SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarterly period ended September 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from ______________ to _______________
Commission file number 0-27062
Horizon Financial Corp.
(Exact name of registrant as specified in its charter)
Chartered by the State of Washington
(State or other jurisdiction of incorporation or organization)
91-1695422
(IRS Employer Identification No.)
1500 Cornwall Avenue
Bellingham, Washington
(Address of principal executive offices)
98225
(Zip Code)
Registrant's telephone number including area code: (360) 733-3050
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
As of November 5, 1997, 7,439,699 common shares, $1.00 par value, were
outstanding.
<PAGE>
HORIZON FINANCIAL CORP.
INDEX PAGE
PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Statements of Financial Condition 1
Consolidated Statements of Operations 2-3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flow 5-6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Defaults Upon Senior Securities 12
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES
<PAGE>
HORIZON FINANCIAL CORP.
Consolidated Statements of Financial Condition
Sept. 30, March 31,
1997 1997
(unaudited)
ASSETS:
Cash and Due from Banks $ 5,373,293 $ 4,416,862
Interest-Bearing Deposits 13,144,043 10,398,316
Investment Securities - Available
for Sale 38,737,666 26,238,895
Investment Securities-Held to Maturity 6,492,088 8,381,775
Mortgage-Backed Securities - Available
for Sale 21,502,932 35,229,087
Mortgage-Backed Securities - Held to
Maturity 17,727,346 19,690,598
Loans Receivable 416,177,549 399,078,123
Accrued Interest and Dividends
Receivable 3,779,824 3,545,380
Income Tax Receivable -0- 297,192
Property and Equipment, Net 6,060,564 6,130,683
Other Assets 2,032,663 1,934,428
Total Assets $531,027,968 $515,341,339
LIABILITIES:
Deposits $437,965,580 $424,811,286
Accounts Payable and Other
Liabilities 5,581,921 8,935,825
Advances by Borrowers for Taxes
and Insurance 865,020 898,950
Deferred Compensation 1,282,500 1,290,000
Net Deferred Income Tax Liabilities 1,789,681 896,264
Federal income Tax Payable 499,332 -0-
Total Liabilities 447,984,034 436,832,325
STOCKHOLDERS' EQUITY:
Serial Preferred Stock, $1.00 Par Value,
10,000,000 Shares Authorized;
None Issued or Outstanding
Common Stock, $1.00 Par Value,
30,000,000 Shares Authorized;
7,682,791 and 6,650,340 Issued
and Outstanding 7,682,791 6,650,340
Paid-in Capital 53,394,799 40,063,678
Retained Earnings 22,955,860 34,518,794
Net Unrealized Gain/(Loss) on Investments
Available for Sale 2,359,115 624,833
Debt Related to ESOP (450,000) (450,000)
Treasury Stock-249,090 and 216,600 Held (2,898,631) (2,898,631)
Total Stockholders' Equity 83,043,934 78,509,014
Total Liabilities and Stockholders'
Equity $531,027,968 $515,341,339
(See Notes to Financial Statements)
<PAGE>
HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
3 Months Ended
Sept. 30
1997 1996
INTEREST INCOME:
Interest on Loans $ 8,547,080 $ 8,409,434
Interest and Dividends on Investment
and Mortgage-Backed Securities 1,548,108 1,187,238
Total Interest Income 10,095,188 9,596,672
INTEREST EXPENSE:
Interest on Deposits 5,598,327 5,193,467
Net Interest Income 4,496,861 4,403,205
Provision for Loan Losses 150,000 50,000
Net Interest Income After
Provision for Loan Losses 4,346,861 4,353,205
NON-INTEREST INCOME:
Service Fees 281,726 231,379
Net Gain(Loss) on Sale of Investments
and Trading Securities 366,486 301,619
Other 73,599 66,040
Total Non-Interest Income 721,811 599,038
NON-INTEREST EXPENSE:
Compensation and Employee Benefits 1,018,457 1,282,849
Building Occupancy 270,016 283,703
FDIC Insurance 13,482 500
Data Processing 112,327 100,499
Advertising 129,809 68,054
Other Expenses 428,673 416,661
Total Non-Interest Expense 1,972,764 2,152,266
Income Before Provision for
Income Taxes 3,095,908 2,799,977
Provision for Income Taxes 1,047,837 947,978
Net Income 2,048,071 1,851,999
Earnings Per Share $.28 $.25*
* Restated for 15% stock dividend declared April 22, 1997.
(See Notes to Financial Statements)
<PAGE>
HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
6 Months Ended
Sept. 30
1997 1996
INTEREST INCOME:
Interest on Loans $ 16,959,927 $ 16,737,681
Interest and Dividends on Investment
and Mortgage-Backed Securities 3,077,874 2,368,530
Total Interest Income 20,037,801 19,106,211
INTEREST EXPENSE:
Interest on Deposits 10,985,459 10,318,725
Net Interest Income 9,052,342 8,787,486
Provision for Loan Losses 180,000 110,000
Net Interest Income After
Provision for Loan Losses 8,872,342 8,677,486
NON-INTEREST INCOME:
Service Fees 575,039 492,357
Net Gain(Loss) on Sale of Investments
and Trading Securities 305,161 301,619
Other 123,613 115,492
Total Non-Interest Income 1,003,813 909,468
NON-INTEREST EXPENSE:
Compensation and Employee Benefits 2,013,485 2,246,901
Building Occupancy 560,550 558,643
FDIC Insurance 26,918 1,000
Data Processing 217,820 200,046
Advertising 207,919 179,837
Other Expenses 741,248 756,185
Total Non-Interest Expense 3,767,940 3,942,612
Income Before Provision for
Income Taxes 6,108,215 5,644,342
Provision for Income Taxes 2,069,096 1,910,184
Net Income 4,039,119 3,734,158
Earnings Per Share $.54 $.49*
* Restated for 15% stock dividend declared April 22, 1997.
(See Notes to Financial Statements)
<PAGE>
<TABLE>
HORIZON FINANCIAL CORP.
Consolidated Statements of Changes in Stockholder's Equity
6 Months Ended September 30, 1997 and 1996
(unaudited)
Net Unrealized
Common Stock Additional Gains(Losses) Debt
Number Paid-In Retained on Related Treasury
of Shares at Par Capital Earnings Securities to ESOP Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 3/31/96 6,579,954 $6,579,954 $39,415,875 $31,548,712 $1,602,673 -0- -0- $79,147,214
Cash div on common stk
at $.20 per share (1,308,929) (1,308,929)
Stock opts exercised 13,198 13,198 81,108 94,306
DRIP 10,915 10,915 131,066 141,981
Net change in unrealized
gain/loss - AFS (94,885) (94,885)
ESOP loan (500,000) (500,000)
Treasury stock (1,472,394) (1,472,394)
Net income 3,734,158 3,734,158
Balance at 9/30/96 6,604,067 6,604,067 $39,628,049 $33,973,941 $1,507,788 $(500,000) (1,472,394) 79,741,451
Balance at 3/31/97 6,650,340 6,650,340 40,063,678 34,518,794 624,833 (450,000) ($2,898,631) 78,509,014
Cash div on common
stock at $.21 per sh. (1,559,419) (1,559,419)
Stock opts. exercised 21,748 21,748 113,607 135,355
DRIP 12,751 12,751 181,766 194,517
Net change in unrealized
gain/loss - AFS 1,734,282 1,734,282
15% stock dividend 997,952 997,952 13,035,748 (14,033,700) -0-
Cash paid for
fractional shares (8,934) (8,934)
Net income 4,039,119 4,039,119
Balance at 9/30/97 7,682,791 7,682,791 $53,394,799 $22,955,860 $2,359,115 $(450,000) $(2,898,631) $83,043,934
(See Notes to Financial Statements)
</TABLE>
<PAGE>
HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
6 Months Ended
Sept. 30,
1997 1996
Cash Flows from Operating Activities:
Net Income $ 4,039,119 $ 3,734,158
Adjustments to Reconcile Net Income
Provided by Operating Activities
Depreciation 223,269 222,537
Amortization and Deferrals, Net (18,435) 90,357
Provision for Loan Losses 180,000 110,000
Changes in Assets and Liabilities:
Interest & Dividends Receivable (234,444) (21,678)
Interest Payable (77,559) (7,813)
Federal Income Taxes Payable 796,524 235,184
Other Assets (98,235) (62,035)
Other Liabilities (3,317,775) 1,531,356
Net Cash Flows from Operating Activities $ 1,492,464 $ 5,832,066
Cash Flows From Investing Activities:
Change in Interest-Bearing Deposits, Net $ (2,745,727) $ 5,210,189
Purchases of Investment Securities - AFS (15,606,797) (5,848,687)
Proceeds from Sales and Maturities of
Investment Securities - AFS 4,357,379 7,979,283
Purchases of Investment Securities - HTM -0- -0-
Proceeds from Maturities of Investment
Securities - HTM 1,889,687 2,560,789
Purchases of Mtge Backed Securities - HTM -0- -0-
Purchases of Mtge Backed Securities - AFS (5,942,010) (5,020,436)
Proceeds from Mat of Mtge Backed Sec - HTM 1,963,252 1,616,830
Proceeds from Mat of Mtge Backed Sec - AFS 21,046,511 74,120
Proceeds from Sale of Loans 15,750,743 3,054,288
Principal Payments on Loans 35,704,479 34,070,745
Originations and Purchases of Loans (68,716,213) (56,626,746)
Purchases of Bank Premises and
Equipment (153,150) (159,763)
Net Cash Flows From Investing Activities: $ (12,451,846) $(13,089,388)
(See Notes to Financial Statements)
<PAGE>
HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
6 Months Ended
Sept. 30,
1997 1996
Cash Flows From Financing Activities:
Change in Checking and
Savings Accounts, Net 51,482 7,691,120
Proceeds From Issuance of Time Deposits 90,881,857 67,173,688
Payments for Maturing Time Deposits (77,779,045) (65,796,234)
Common Stock Issued, Net 329,872 236,287
Cash Dividends Paid (1,568,353) (1,308,929)
Treasury Stock Purchased -0- (1,472,394)
Net Cash Flows from Financing
Activities 11,915,813 6,523,538
Net Change in Cash and Cash Equivalents 956,431 733,784
Cash and Cash Equivalents,
Beginning of Year 4,416,862 4,844,146
Cash and Cash Equivalents,
End of Year $5,373,293 $4,110,362
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash Paid During the Period for:
Interest Expense $11,063,018 $10,326,538
Income Taxes $ 1,280,000 $ 1,675,000
<PAGE>
HORIZON FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1997
(unaudited)
NOTE A - Basis of Presentation
The unaudited consolidated financial statements have been prepared in
accordance with general accepted accounting principles for interim financial
information and with the instructions to the Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation are reflected in the interim financial statements. The results
of operations for the periods ended September 30, 1997 and 1996 are not
necessarily indicative of the operating results for the full year. The
March 31, 1997, consolidated statement of financial condition presented with
the interim financial statements was audited and received an unqualified
opinion. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Bank's annual report for
the year ended March 31, 1997.
On October 13, 1995, Horizon Bank, a savings bank, ("Bank") reorganized into
the holding company form of ownership ("Reorganization"), resulting in
the Registrant becoming the sole stockholder of the Bank. Each outstanding
share of common stock of the Bank and options to acquire shares of common
stock of the Bank, became outstanding shares of common stock of the
Registrant and options to acquire shares of common stock of the Registrant,
respectively, as a result of the Reorganization. The consolidated financial
statements for the three months and six months ended September 30, 1997,
include the accounts of Horizon Financial Corp., the Bank and other sub-
sidiaries of the Bank. Significant intercompany balances and transactions
have been eliminated in consolidation.
Prior to Reorganization, Horizon Financial Corp. had no material assets or
liabilities and engaged in no business activity. Subsequent to the
acquisition of the bank, Horizon Financial Corp. has engaged in no
significant activity other than holding the stock of the Bank.
NOTE B - Net Income Per Share
Earnings per share for the three months ended September 30, 1997 and 1996 are
calculated on the basis of 7,424,120 and 7,541,620 weighted average shares
outstanding, respectively (restated to reflect a 15% stock dividend declared
April 22, 1997).
NOTE C - Reclassification
Certain reclassifications have been made to prior financial statements to
conform with current presentation. Such reclassifications have no effect on
net income.
<PAGE>
HORIZON FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
General
The Corporation was formed under Washington law on May 22, 1995, and became
the holding company of the Bank, effective October 13, 1995. As a bank
holding company, the Corporation has a number of additional options and
operating advantages over the Bank. these include, but are not limited to:
expanded business diversification options; flexibility in acquisitions; and
the ability to repurchase its own stock without incurring the adverse tax
consequences of recapturing portions of the Bank's bad debt reserve.
The Bank was organized in 1922 as a Washington state-chartered mutual savings
and loan association and converted to a federal mutual savings and loan
association in 1934. In 1979, the Bank converted to a Washington state-
chartered mutual savings bank, the deposits of which are insured by the
Federal Deposit Insurance Corporation ("FDIC"). On August 12, 1986, the Bank
then converted to a state-chartered stock savings bank. The primary business
of the Bank is to acquire funds in the form of savings deposits and to use
the funds to make loans secured by residential and commercial properties in
the Bank's primary market area. The Bank's operations are conducted through
twelve full-service office facilities, located in Whatcom, Skagit and
Snohomish counties in northwest Washington.
At its March 26, 1996, meeting, the Board of Directors authorized the
repurchase of up to 10% of the Corporation's outstanding common stock over a
24-month period. During the fiscal year ended March 31, 1997, the
Corporation repurchased 216,600 shares (249,090 shares on a restated basis)
of its common stock. No shares were repurchased during the six months ended
September 30, 1997.
On April 22, 1997, the Corporation declared a 15% stock dividend. The
appropriate historical figures presented herein have been restated to
reflect this stock dividend.
Financial Condition
Total consolidated assets for the Corporation as of September 30, 1997, were
$531,027,968, an increase of 3.04% from the March 31, 1997, level of
$515,341,339. This increase in assets was due primarily to the growth in
loans receivable, which increased 4.28% to $416,177,549 at September 30, 1997,
from $399,078,123 at March 31, 1997.
Total liabilities increased 2.55% to $447,984,034 at September 30, 1997, from
$436,832,325 at March 31, 1997. The increase in liabilities was due
primarily to the growth in savings deposits, which increased 3.10% to
$437,965,580 from $424,811,286.
Total stockholders' equity increased 5.78% to $83,043,934 at September 30,
1997, from $78,509,014 at March 31, 1997.
<PAGE>
Liquidity and Capital Resources
The Bank maintains liquid assets in the form of cash and short-term
investments to provide a source to fund loans, savings withdrawals and other
short-term cash requirements. At September 30, 1997, the Bank had liquid assets
(cash and marketable securities with maturities of one year or less) with a
book value of $21,221,698.
As of September 30, 1997, the total book value of investments and mortgage-
backed securities was $80,885,616 compared to a market value of $84,720,024,
resulting in an unrealized gain of $3,834,408. On March 31, 1997, the book
value of investments and mortgage-backed securities was $88,593,639 compared
to a market value of $89,321,020, resulting in an unrealized gain of $727,381.
The primary reasons for this difference at September 30, 1997, compared to
March 31, 1997, was the overall lower level of interest rates which increased
the valuation of the Bank's investment portfolio, along with increases in the
value of the Bank's common stock holdings.
The Bank's primary sources of funds are cash flow from operations, which
consist primarily of mortgage loan repayments; deposit increases; loan sales;
and cash received from the maturity or sale of investment securities. These
funds are primarily used to originate mortgage loans on real estate.
The Bank's liquidity fluctuates with the supply of funds, and management
believes that the current level of liquidity is adequate at this time. If
additional liquidity is needed, the Bank's options include, but are not
necessarily limited to: (1) selling additional loans in the secondary market;
(2) reverse repurchase agreements; (3) accepting additional jumbo and/or
public funds deposits; or (4) accessing the discount window of the Federal
Reserve Bank of San Francisco. The Bank had no borrowings against any kind
of credit as of September 30, 1997.
Stockholders' equity to total assets was 15.64% as of September 30, 1997, well
in excess of the 5.0% minimum required by the FDIC in order to be considered
well capitalized.
Comparative Results of Operations
For the Three and Six Months Ended
September 30, 1997 and 1996
Net Interest Income
Net interest income for the three months ended September 30, 1997, increased
2.13% to $4,496,861 from $4,403,205 in the same quarter of the previous year.
While interest on loans for the quarter ended September 30, 1997, increased
only 1.64% to $8,547,080 from $8,409,434, interest and dividends on investments
and mortgage-backed securities increased 30.40% to $1,548,108 from $1,187,238
for the comparable quarter a year ago. This is primarily due to the fact
that the Bank securitized approximately $25,000,000 in mortgages near the end
of fiscal 1997, which shifted these interest-earning assets from loans
receivable into mortgage-backed securities.
<PAGE>
Total interest income increased 5.19% to $10,095,188 from $9,596,672. This
increase is primarily attributable to an overall increase in interest-earning
assets over the prior period. Total interest paid on deposits increased
7.80% to $5,598,327 from $5,193,467. This increase in interest expense is due
to the overall deposit growth of the Bank, along with increased competition
facing the Bank in attracting deposits.
The weighted average yield on all earning assets for the quarter ended
September 30, 1997, decreased 3 basis points to 8.00% from 8.03% for the
quarter ended September 30, 1996. The weighted average yield on loans
decreased 1 basis point to 8.32% from 8.33%, and the weighted average yield on
investments increased 19 basis points to 6.53% from 6.34%. This increase in
the weighted average yield on investments can be attributed in large part to
the securitization of mortgages discussed above, which shifted long-term
mortgages from loans receivable to investment securities on the Bank's
balance sheet.
The Bank's cost of funds for the quarter ended September 30, 1997, increased 9
basis points to 5.14% from 5.05% for the quarter ended September 30, 1996.
As a result, the Bank's interest rate spread decreased 12 basis points to 2.86%
from 2.98% for the comparable quarter one year ago.
Net interest income for the three months ended September 30, 1997, after
provision for loan losses, increased .15% to $4,346,861 from $4,353,205 for the
same period one year ago. Provisions for loan losses increased to $150,000
from $50,000. While the Bank had no loans listed as over 90 days
delinquent at September 30, 1997, management considers it prudent to continue
additions to the loan loss reserves to protect the Bank from future potential
loan losses.
Net interest income for the six-month period ended September 30, 1997,
increased 3.01% to $9,052,342 from $8,787,486 for the comparable period one
year ago. Total interest income increased 4.88% to $20,037,801 from $19,106,211
due primarily to the increase in the Bank's earning assets. Total interest
expense for the six-month period increased 6.46% to $10,985,459 from
$10,318,725. As discussed above, this increase is due to the overall growth
of the Bank, along with increases in the Bank's cost of funds attributable to
the competition facing the Bank in attracting deposits. Net interest income
after provisions for loan losses increased 2.25% to $8,872,342 from $8,677,486.
Non Interest Income
Non interest income for the three months ended September 30, 1997, increased
20.50% to $721,811 from $599,038 for the same time period a year ago. Service
fee income increased 21.76% to $281,726 from $231,379. This is due in large
part to the increase in servicing fee income on loans which have been sold or
securitized in the secondary market, along with increases in fee income as a
result of a productive quarter in terms of loan volume. The net gain/loss on
the sale of investment securities showed a gain of $366,486 during the quarter,
compared to $301,619 in the comparable period one year ago. These gains were
due primarily to the sale of selected common stocks from the Bank's portfolio
during both of these periods. In the quarter ended September 30, 1997, the
Bank also sold approximately $20,000,000 in mortgage-backed securities, which
accounted for approximately $103,000 of the gains generated during the quarter.
Other non interest income for the quarter increased 11.45% to $73,599 from
$66,040.
<PAGE>
Non interest income for the six months ended September 30, 1997, increased
10.37% to $1,003,813 from $909,468. Service fee income increased 16.79% to
$575,039 from $492,357 due primarily to the increased service fee income from
loans and increased fee income related to loan productions, as discussed above.
The net gain on sales of investment securities increased 1.17% to $305,161 from
$301,619. Other non interest income increased 7.03% to $123,613 from $115,492.
Non Interest Expense
Non interest expense for the three months ended September 30, 1997, decreased
8.34% to $1,972,764 from $2,152,266. Compensation and employee benefits
decreased 20.61% to $1,018,457 from $1,282,849. The primary reason for this
difference was the one-time recognition of $277,525 in expenses relating to the
Bank's deferred compensation program during the quarter ended September 30,
1996. If this expense were excluded from last year's numbers, employee compen-
sation and benefits for the quarter ended September 30, 1997, would have shown
an increase of 1.31% over the same quarter one year ago. Building occupancy
for the quarter ended September 30, 1997, decreased 4.82% to $270,016 from
$283,703. This decline is due to a one-time expenses recognized in the
previous year of approximately $15,000 for an LID assessment at one of the
Bank's offices. The Bank's FDIC insurance expense for the quarter ended
September 30, 1997, was $13,482, compared to the statutory minimum of $500
paid in the period one year ago. Data processing increased 11.77% to $112,327
for the quarter ended September 30, 1997, from $100,499, due primarily to the
overall growth of the Bank. Advertising expenses increased 90.74% to $129,809
for the quarter from $68,054. The reasons for this increase include the
recognition of expenses relating to the purchase of a marketing customer
information system which will allow the Bank to better target its future ad-
vertising efforts, along with expenses related to the development of an inter-
net web site for the Bank. Other non interest expenses increased 2.88% to
$428,673 from $416,661.
Non interest expense for the six months ended September 30, 1997, decreased
4.43% to $3,767,940 from $3,942,612. Compensation and employee benefits
decreased 10.39% to $2,013,485 from $2,246,901, due primarily to the recogni-
tion of deferred compensation expenses in the previous year, as discussed
above. Building occupancy expenses for the six months were little changed at
$560,550 from $558,643. FDIC insurance expenses increased to $26,918, compared
to the statutory minimum of $1,000 paid in the six-month period one year ago.
Data processing expenses increased 8.88% to $217,820 from $200,046 due pri-
marily to the growth of the Bank. Advertising expenses increased 15.62% for
the six-month period ended September 30, 1997, to $207,919 from $179,837 due
primarily to items expensed in the most recent quarter, as discussed above.
Other expenses decreased 1.98% to $741,248 from $756,185.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Horizon Financial Corporation has certain litigation and/or
negotiations in progress resulting from activities arising from
normal operations. In the opinion of management, none of these
matters is likely to have a materially adverse effect on the
Corporation's financial position or results of operation.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HORIZON FINANCIAL CORP.
By: /s/ V. Lawrence Evans
V. Lawrence Evans
President and Chief Executive Officer
By: /s/ Richard P. Jacobson
Richard P. Jacobson
Chief Financial Officer
Dated: November 13, 1997
<PAGE>
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