Horizon Bancorp (HBNC) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Our commercial, residential mortgage and consumer loans expose us to increased credit risks36% rewritten
2. 02Our holdings of construction, land and home equity loans may pose more credit risk than other types of mortgage loans
3. 03The allowance for credit losses on loans may prove inadequate or be negatively affected by credit risk exposures

Market Risk

1. 04Changes in interest rates could adversely affect our financial condition and results of operations
2. 052025 Annual Report on Form 10–K
3. 06We are exposed to intangible asset risk in that our goodwill may become impaired
4. 07Our mortgage lending profitability could be significantly reduced as changes in interest rates could affect mortgage origination volume and pricing for selling mortgages on the secondary market
5. 08Although our common stock is listed on the NASDAQ Global Select Market, our stock price constantly changes, and we expect our stock price to continue to fluctuate in the future. Our stock price is impacted by a variety of factors, some of which are beyond our control
6. 09The trading volume in our common stock is less than that of other larger financial institutions
7. 10We are subject to liquidity risk in our operations, which could adversely affect the ability to fund various obligations
8. 11Unrealized losses in our investment portfolio could adversely affect liquidity
9. 12We may need to raise additional capital in the future, and such capital may not be available when needed or at all

Operational Risk

1. 13Our internal controls may be ineffective, circumvented, or fail
2. 14Our information systems may experience cyber–attacks or an interruption or breach in security. Our cybersecurity systems could be inadequate or fail
3. 15Acts of terrorism or war, as well as the threat of terrorism or war, may adversely affect our results of operations, financial condition, and liquidity
4. 16Pandemics, other global or regional health crises or disease outbreaks, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business
5. 17The preparation of our financial statements requires the use of estimates that may vary from actual results
6. 18Our remaining indirect lending exposures are subject to higher fraud risk than our other lending operations59% rewritten
7. 19Due 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 transactionsNew
8. 20The adoption of artificial intelligence tools by us and our third-party vendors and service providers may increase the risk of errors, omissions, unfair treatment, or fraudulent behavior by our employees, clients, or counterparties, or other third parties
9. 21We rely on other companies to provide key components of our business infrastructure
10. 22The loss of key members of our senior management team and our lending teams could affect our ability to operate effectively
11. 23Our inability to continue to process large volumes of transactions accurately could adversely impact our business and financial results
12. 24Potential acquisitions may disrupt our business and dilute stockholder value
13. 25An economic slowdown in our primary market areas could affect our business
14. 26Negative developments affecting the banking industry, and resulting media coverage, may erode customer confidence in the banking system and could have a material effect on our operations and/or stock price
15. 27The soundness of other financial institutions could adversely affect us
16. 28Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations and financial condition

Legal/Regulatory/Compliance Risk

1. 29We 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 operationsNew
2. 30Any regulatory examination scrutiny or new regulatory requirements in the banking industry could increase the Company's expenses and affect the Company's operations
3. 31We may be exposed to risk of environmental liabilities with respect to real property to which we take title
4. 32We are subject to extensive regulation and changes in laws and regulatory policies could adversely affect our business
5. 33Digital asset trends introduce regulatory and competitive challenges
6. 34Provisions in our articles of incorporation, our by–laws, and Indiana law may delay or prevent an acquisition of us by a third party78% rewritten
7. 35Our articles of incorporation provide for a staggered board, which means that only one–third of our board can be replaced by shareholders at any annual meeting. Our articles also provide that our directors may only be removed without cause by shareholders owning 70% or more of our outstanding common stockNew
8. 36Our prior role as a trustee for employee stock ownership plans (“ESOPs”) may expose us to increased risk of litigation due to heightened scrutiny of this role by the U.S. Department of Labor and the plaintiffs' bar

General Risks

1. 37We continually encounter technological changes
2. 38We face intense competition in all phases of our business from other banks, financial institutions and non–banks61% rewritten
3. 39the assistance of banks. Use of emerging alternative payment platforms, such as Apple Pay, Google Pay, and PayPal can alter consumer credit card behavior and consequently impact our interchange fee incomeNew