SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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 June 30, 1999
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OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from March 31, 1999 to June 30, 1999
Commission file number 0-27062
Horizon Financial Corp.
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(Exact name of registrant as specified in its charter)
Chartered by the State of Washington
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(State or other jurisdiction of incorporation or organization)
91-1695422
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(IRS Employer Identification No.)
1500 Cornwall Avenue
Bellingham, Washington
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(Address of principal executive offices)
98225
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(Zip Code)
Registrant's telephone number including area code: (360) 733-3050
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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
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As of August 6, 1999, 8,529,869 common shares, $1.00 par value, were
outstanding.
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Item 1 Financial Statements
HORIZON FINANCIAL CORP.
Consolidated Statements of Financial Condition
June 30, March 31,
1999 1999*
---- ----
(Unaudited) (Unaudited)
ASSETS:
- ------
Cash and Due from Banks $ 11,904,662 $ 10,889,530
Interest-Bearing Deposits 8,909,050 15,572,363
Investment Securities - Available for Sale 25,295,797 27,631,904
Investment Securities-Held to Maturity 1,364,383 1,391,873
Mortgage-Backed Securities - Available for Sale 51,527,520 43,886,859
Mortgage-Backed Securities - Held to Maturity 9,889,458 10,959,539
Federal Home Loan Bank stock 4,879,600 4,861,700
Loans Receivable 533,664,035 533,649,169
Accrued Interest and Dividends Receivable 3,899,654 3,739,470
Property and Equipment, Net 12,248,075 11,609,414
Goodwill 674,495 688,846
Other Assets 2,950,731 3,235,435
------------ ------------
Total Assets $667,207,460 $668,116,102
============ ============
LIABILITIES:
- -----------
Deposits $537,079,130 $537,389,845
Securities sold under agreements to repurchase 14,700,000 14,800,000
Borrowings 7,000,000 7,918,151
Accounts payable and other liabilities 6,556,482 6,034,947
Advances by Borrowers for Taxes and Insurance 472,920 928,618
Deferred Compensation 1,275,875 1,260,100
Net Deferred Income Tax Liabilities 2,046,289 2,572,474
Income Tax Payable 1,334,592 770,986
------------ ------------
Total Liabilities $570,465,288 $571,675,121
============ ============
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;
8,517,539 and 8,491,523 Shares Issued
and Outstanding $ 8,517,539 $ 8,491,523
Paid-in Capital 56,670,363 56,459,066
Retained Earnings 29,785,032 28,638,576
Net unrealized gain/(loss) on investments
available for sale 2,273,963 3,201,816
Debt Related to ESOP <504,725> <350,000>
------------ ------------
Total Stockholders' Equity $ 96,742,172 $ 96,440,981
============ ============
Total Liabilities and Stockholders' Equity $667,207,460 $668,116,102
============ ============
* All prior year numbers have been restated to reflect the merger of
Bellingham Bancorporation effective June 19, 1999.
(See Notes to Financial Statements)
2
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HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
3 Months Ended
June 30
1999 1998*
---- ----
INTEREST INCOME:
- ---------------
Interest on Loans $10,533,781 $10,141,493
Interest and Dividends on Investment and
Mortgage-Backed Securities 1,566,627 1,531,751
----------- -----------
Total Interest Income 12,100,408 11,673,244
INTEREST EXPENSE:
- ----------------
Interest on Deposits 5,988,484 6,144,642
Interest on Borrowings 311,402 81,636
----------- -----------
Total Interest Expense 6,299,886 6,226,278
----------- -----------
Net Interest Income 5,800,522 5,446,966
----------- -----------
Provision for Loan Losses 44,000 344,500
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Net Interest Income After Provision
For Loan Losses 5,756,522 5,102,466
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NON-INTEREST INCOME:
- -------------------
Service Fees 482,646 455,764
Net Gain (Loss) on Sale of Loans < 44,641> <114,712>
Net Gain (Loss) on Sale of Investments 185,018 301,836
Other 174,913 359,753
----------- -----------
Total Non-Interest Income 797,936 1,002,641
----------- -----------
NON-INTEREST EXPENSE:
- --------------------
Compensation and Employee Benefits 1,654,038 1,282,485
Building Occupancy 532,567 381,538
Other Expenses 1,278,245 938,923
----------- -----------
Total Non-Interest Expense 3,464,850 2,602,946
----------- -----------
Income Before Provision for
Income Taxes 3,089,608 3,502,161
Provision for Income Taxes 1,006,222 1,189,391
----------- -----------
Net Income $2,083,386 $2,312,770
=========== ===========
Earnings Per Share:
Basic Earnings Per Share $.25 $.27
Diluted Earnings Per Share $.23 $.27
* All prior year numbers have been restated to reflect the merger
of Bellingham Bancorporation effective June 19, 1999.
(See Notes to Financial Statements)
3
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<TABLE>
HORIZON FINANCIAL CORP.
Consolidated Statements of Changes in Stockholder's Equity
3 Months Ended June 30, 1999 and 1998 *
(unaudited)
Common Stock
------------ Additional Accum Other Debt
Number Paid-In Retained Comprehensive Related
Of Shares At Par Capital Earnings Income to ESOP Total
--------- ------- ------- -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at 3/31/98 8,460,858 $8,460,858 $55,688,886 $22,993,399 $3,135,677 $<400,000> $ 89,878,820
Cash div on common
stock at $.11 per
share <823,734> <823,734>
Stock opts.
exercised 2,923 2,923 25,696 28,619
DRIP 7,356 7,356 124,588 131,944
Net change in other
Comprehensive income <1,660> <1,660>
Net income 2,312,770 2,312,770
--------- ---------- ----------- ----------- ---------- --------- ------------
Balance at 6/30/98 8,471,137 $8,471,137 $55,839,170 $24,482,435 $3,134,017 $<400,000> $ 91,526,759
========= ========== =========== =========== ========== ========= ============
Balance at 3/31/99 8,491,523 $8,491,523 $56,459,066 $28,638,576 $3,201,816 $<350,000> $ 96,440,981
Cash div on common <936,930> <936,930>
stock at $.11 per share
Stock opts
exercised 16,638 16,638 106,390 123,028
DRIP 9,378 9,378 104,907 114,285
Net change in other
comprehensive income <$927,853> <927,853>
Loan to ESOP <154,725> <154,725>
Net income 2,083,386 2,083,386
--------- ---------- ----------- ----------- ---------- --------- ------------
Balance at 6/30/99 8,517,539 $8,517,539 $56,670,363 $29,785,032 $2,273,963 $<504,725> $96,742,172
========= ========== =========== =========== ========== ========= ============
* All prior year numbers have been restated to reflect the merger of Bellingham
Bancorporation effective June 19, 1999.
(See Notes to Financial Statements)
</TABLE>
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HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
3 Months Ended
June 30,
1999 1998 *
---- ----
Cash Flows From Operating Activities:
Net Income $ 2,083,386 $2,312,770
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation 234,735 121,520
Provision for loan losses 44,000 344,500
Changes in Assets and Liabilities:
Interest & Dividends Receivable <160,184> 211,672
Interest Payable 68,126 20,362
Federal Income Tax (rec) Payable 563,606 1,189,391
Other Assets 284,704 <82,331>
Other Liabilities <41,558> <3,108,727>
Goodwill 14,351 23,918
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Net Cash Flows from Operating Activities 3,091,166 1,033,075
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Cash Flows From Investing Activities:
Inv in Interest-Bearing Deposits, Net 6,663,313 7,858,065
FHLB Stock <17,900> <3,500>
Purchases of Investment securities-AFS <5,280,000> <500,000>
Proceeds from Sales and Mat of 7,466,427 4,829,936
Purchases of Investment Securities-HTM - -
Proceeds from Sales & Mat of HTM 27,490 1,002,049
Purchases of Mtge Backed Securities - AFS - -
Sales from Mat of Mtge Backed Sec - AFS 1,635,273 7,415,266
Purch Mtg. Backed - HTM - -
Mat Mtge Back - HTM 1,070,081 1,106,518
Net Change in Loans <10,738,840> <29,883,848>
Purchases of Bank Premises and Equipment <873,396> <761,069>
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Net Cash Flows From Investing Activities <47,552> <8,936,583>
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* All prior year numbers have been restated to reflect the merger of
Bellingham Bancorporation effective June 19, 1999.
(See Notes to Financial Statements)
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<PAGE>
HORIZON FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
3 Months Ended
June 30,
1999 1998 *
---- ----
Cash Flows From Financing Activities:
Change in Deposits <310,715> 508,918
Borrowings <1,018,151> 7,710,353
Common Stock Issued, Net 237,313 160,563
Cash Dividends Paid <936,929> <823,734>
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Net Cash Flows from Financing Activities <2,028,482> 7,556,100
---------- ---------
Net change in Cash and Cash Equivalents 1,015,132 <347,408>
Cash and Cash Equivalents,
Beginning of Year 10,889,530 9,841,417
Cash and Cash Equivalents,
End of Year 11,904,662 9,494,009
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash Paid During the Period for:
Interest Expense $5,988,484 6,145,873
Income Taxes $ 425,000 -
* All prior year numbers have been restated to reflect the merger of
Bellingham Bancorporation effective June 19, 1999.
(See Notes to Financial Statements)
6
<PAGE>
HORIZON FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 1999
(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 June 30, 1999 and 1998 are not necessarily
indicative of the operating results for the full year. The March 31, 1999,
consolidated statement of financial condition presented with the interim
financial statements has been restated to reflect the merger of Bellingham
Bancorporation effective June 19, 1999. For audited financial results, refer
to the consolidated financial statements and footnotes thereto included in the
Bank's annual report for the year ended March 31, 1999.
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 ended June 30, 1999, include the accounts of Horizon Financial
Corp., the Bank and other subsidiaries 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.
On June 19, 1999 Bellingham Bancorporation merged into Horizon Financial Corp.
This transaction was accounted for as a pooling of interests. As such, all
prior year numbers have been restated to reflect the merger.
NOTE B - Net Income Per Share
- -----------------------------
Basic earnings per share for the three months ended June 30, 1999 and 1998 are
calculated on the basis of 8,500,329 and 8,461,843 weighted average shares
outstanding. Diluted earnings per share for the three months ended June 30,
1999 and 1998 are calculated on the basis of 8,632,551 and 8,640,979 weighted
average share outstanding, respectively. Diluted EPS figures are computed by
determining the number of additional shares that are deemed outstanding due to
stock options under the treasury stock method.
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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. All prior year numbers have been restated to reflect the merger
with Bellingham Bancorporation.
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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: V. Lawrence Evans
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V. Lawrence Evans
President and Chief Executive Officer
By: Richard P. Jacobson
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Richard P. Jacobson
Chief Financial Officer
Dated: August 27, 1999
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