sulerzyski Charles W |
Grant/award | 1,223 | $20.45 | $25.0K |
| 2026-07-27 | Deruiter Kathie A |
Open-market sale | 8,000 | $20.19 | $161.5K |
| 2026-07-02 | Blackhurst Eric P. |
Grant/award | 322 | $20.08 | $6.5K |
| 2026-07-02 | Maass Brian W |
Grant/award | 332 | $20.08 | $6.7K |
| 2026-07-02 | Samuels Michele Annette |
Grant/award | 332 | $20.08 | $6.7K |
| 2026-05-26 | Stewart John R |
Shares withheld for tax | 8,649 | $18.50 | $160.0K |
| 2026-05-20 | Stewart John R |
Grant/award | 19,897 | — | — |
| 2026-04-28 | Walker Brian C |
Open-market purchase | 1,306 | $18.36 | $24.0K |
Well-known investors holding HBNC (13F)
None of the 59 investors we track reported a position in their latest 13F.