Regulatory Capital

6 Months Ended

Jun. 30, 2024

Banking and Thrift, Interest [Abstract]

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd–Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off–balance–sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel III–based regulations. As allowed under Basel III rules, the Company made the decision to opt–out of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below.

In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk–based, Tier I risk–based, common equity Tier I risk–based and Tier I leverage ratios as set forth in the table below. As of June 30, 2024, March 31, 2024 and December 31, 2023, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the second quarter of 2024 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well capitalized status for bank holding companies.

During the second quarter of 2024 management corrected a prior computation of the Company’s total capital (to risk-weighted assets), Tier 1 capital (to risk-weighted assets), and Tier 1 capital (to average assets) ratios for purposes of the Company’s consolidated financial statements for holding companies filed with the Federal Reserve (the “Regulatory Filings”), which involved an incorrect classification of the Company’s subordinated notes as Tier 1 capital. This incorrect classification affected the Company's regulatory capital disclosures in certain prior period filings with the SEC, as those disclosures were sourced from the Regulatory Filings. The Company evaluated the effects of the incorrect classification to its previously filed Regulatory Filings and previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon qualitative and quantitative factors, determined the errors were not material to the previously filed Regulatory Filings or the previously issued financial statements and disclosures included in our Annual Reports on Form 10-K for the years ended December 31, 2020, 2021, 2022 and 2023, or for any of the quarterly reports included therein or through our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024. The Company has amended its Regulatory Filings for the periods ended March 31, 2024 and December 31, 2023 to reclassify the subordinated notes balance from Tier 1 capital into Tier 2 capital. The correction of the classification had no effect on the Company’s consolidated balance sheets, statements of income, stockholders’ equity, or the amounts or disclosure of the regulatory capital ratios of the Bank as included in its call reports. The Company continues to exceed regulatory proxy ratios to be considered “well capitalized”, plus the capital conservation buffer, at June 30, 2024.

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


	Actual				Required for Capital Adequacy Purposes(1)				Required For Capital Adequacy Purposes with Capital Buffer(1)				Well Capitalized Under Prompt Corrective Action Provisions(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
June 30, 2024
Total capital (to risk-weighted assets)(1)
Consolidated	$	802,395	13.41	%	$	478,786	8.00	%	$	628,407	10.50	%	N/A		N/A
Bank	732,301		12.26		477,761		8.00		627,061		10.50		$	597,201	10.00	%
Tier 1 capital (to risk-weighted assets)(1)
Consolidated	693,807		11.59		359,090		6.00		508,711		8.50		N/A		N/A
Bank	679,381		11.38		358,321		6.00		507,621		8.50		477,761		8.00
Common equity tier 1 capital (to risk-weighted assets)(1)
Consolidated	636,438		10.63		269,317		4.50		418,938		7.00		N/A		N/A
Bank	679,381		11.38		268,741		4.50		418,041		7.00		388,181		6.50
Tier 1 capital (to total assets)(1)
Consolidated	693,807		9.02		307,743		4.00		307,743		4.00		N/A		N/A
Bank	679,381		8.84		307,335		4.00		307,335		4.00		384,168		5.00
March 31, 2024
Total capital (to risk-weighted assets)(1)
Consolidated (As Revised)*	$	789,786	13.75	%	$	459,485	8.00	%	$	603,074	10.50	%	N/A		N/A
Consolidated (As Reported)	793,567		13.82		459,485		8.00		603,074		10.50		N/A		N/A
Bank	721,018		12.59		458,163		8.00		601,338		10.50		$	572,703	10.00	%
Tier 1 capital (to risk-weighted assets)(1)
Consolidated (As Revised)*	683,015		11.89		344,614		6.00		488,203		8.50		N/A		N/A
Consolidated (As Reported)	742,430		12.93		344,614		6.00		488,203		8.50		N/A		N/A
Bank	669,881		11.70		343,622		6.00		486,798		8.50		458,163		8.00
Common equity tier 1 capital (to risk-weighted assets)(1)
Consolidated	625,700		10.89		258,460		4.50		402,049		7.00		N/A		N/A
Bank	669,881		11.70		257,716		4.50		400,892		7.00		372,257		6.50
Tier 1 capital (to total assets)(1)
Consolidated (As Revised)*	683,015		8.91		306,716		4.00		306,716		4.00		N/A		N/A
Consolidated (As Reported)	742,430		9.68		306,716		4.00		306,716		4.00		N/A		N/A
Bank	669,881		8.63		310,592		4.00		310,592		4.00		388,240		5.00
(1) As defined by regulatory agencies
*Prior periods have been revised (see disclosures above)


	Actual				Required for Capital Adequacy Purposes(1)				Required For Capital Adequacy Purposes with Capital Buffer(1)				Well Capitalized Under Prompt Corrective Action Provisions(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2023
Total capital (to risk-weighted assets)(1)
Consolidated (As Revised)*	$	782,598	14.04	%	$	446,000	8.00	%	$	585,374	10.50	%	N/A		N/A
Consolidated (As Reported)	786,436		14.11		446,000		8.00		585,374		10.50		N/A		N/A
Bank	714,402		12.87		444,147		8.00		582,943		10.50		$	555,184	10.00	%
Tier 1 capital (to risk-weighted assets)(1)
Consolidated (As Revised)*	676,411		12.13		334,500		6.00		473,874		8.50		N/A		N/A
Consolidated (As Reported)	735,792		13.20		334,500		6.00		473,874		8.50		N/A		N/A
Bank	663,758		11.96		333,111		6.00		471,907		8.50		444,147		8.00
Common equity tier 1 capital (to risk-weighted assets)(1)
Consolidated	619,153		11.11		250,875		4.50		390,250		7.00		N/A		N/A
Bank	663,758		11.96		249,833		4.50		388,629		7.00		360,870		6.50
Tier 1 capital (to average assets)(1)
Consolidated (As Revised)*	676,411		8.61		314,306		4.00		314,306		4.00		N/A		N/A
Consolidated (As Reported)	735,792		9.36		314,306		4.00		314,306		4.00		N/A		N/A
Bank	663,758		8.41		315,550		4.00		315,550		4.00		394,438		5.00
(1) As defined by regulatory agencies
*Prior periods have been revised (see disclosures above)

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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