Regulatory Capital

12 Months Ended

Dec. 31, 2022

Regulatory Capital Requirements under Banking Regulations [Abstract]

Regulatory Capital

Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies and are assigned to a capital category. 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.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets, or leverage ratio. For December 31, 2022 and 2021, Basel III rules require the Company and Bank to maintain minimum amounts and ratios of common equity Tier I capital to risk-weighted assets. Additionally, under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital.

To be categorized as well capitalized, the Company and Bank must maintain minimum 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 December 31, 2022 and December 31, 2021, the Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the year ending December 31, 2022 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies. As indicated in Note 1, the Company adopted ASC 326 and has elected to apply the CECL transition provisions.

Horizon and the Bank’s actual and required capital ratios as of December 31, 2022 and 2021 were as follows:

	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, 2022
Total capital (to risk–weighted assets)(1)
Consolidated	$	776,390	14.37	%	$	432,172	8.00	%	$	567,226	10.50	%	N/A		N/A
Bank	726,339		13.59	%	427,456		8.00	%	561,036		10.50	%	$	534,320	10.00	%
Tier 1 capital (to risk–weighted assets)(1)
Consolidated	729,835		13.51	%	324,129		6.00	%	459,183		8.50	%	N/A		N/A
Bank	679,784		12.72	%	320,592		6.00	%	454,172		8.50	%	427,456		8.00	%
Common equity tier 1 capital (to risk–weighted assets)(1)
Consolidated	609,630		11.28	%	243,097		4.50	%	378,151		7.00	%	N/A		N/A
Bank	679,784		12.72	%	240,444		4.50	%	374,024		7.00	%	347,308		6.50	%
Tier 1 capital (to average assets)(1)
Consolidated	729,835		10.03	%	291,122		4.00	%	291,122		4.00	%	N/A		N/A
Bank	679,784		8.89	%	305,996		4.00	%	305,996		4.00	%	382,495		5.00	%
December 31, 2021
Total capital (to risk–weighted assets)(1)
Consolidated	$	708,198	15.71	%	$	360,737	8.00	%	$	473,468	10.500	%	N/A		N/A
Bank	664,061		14.72	%	361,015		8.00	%	473,832		10.500	%	$	451,269	10.00	%
Tier 1 capital (to risk–weighted assets)(1)
Consolidated	661,729		14.68	%	270,553		6.00	%	383,284		8.500	%	N/A		N/A
Bank	617,592		13.69	%	270,761		6.00	%	383,578		8.500	%	361,015		8.00	%
Common equity tier 1 capital (to risk–weighted assets)(1)
Consolidated	541,920		12.02	%	202,915		4.50	%	315,645		7.500	%	N/A		N/A
Bank	617,592		13.69	%	203,071		4.50	%	315,888		7.500	%	293,325		6.50	%
Tier 1 capital (to average assets)(1)
Consolidated	661,729		9.05	%	292,335		4.00	%	292,335		4.000	%	N/A		N/A
Bank	617,592		8.50	%	29,064		4.00	%	290,646		4.000	%	363,307		5.00	%
(1)As defined by regulatory agencies

The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The capital conservation buffer was phased in by increments starting in 2016 and was fully implemented by 2019 at 2.50%. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.