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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Our hedging policy allows the use of interest rate derivative instruments to manage our exposure to interest rate risk or hedge specified assets and liabilities. All derivative instruments are carried on the balance sheet at their estimated fair value and are recorded in other assets or other liabilities, as appropriate, and in the net change in each of these financial statement line items in the accompanying consolidated statement of cash flows.
Fair Value Hedges
Fair value hedges are intended to reduce the interest rate risk associated with the underlying hedged item. The Company enters into fixed rate loan agreements as part of its lending policy. To mitigate the risk of changes in fair value based on fluctuations in interest rates, the Company previously entered into interest rate swap agreements on individual loans, converting the fixed rate loans to a variable rate. The Company also previously entered into interest rate swap agreements on individual investment securities, converting the fixed rate security to a variable rate. During the year ended December 31, 2024, the Company terminated the fair value hedges on loans and securities, recording a deferred gain of $2.3 million on the loan termination that will be accreted into interest income over the remaining life of the underlying loans, and a mark-to-market adjustment of $0.3 million that was recorded in non-interest income on the termination of the fair value hedges against investment securities.

The change in fair value of both the hedge instruments and the underlying loan and security agreements are recorded as gains or losses in non–interest income. The fair value hedges are considered to be highly effective.
Other Derivative Instruments

From time to time, we may enter into certain interest rate swaps that are not designated as hedging instruments. These interest rate derivative contracts relate to transactions in which we enter into an interest rate swap with a customer while concurrently entering into an offsetting interest rate swap with a third-party financial institution. We agree to pay interest to the customer on a notional amount at a variable rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These interest rate derivative contracts allow our customers to effectively convert a variable rate loan to a fixed rate loan.

The Company enters into non–hedging derivatives in the form of mortgage loan forward sale commitments with investors and commitments to originate mortgage loans as part of its mortgage banking business. At March 31, 2025, the Company’s fair value of these derivatives were recorded and over the next 12 months are not expected to have a significant impact on the Company’s net income.
The change in fair value of both the forward sale commitments and commitments to originate mortgage loans were recorded and the net gains or losses included in the Company’s gain on sale of loans.
The following tables summarize the fair value of our derivative financial instruments utilized by Horizon on a gross basis for the periods indicated.
Asset DerivativesLiability Derivatives
March 31, 2025March 31, 2025
Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Derivatives not designated as hedging instruments
Interest rate contracts -customer accommodation$514,001 $21,153 $514,001 $21,153 
Mortgage loan contracts— — 15,988 46 
Commitments to originate mortgage loans15,123 509 — — 
Total derivatives not designated as hedging instruments529,124 21,662 529,989 21,199 
Total derivatives subject to enforceable master netting arrangements, gross$529,124 $21,662 $529,989 $21,199 
Less: Gross amounts offset— — — — 
Total derivatives subject to enforceable master netting arrangements, net$529,124 $21,662 $529,989 $21,199 
Asset DerivativesLiability Derivatives
December 31, 2024December 31, 2024
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Derivatives not designated as hedging instruments
Interest rate contracts - customer accommodation$521,520 $28,817 $521,520 $28,817 
Mortgage loan contracts6,155 27 — — 
Commitments to originate mortgage loans6,856 202 — — 
Total derivatives not designated as hedging instruments534,531 29,046 521,520 28,817 
Total derivatives subject to enforceable master netting arrangements, gross$534,531 $29,046 $521,520 $28,817 
Less: Gross amounts offset— — — — 
Total derivatives subject to enforceable master netting arrangements, net$534,531 $29,046 $521,520 $28,817 

While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company has elected to not offset derivative assets and liabilities under these agreements on its consolidated balance sheets. Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities. At March 31, 2025, the Company pledged marketable securities as collateral with a carrying value of $5.8 million.
The effect of the derivative and the hedged item in fair value hedging relationships on the condensed consolidated statements of income for three month periods ended March 31, 2025 and March 31, 2024 is as follows:
Location of gain
(loss)
recognized on derivative and Hedge item
Amount of Gain (Loss) Recognized on Derivative and Hedged Item
Three Month Ended
March 31, 2025March 31, 2024
Derivatives designated as hedging instruments
Interest rate contracts - fair value hedgeInterest income - loans receivable$— $335 
Hedged item— (335)
Interest rate contracts - fair value hedgeInterest income - investment securities— (71)
Hedged item— 71 
Total$— $— 
The effect of derivatives not designated as hedging instruments on the condensed consolidated statements of income for the three month periods ended March 31, 2025 and March 31, 2024 is as follows:
Location of gain
(loss)
recognized on derivative
Amount of Gain (Loss) Recognized on Derivative
Three Month Ended
March 31, 2025March 31, 2024
Derivative not designated as hedging relationship
Mortgage loan contractsNon-interest income-Gain on sale of loans509 (24)
Commitments to originate mortgage loansNon-interest income-Gain on sale of loans(46)(38)
Total$463 $(62)