U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-KSB
-----------
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
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Commission File Number 333-71773
HORIZON BANCORPORATION, INC.
a Florida corporation
(IRS Employer Identification No. 65-0840565)
Suite C, 3005-26th Street West
Bradenton, Florida 34205
(941) 753-2265
--------------
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934:
None
----
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
None
----------------------
Check 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 twelve 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
- -----------------------------------
Indicate by a check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of the Form 10-KSB or any amendment to this
Form 10-KSB. [X]
The Registrant's revenues for the fiscal year ended December 31,
1999 were $172,258.
The aggregate market value of the common stock of the Registrant
held by non-affiliates of the Registrant on March 24, 2000, was
$4,305,136. As of such date, no organized trading market existed
for the common stock of the Registrant. The aggregate market
value of the common stock of the Registrant held by non-
affiliates was computed by reference to the fair market value of
the common stock as of March 24, 2000 (i.e., $5.50 per share).
The estimated fair market value reflects the offering price of
the common stock in the Registrant's initial public offering
completed on December 31, 1999. For the purposes of this
response, directors, executive officers and holders of 5% or more
of the Registrant's common stock are considered the affiliates of
the Registrant at that date.
The number of shares outstanding of the Registrant's common stock
as of March 24, 2000: 1,146,077 shares of common stock, par value
$.01 per share (the "Common Stock").
Transitional Small Business Disclosure Format:
Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
None
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CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995.
- -----------------------------------------------------------------------------
This Report may contain certain "forward-looking statements"
including statements concerning plans, objectives, future events
or performance and assumptions and other statements that are not
statements of historical fact. The Company and the Bank (each as
later defined in this Report) caution readers that the following
important factors, among others, could cause the Company's actual
results to differ materially from the forward-looking statement
contained in this Report: (i) the effect of changes in laws and
regulations, including federal and state banking laws and
regulations, with which the Company or the Bank must comply, and
the associated costs of compliance with such laws and regulations
either currently or in the future as applicable; (ii) the effect
of changes in accounting policies and practices, as may be
adopted by the regulatory agencies as well as by the Financial
Accounting Standards Board, or of changes in the Company's
organization, compensation and benefit plans; (iii) the effect on
the Company's competitive position within its market area of the
increasing consolidation within the banking and financial
services industries, including the increased competition from
larger regional and out-of-state banking organizations as well as
non-bank providers of various financial services; (iv) the effect
of changes in interest rates; and (v) the effect of changes in
the business cycle and downturns in the local, regional or
national economies.
The Company cautions that the foregoing list of important factors is not
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exclusive. The Company does not undertake to update any forward-looking
========================================================================
statement, whether written or oral, that the Company or its agents may make
===========================================================================
from time to time.
==================
PART I
Item 1. Description of Business.
A. Business Development.
Horizon Bancorporation, Inc. (hereinafter, the "Company" or
the "Registrant") was incorporated in the State of Florida on May
27, 1998, under the name of Manasota Group, Inc., for the purpose
of becoming a bank holding company owning all of the outstanding
capital stock of Horizon Bank, a commercial bank chartered under
the laws of Florida (the "Bank"). In anticipation of the filing
for regulatory approval for the Bank, the Company amended its
Articles of Incorporation on October 2, 1998, changing its name
to Horizon Bancorporation, Inc., authorizing additional capital
stock and adopting anti-takeover provisions typical of a bank
holding company for a community bank. All of the regulatory
approvals necessary for the operation of the Company and the Bank
were granted as of October 25, 1999.
The Company began its initial public offering of the Common
Stock at $5.50 per share on February 9, 1999, and completed its
minimum offering of 1,023,638 shares on October 13, 1999. Of the
total proceeds of $5,630,009, the Company used $5,280,000 to
capitalize the Bank, which opened for business on October 25,
1999. The Company raised an additional $673, 414.50 as of
December 31, 1999, when the offering closed, with a total of
1,146,077 shares of Common Stock sold for the aggregate amount of
$6,303,423.50 (the "Offering").
B. Business.
1. Services Offered by the Bank.
The Company's sole subsidiary, the Bank, conducts a
commercial banking business in its primary service area of
Bradenton, Florida and the surrounding area of Manatee County.
The Bank offers a full range of commercial banking services to
individual, professional and business customers in its primary
service area. These services include personal and business
checking accounts and savings and other time certificates of
deposit. The transaction accounts and time certificates are at
rates competitive with those offered in the primary service area.
Customer deposits with the Bank are insured to the maximum extent
provided by law through the FDIC. The Bank issues credit cards
and acts as a merchant depository for cardholder drafts under
both Visa and MasterCard. It offers night depository and bank-by-
mail services and sells travelers checks issued by an independent
entity and cashiers checks. The Bank does not offer trust and
fiduciary services presently and will rely on trust and fiduciary
services offered by correspondent banks until it determines that
it is profitable to offer these services directly.
Lending Activities
The Bank seeks to attract deposits from the general public
and uses those deposits, together with borrowings and other
sources of funds, to originate and purchase loans. It offers a
full range of short and medium-term commercial, consumer and real
estate loans. The Bank attempts to react to prevailing market
conditions and demands in its lending activities, while avoiding
excessive concentrations of any particular loan category. The
Bank has a loan approval process that provides for various levels
of officer lending authority. When a loan amount exceeds an
officer's lending authority, it is transferred to an officer with
a higher limit, with ultimate lending authority resting with the
Loan Committee of the Board of Directors.
The risk of nonpayment of loans is inherent in making all
loans. However, management carefully evaluates all loan
applicants and attempts to minimize its credit risk exposure by
use of thorough loan application and approval procedures that are
established for each category of loan prior to beginning
operation. In determining whether to make a loan, the Bank
considers the borrower's credit history, analyzes the borrower's
income and ability to service the loan and evaluates the need for
collateral to secure recovery in the event of default.
Under Florida law, the Bank is limited in the amount it can
loan to a single borrower to no more than 15% of its statutory
capital base, unless a loan that is greater than 15% of the
statutory capital base is approved by the Board of Directors and
unless the entire amount of the loan is secured. In no event,
however, may the loan be greater than 25% of a bank's statutory
capital base. The Bank's legal lending limit under Florida law
for one borrower, based upon its initial statutory capital base,
is approximately $700,000 for unsecured loans and $1,170,000 for
fully secured loans.
The Bank maintains an allowance for loan losses based upon
management's assumptions and judgments regarding the ultimate
collectibility of loans in its portfolio and based upon a
percentage of the outstanding balances of specific loans when
their ultimate collectibility is considered questionable.
Certain risks with regard to specific categories of loans are
described below.
Commercial Loans.
----------------
Commercial lending activities are directed principally
toward businesses whose demand for funds will fall within the
Bank's anticipated lending limit. These businesses include small
to medium-size professional firms, retail and wholesale
businesses, light industry and manufacturing concerns operating
in and around the primary service area. The types of loans
provided include principally term loans with variable interest
rates secured by equipment, inventory, receivables and real
estate, as well as secured and unsecured working capital lines of
credit. Repayment of these loans is dependent upon the financial
success of the business borrower. Personal guarantees are
obtained from the principals of business borrowers and/or third
parties to further support the borrower's ability to service the
debt and reduce the risk of nonpayment.
Real Estate Loans.
------------------
Real estate lending is oriented toward short-term interim
loans and construction loans. The Bank originates a limited
number of variable-rate residential and other mortgage loans for
its own account and both variable and fixed-rate residential
mortgage loans for resale. The residential loans are secured by
first mortgages on one-to-four family residences in the primary
service area. Loans secured by second mortgages on a borrower's
residence are also made.
Consumer Loans.
---------------
Consumer lending is made on a secured or unsecured basis and
is oriented primarily to the requirements of the Bank's
customers, with an emphasis on automobile financing, home
improvements, debt consolidation and other personal needs.
Consumer loans generally involve more risk than first mortgage
loans because the collateral for a defaulted loan may not provide
an adequate source of repayment of the principal due to damage to
the collateral or other loss of value while the remaining
deficiency often does not warrant further collection efforts. In
addition, consumer loan performance is dependent upon the
borrower's continued financial stability and are, therefore, more
likely to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Various Federal and state laws, including
Federal and state bankruptcy and insolvency laws, also limit the
amount that can be recovered.
Asset and Liability Management
The primary assets of the Bank consist of its loan portfolio
and investment accounts. Consistent with the requirements of
prudent banking necessary to maintain liquidity, the Bank seeks
to match maturities and rates of loans and the investment
portfolio with those of deposits, although exact matching is not
always possible. The Bank seeks to invest the largest portion of
its assets in commercial, consumer and real estate loans.
Generally, loans are limited to less than 74% of deposits and
capital funds; however, this ratio may be exceeded in the initial
period of operation. The Bank's investment account consists
primarily of marketable securities of the United States
government, Federal agencies and state and municipal governments,
generally with varied maturities.
The Bank's investment policy provides for a portfolio
divided among issues purchased to meet one or more of the
following objectives:
* to complement strategies developed in assets/liquidity management,
including desired liquidity levels;
* to maximize after-tax income from funds not needed for day-to-day
operations and loan demand; and
* to provide collateral necessary for acceptance of public funds.
This policy allows the Bank to deal with seasonal deposit
fluctuations and to provide for basic liquidity consistent with
loan demand and, when possible, to match maturities with
anticipated liquidity demands. Longer term securities are
sometimes selected for a combination of yield and exemption from
Federal income taxation when appropriate. Deposit accounts
represent the majority of the liabilities of the Bank. These
include savings accounts, transaction accounts and time deposits.
The Bank derives its income principally from interest charged
on loans and, to a lesser extent, from interest earned on
investments, fees received in connection with the origination of
loans and miscellaneous fees and service charges. Its principal
expenses are interest expense on deposits and operating expenses.
The funds for these activities are provided principally by
operating revenues, deposit growth, purchase of Federal funds
from other banks, repayment of outstanding loans and sale of
loans and investment securities.
2. Market Area and Competition.
The Bank's primary service area is Bradenton, Florida and the
surrounding area of Manatee County. Manatee County is situated in
the Tampa Bay region, south of Tampa and north of Sarasota.
Bradenton is the county's largest city and the county seat. The
primary service area from which the Bank draws 75% of its
business is defined as the 29 census tracts bounded on the north
by the Manatee River, on the south by the Manatee County line, on
the east by the Braden River/38th Street and on the West by
Sarasota Bay/Palma Sola Bay. The current population in the
primary service area is estimated at 161,899 and is projected to
rise to 172,379 by the year 2003. Total employment in the
primary service area is estimated at 88,000, and the median age
is estimated at 42.4.
Service and retail industries employ almost 75% of the
workforce and account for almost two-thirds of the payroll
dollars in Manatee County. In 1997, the primary service area had
an average household income of $33,447, which is projected to
increase to $38,503 by 2003, with more than 47% of the households
in the primary service area having an annual income over $25,000.
The Bank has substantial competition for accounts,
commercial, consumer and real estate loans and for the provision
of other services in the primary service area. The leading
factors in competing for bank accounts are interest rates, the
range of financial services offered, convenience of office
locations and flexible office hours. Direct competition for bank
accounts comes from other commercial banks, savings institutions,
credit unions, brokerage firms and money market funds. The
leading factors in competing for loans are interest rates, loan
origination fees and the range of lending services offered.
Competition for origination of loans normally comes from other
commercial banks, savings institutions, credit unions and
mortgage banking firms. These entities may have competitive
advantages as a result of greater resources and higher lending
limits by virtue of their greater capitalization. These
competitors also may offer their customers certain services that
Horizon Bank does not provide directly but might offer indirectly
through correspondent institutions.
As of June 30, 1999, there were 15 commercial banks,
including the Bank, and eight savings banks and savings and loan
institutions operating in the primary service area. Their 81
branches had combined deposits of approximately $3 billion.
3. Distribution of Assets, Liabilities and
Shareholders' Equity; Interest Rates and Interest Differential.
The following is a presentation of the average consolidated
balance sheet of the Company for the year ended December 31,
1999. This presentation includes all major categories of
interest-earning assets and interest-bearing liabilities (in
thousands):
AVERAGE CONSOLIDATED ASSETS
Year Ended
December 31, 1999
-----------------
Cash and due from banks $ 167
-----
Taxable securities 84
Funds with Escrow Agent 1,825
Federal funds sold 230
Net Loans 559
-----
Total earning assets 2,698
Other assets 160
-----
Total assets $3,353
======
AVERAGE CONSOLIDATED
LIABILITIES AND STOCKHOLDERS' EQUITY
Year Ended
December 31, 1999
-----------------
Non interest bearing-deposits $ 49
NOW and money market deposits 106
Savings Deposits 5
Time Deposits 22
Borrowings 328
Other Liabilities 7
Total liabilities $ 517
-----
Common Stock Subscribed $1,825
Common Stock 554
Paid-in Capital 519
Retained (deficit) (62)
-----
Total stockholders' equity 2,836
-----
Total liabilities and
stockholders' equity $3,353
======
The following is a presentation of an analysis of the net
interest earnings of the Company for the period indicated with
respect to each major category of interest-earning asset and each
major category of interest-bearing liability. The Yield/Rate was
computed on a tax equivalent basis. (dollars in thousands)
Year Ended December 31, 1999
----------------------------
Average
Average Yield/
Assets Amount Interest Rate
- ------ ------ -------- ----
Taxable securities $ 84 $ 5 6.33%
Funds with Escrow Agent 1,825 96 5.25
Federal funds sold 230 17 7.37
Net loans 559 54 9.66
------ ---- -----
Total earning assets $2,698 $172 6.38%
====== ==== =====
Liabilities
- -----------
NOW and money market deposits $106 $5 4.30%
Savings deposits 5 - - 2.52%
Time deposits 22 1 6.03%
Borrowings 328 25 7.62%
---- --- -----
Total interest bearing liabilities $461 $31 6.72%
==== === =====
Interest spread .34%
====
Net interest income $141
====
Net yield on interest earning assets 5.23%
=====
4. Rate/Volume Analysis of Net Interest Income.
During 1998 the Company's activities were centered on creating a
successful business model for a bank, researching the feasibility
of opening a bank in Bradenton, Florida, selecting a Board of
Directors, and related activities. During the first nine months
of 1999, the Company's main focus shifted to the tasks of
obtaining all regulatory approvals and raising capital. Finally,
on October 25, 1999, the Bank commenced operations. It is the
Company's opinion that producing the rate/volume table will be
meaningless and misleading based on the fact that the Company
began operations only in the last two months of 1999.
5. Deposits Analysis.
The Bank offers a full range of interest-bearing and non-
interest bearing accounts, including commercial and retail
checking accounts, negotiable order of withdrawal ("NOW")
accounts, individual retirement accounts, regular interest-
bearing savings accounts and certificates of deposit with a range
of maturity date options. The sources of deposits are residents,
businesses and employees of businesses within the Bank's market
area. Customers are obtained through personal solicitation,
direct mail solicitation and advertisements published in the
local media.
The Bank pays competitive interest rates on time and savings
deposits up to the maximum permitted by law or regulation. In
addition, the Bank has implemented a service charge fee schedule
competitive with other financial institutions, covering such
matters as maintenance fees on checking accounts, per item
processing fees on checking accounts, returned check charges and
the like.
The following table presents, for the periods indicated, the
average amount of and average rate paid on each of the indicated
deposit categories (dollars in thousands):
Year Ended December 31, 1999
----------------------------
Deposit Category Average Amount Average Rate Paid
-------------- -----------------
Non interest bearing demand deposits $ 49 N/A
NOW and money market deposits 106 4.30%
Savings deposits 5 2.52
Time deposits 22 6.03
---- -----
$182 4.51%
==== =====
Time Certificates of Deposit
---------------------------------
3 months or less $ - -
3-6 months $ - -
6-12 months $ - -
over twelve months $ 100
--------
Total $ 100
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6. Loan Portfolio Analysis.
The Bank engages in a full complement of lending activities,
including commercial, consumer installment and real estate loans.
Commercial lending is directed principally towards businesses
whose demands for funds fall within the Company's legal lending
limits and which are potential deposit customers of the Bank.
These loans include loans obtained for a variety of business
purposes, and are made to individual, partnership or corporate
borrowers. The Bank places particular emphasis on loans to small
and medium-sized businesses.
The Bank's consumer loans consist primarily of installment
loans to individuals for personal, family and household purposes,
including automobile loans and pre-approved lines of credit to
individuals. This category of loans includes lines of credit and
term loans secured by second mortgages on residences for a
variety of purposes, including home improvements, education and
other personal expenditures.
The Bank's real estate loans consist of residential and
commercial first and second mortgages.
The following table presents various categories of loans
contained in the Bank's loan portfolio as of December 31, 1999
and the total amount of all loans for such period (in thousands):
Type of Loan As of December 31, 1999
- ------------ -----------------------
Domestic:
Commercial, financial and agricultural $ 1,746
Real estate-construction - -
Real estate mortgage 2,029
Installment and other loans to individuals 153
------
Subtotal $ 3,928
Allowance for loan losses (100)
------
Total (net of allowance) $ 3,828
========
The following is a presentation of an analysis of maturities
of loans as of December 31, 1999 (in thousands):
Due in 1 Due In 1 Due After
Type of Loan Year or Less To 5 Years 5 Years Total
- ------------ ------------ ---------- ------- -----
Commercial, financial
and agricultural $888 $642 $216 $1,746
Real estate-construction - - - - - - - -
---- ---- ---- ------
Total $888 $642 $216 $1,746
==== ==== ==== ======
Experience of the Bank has shown that some receivables will
be paid prior to contractual maturity and others will be
converted, extended or renewed. Therefore, the tabulation of
contractual payments should not be regarded as a forecast of
future cash collections.
The following is a presentation of an analysis of sensitivity
of loans, excluding installment and other loans to individuals,
to changes in interest rates as of December 31, 1999 (in
thousands):
Due in 1 Due In 1 Due After
Type of Loan Year or Less To 5 Years 5 Years Total
- ------------ ------------ ---------- ------- -----
Fixed rate loans $314 $146 $ - - $460
Variable rate loans 574 496 216 1,286
--- --- --- -----
Total $888 $642 $216 $1,746
==== ==== ==== ======
The following table presents information regarding non-
accrual, past due and restructured loans as of December 31, 1999
(dollars in thousands):
As of December 31, 1999
Loans accounted for on a non-accrual basis:
Number: none
Amount:
Accruing loans which are contractually past due 90 days or more
as to principal and interest payments:
Number: none
Amount
Loans which were renegotiated to provide a reduction or deferral
of interest or principal because of deterioration in the
financial position of the borrower:
Number: none
Amount:
Loans now current but for which there are serious doubts as to
the borrower's ability to comply with existing terms:
Number: none
Amount:
As of December 31, 1999, there were no loans classified for
regulatory purposes as doubtful, substandard or special mention
that have not been disclosed in the above table, which (i)
represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating
results, liquidity, or capital resources, or (ii) represent
material credits about which management is aware of any
information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment
terms.
Loans are classified as non-accruing when the probability of
collection of either principal or interest becomes doubtful. The
balance classified as non-accruing represents the net realizable
value of the account, which is the most realistic estimate of the
amount the Company expects to collect in final settlement. If
the account balance exceeds the estimated net realizable value,
the excess is written off at the time this determination is made.
At December 31, 1999, all loans were accruing interest.
There are no other loans which are not disclosed above where
known information about possible credit problems of borrowers
causes management to have serious doubts as to the ability of
such borrowers to comply with the loan repayment terms.
7. Summary of Loan Loss Experience.
An analysis of the Company's loss experience is furnished in
the following table for the year ended December 31, 1999, as well
as a breakdown of the allowance for possible loan losses (dollars
in thousands):
Year Ended December 31, 1999
----------------------------
Balance at beginning of period $- -
Charge-offs - -
Recoveries - -
Provision charged to Operations 100
-----
Balance at end of period $ 100
=====
Ratio of allowance for loan losses to total
loans outstanding during the period 2.55%
Net charge-offs to average loans - -
=====
As of December 31, 1999, the allowance for possible losses
was allocated as follows:
Percent of Loan
in Each
Loans Amount Category to Total
- ----- ------ -----------------
Commercial, financial and agricultural $ 26 44.4%
Real estate-Construction - - - -
Real estate-Mortgage 21 51.7
Installment and other loans to individuals 3
Unallocated 50 3.9%
---- ------
Total $100 100.0%
==== =====
8. Loan Loss Reserve.
In considering the adequacy of the Company's allowance for
possible loan losses, management has focused on the fact that as
of December 31, 1999, 44.4% of outstanding loans were in the
category of commercial and financial agricultural loans.
Management generally regards these loans as riskier than other
categories of loans in the Company's loan portfolio. However,
94.0% of the outstanding loans in this category at December 31,
1999, were made on a secured basis, such collateral consisting
primarily of improved farmland real estate and equipment.
Management believes that the secured condition of the
preponderant portion of its commercial, financial and
agricultural loan portfolio greatly reduces any risk of loss
inherently present in these loans.
The Company's consumer loan portfolio is also secured. At
December 31, 1999, the majority of the Company's consumer loans
were secured by collateral primarily consisting of automobiles,
boats and second mortgages on real estate. Management believes
that these loans involve less risk than other categories of
loans.
Real estate mortgage loans constitute 51.7% of outstanding
loans. Management considers these loans to have minimal risk due
to the fact that these loans represent conventional residential
real estate mortgages where the amount of the original loan does
not exceed 80% of the appraised value of the collateral.
The allowance for loan losses reflects an amount which, in
management's judgment, is adequate to provide for potential loan
losses. Management's determination of the proper level of the
allowance for loan losses is based on the ongoing analysis of the
credit quality and loss potential of the portfolio, actual loan
loss experience relative to the size and characteristics of the
portfolio, changes in composition and risk characteristics of the
portfolio and anticipated impacts of national and regional
economic policies and conditions. Senior management and the
Board of Directors of the Bank review the adequacy of the
allowance for loan losses on a monthly basis.
Management considers the year-end allowance appropriate and
adequate to cover possible losses in the loan portfolio; however,
management's judgment is based upon a number of assumptions about
future events, which are believed to be reasonable, but which may
or may not prove valid. Thus, there can be no assurance that
charge-offs in future periods will not exceed the allowance for
loan losses or that additional increases in the loan loss
allowance will not be required.
9. Investments.
As of December 31, 1999, the securities portfolio comprised
approximately 9.9% of the Company's assets, while loans comprised
approximately 55.9% of the Company's assets. The Bank invests
primarily in obligations of the United States or obligations
guaranteed as to principal and interest by the United States,
other taxable securities and in certain obligations of states and
municipalities. In addition, the Bank enters into Federal Funds
transactions with its principal correspondent banks, and acts as
a net seller of such funds. The sale of Federal Funds amounts to
a short-term loan from the Bank to another bank.
The following table presents, for the year ended December 31,
1999, the approximate market value of the Company's investments,
classified by category and by whether they are considered
available-for-sale or held-to-maturity (in thousands):
Investment Category
- -------------------
December 31, 1999
Available-for-Sale:
- -------------------
FRB and IBB Stock $178
----
Total Securities $178
====
Held-to-Maturity:
- -----------------
U.S. Agencies $500
----
Total Securities $500
====
The following table indicates, for the year ended December
31, 1999, the amount of investments, appropriately classified,
due in (i) one year or less, (ii) one to five years, (iii) five
to ten years, and (iv) over ten years (dollars in thousands):
Investment Category
- -------------------
Average
Available-for-Sale: Amount Weighted Yield
- ------------------ ------ --------------
Other Securities
No maturity $178 6.23%
---- -----
Total $178 6.23%
==== =====
Held-to-Maturity:
- -----------------
Obligations of U.S. Agencies
Over 5 through 10 years $500 7.10%
---- -----
Total Securities $500 7.10%
==== =====
10. Return on Equity and Assets.
Returns on average consolidated assets and average
consolidated equity for the year ended December 31, 1999 are as
follows:
1999
----
Return on average assets (13.9%)
Return on average equity (16.5%)
Equity to assets ratio 84.6%
Dividend payout ratio - -
11. Asset/Liability Management.
The Bank seeks to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the
framework of established cash, loan investment, borrowing and
capital policies. Certain of its officers are responsible for
monitoring policies and procedures that are designed to ensure
acceptable composition of the asset/liability mix, stability and
leverage of all sources of funds while adhering to prudent
banking practices. It is the overall philosophy of management to
support asset growth primarily through growth of core deposits of
all categories made by individuals, partnerships and
corporations. The management of the Bank seeks to invest the
largest portion of their assets in commercial, consumer and real
estate loans.
The asset/liability mix of the Bank is monitored on a daily
basis by its management. A monthly report reflecting interest-
sensitive assets and interest-sensitive liabilities is prepared
and presented to its Board of Directors. The objective of this
policy is to control interest-sensitive assets and liabilities so
as to minimize the impact of substantial movements in interest
rates on their respective earnings.
12. Employees.
As of March 24, 2000, the Bank employed ten full-time
equivalent employees. Management of the Bank believes that its
employee relations are good. There are no collective bargaining
agreements covering any of the Bank's employees.
13. Supervision and Regulation.
Supervision and Regulation of the Company
The Company is a bank holding company within the meaning of
the Federal Bank Holding Company Act of 1956. As a bank holding
company, the Company is required to file with the Board of
Governors of the Federal Reserve System (the "Federal Reserve")
annual and semi-annual reports and information regarding its
business operations and those of the Bank. The Company is also
examined by the Federal Reserve.
A bank holding company is required by the Federal Bank
Holding Company Act to obtain approval from the Federal Reserve
prior to acquiring control of any bank that it does not already
own or engaging in any business other than banking or managing,
controlling or furnishing services to banks and other
subsidiaries authorized by the statute. The Federal Reserve
would approve the ownership of shares by a bank holding company
in any company the activities of which it has determined by order
or regulation to be so closely related to banking or to managing
or controlling banks as to be a proper incident thereto. In
other words, the Company would require Federal Reserve approval
if we were to engage in any of the foregoing activities.
The Company is compelled by the Federal Reserve to invest
additional capital in the event the Bank experiences either
significant loan losses or rapid growth of loans or deposits.
The Federal Reserve requires a bank holding company to act as a
source of financial strength and to take measures to preserve and
protect its bank subsidiaries
As a bank holding company, the Company operates under the
capital adequacy guidelines established by the Federal Reserve.
Under the Federal Reserve's current risk-based capital guidelines
for bank holding companies, the minimum required ratio for total
capital to risk weighted assets we will be required to maintain
is 8%, with at least 4% consisting of Tier 1 capital. Tier 1
capital consists of common and qualifying preferred stock and
minority interests in equity accounts of consolidated
subsidiaries, less goodwill and other intangible assets. Because
the Company is a bank holding company with less than $150 million
in total consolidated assets, these guidelines apply on a Bank-
only basis. These risk-based capital guidelines establish
minimum standards and bank holding companies generally are
expected to operate well above the minimum standards.
The Company also is subject to requirements to file annual,
quarterly and certain other reports with the SEC applicable under
the Securities Exchange Act of 1934.
Supervision and Regulation of the Bank
The Bank is examined and regulated by the Florida Department
and, as a member of the Federal Reserve Bank System, the Federal
Reserve. Under Florida law and Florida Department's regulations,
the Bank may pay cash dividends only up to the sum of:
* current period net profits; plus
* 80% of its cumulative retained net profits for the preceding two
years or, with the approval of the Florida Department, 80% of its
cumulative retained net profits for a period longer than two years.
Also, no dividend may be paid by the Bank if
* the sum of the amounts equal to the remaining 20% of the retained net
profits for the periods from which the 80% is used to pay the
dividends is less than the Bank's book value of its common and
preferred stock; or
* the sum of the current period net profits plus the retained net
profits for the preceding two years is less than zero.
The Bank's deposits are insured by the FDIC for a maximum of
$100,000 per depositor. For this protection, the Bank pays a
semi-annual statutory assessment and will have to comply with the
rules and regulations of the FDIC. In case of member banks like
the Bank, the Federal Reserve has the authority to prevent the
continuance or development of unsound and unsafe banking
practices and to approve conversions, mergers and consolidations.
As a member of the Federal Reserve, the Bank also has to
comply with rules that restrict preferential loans by the bank to
"insiders," require the Bank to keep information on loans to
principal shareholders and executive officers, and prohibit
certain director and officer interlocks between financial
institutions. Also, under the Federal Reserve's current risk-
based capital guidelines for member banks, the Bank will be
required to maintain a minimum ratio of total capital to risk
weighted assets of 8%, with at least 4% consisting of Tier 1
capital.
In addition, the Federal Reserve requires its member banks to
maintain a minimum ratio of Tier 1 capital to total assets. This
capital measure is generally referred to as the leverage capital
ratio. The minimum required leverage capital ratio is 4 percent
if the Federal Reserve determines that the institution is not
anticipating or experiencing significant growth and has well-
diversified risks -- including no undue interest rate exposure,
excellent asset quality, high liquidity and good earnings -- and,
in general, is considered a strong banking organization and rated
Composite 1 under the Uniform Financial Institutions Rating
Systems. If the Bank does not satisfy any of these criteria it
may be required to maintain a ratio of total capital to risk-
based assets of 10% and a ratio of Tier 1 capital to risk-based
assets of at least 6%. The Bank would then be required to
maintain a 5% leverage capital ratio.
Monetary Policy
Banking is a business that depends on interest rate
differentials. The difference between the interest rates paid by
the Bank on its deposits and other borrowings and the interest
rate received on loans extended to its customers and on
securities held in its portfolio comprises the major portion of
the Bank's earnings.
The earnings and growth of the Bank are affected not only by
general economic conditions, both domestic and foreign, but also
by the monetary and fiscal policies of the United States and its
agencies, particularly the Federal Reserve. The Federal Reserve
implements national monetary policy by its open market operations
in United States government securities, adjustments in the amount
of industry reserves that banks and other financial institutions
are required to maintain and adjustments to the discount rates
applicable to borrowings by banks from the Federal Reserve. The
actions of the Federal Reserve in these areas influence the
growth of bank loans, investments and deposits and also affect
interest rates charged and paid on deposits. We cannot predict
the nature and impact of any future changes in monetary policies.
Recent Legislative Developments
Under recent Florida legislation, which is designed to
implement the Interstate Banking Act, a non-Florida bank may not
open new branches in Florida but may, beginning May 31, 1997,
acquire by merger a Florida bank and operate its branches after
the merger, provided that the Florida bank is at least three
years old. Also, effective May 31, 1997, recent Florida
legislation prohibits the establishment in Florida of new banks
by non-Florida bank holding companies. A non-Florida bank
holding company may, however, acquire a Florida bank or bank
holding company, provided that the Florida bank involved is at
least three years old. These interstate acquisitions are
prohibited if they result in the control of more than 30% of the
total amount of insured deposits in Florida, except where the
acquisition is an initial entry into Florida by the out-of-state
bank holding company. This legislation has the potential of
increasing the competitive forces to which we would be subject.
On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act of 1999, which repeals many of the Glass-
Steagall Act's restrictions on the activities of banks and bank
holding companies. The new law establishes two new structures --
"financial holding companies" and "financial subsidiaries"-- that
enable qualifying bank holding companies and banks to provide a
wide variety of financial services that formerly could be
performed only by insurance companies and securities firms. The
new law also permits bank affiliations with insurance and
securities firms.
Item 2. Description of Property.
In July 1999, the Company agreed to purchase, for $407,500,
an approximately one acre parcel of land at 901-53rd Avenue East,
Bradenton, Florida as the site for a permanent facility for the
Bank. Construction on the 5,000 square foot facility began in
February 2000, and the facility is scheduled for occupancy in
July 2000. The facility will consist of a one-story building
with approximately 5,000 square feet of interior space, with four
interior teller windows, four exterior drive-through teller
stations and 30 parking spaces. The interior will include
executive offices, work stations for support staff and safe
deposit box storage areas. The total cost of construction,
landscaping, furniture and equipment will be approximately
$1,100,000.
Pending the completion of the permanent facility, the Bank is
currently operating out of a 700 square foot modular unit with
two attached drive-through windows. Loan applications are also
accepted at the Bank's temporary office at Suite C, 3005-26th
Street West, Bradenton, Florida.
Item 3. Legal Proceedings.
Neither the Company nor the Bank is a party to, nor is any of
their property the subject of, any material pending legal
proceeding that is not routine litigation that is incidental to
the business or any other material legal proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security-holders during
the fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Registrant's Amended and Restated Articles of
Incorporation authorize it to issue up to 25,000,000 shares of
the Common Stock. As of March 24, 2000, 1,146,077 shares of the
Common Stock were issued and outstanding to 826 holders of
record.
There is no established public trading market in the stock.
In the Offering, the Registrant sold 1,146,077 shares of Common
Stock at a price of $5.50 per share. The Registrant is aware of
isolated private sales that have occurred since December 31,
1999, at an average price of $6.00 per share.
The declaration of future dividends is within the discretion
of the Board of Directors and will depend, among other things,
upon business conditions, earnings, the financial condition of
the Bank and the Company, and regulatory requirements.
The Bank is restricted in its ability to pay dividends under
the Florida banking laws and by regulations of the OCC.
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Discussion of the financial condition and results of
operations of the Company should be read in conjunction with the
Company's consolidated financial statements and related notes
which are included elsewhere herein.
A. Results of Operations.
Year Ended December 31, 1999
- ----------------------------
For the year ended December 31, 1999, net loss amounted to
$466,866. For 1999, basic and diluted loss per share of Common
Stock was $.80. Because of the existence of stock options, the
Company has a complex capital structure, necessitating the
disclosure of basic and dilutive income/loss per share. However,
since the options were not dilutive, basic and dilutive
income(loss) per share are identical.
Net Interest Income
- -------------------
The Company's results of operations are determined by its
ability to manage effectively interest income and expense, to
minimize loan and investment losses, to generate non-interest
income and to control non-interest expense. Since interest rates
are determined by market forces and economic conditions beyond
the control of the Company, the ability to generate net interest
income is dependent upon the Company's ability to maintain an
adequate spread between the rate earned on earning assets and the
rate paid on interest-bearing liabilities, such as deposits and
borrowings. Thus, net interest income is the key performance
measure of income.
The Company's net interest income for 1999 was $140,803.
Average yield on earning assets was 6.38% for the year ended
December 31, 1999. The average costs of funds for 1999 was
6.72%. The net interest yield is computed by subtracting
interest expense from interest income and dividing the resulting
figure by average interest-earning assets. Net interest yields
for the year ended December 31, 1999 amounted to 5.23%.
Non-Interest Income
- -------------------
Non-interest income for the years ended December 31, 1999
amounted to $97. However, the Company commenced banking
operations on October 25, 1999 and is operating from a temporary
structure. Once the permanent structure is completed, and an
advertising campaign is initiated, the Bank will be able to
increase its resources significantly.
Non-Interest Expense
- --------------------
Non-interest expense was $507,766 during 1999. Below are the
components of non-interest expense for the year 1999 (dollars in
thousands):
Year Ended December 31, 1999
Salaries and other personnel benefits $217
Employee leasing 110
Organization costs 41
Professional Fees 35
Other expenses 105
----
Total non-interest expense $508
====
At December 31, 1999, the allowance for loan losses was
$100,000. As of December 31, 1999, management considers the
allowance for loan losses to be adequate to absorb possible
future losses. However, there can be no assurance that charge-
offs in future periods will not exceed the allowance for loan
losses or that additional provisions to the allowance will not be
required.
Liquidity and Interest Rate Sensitivity
- ---------------------------------------
Net interest income, the Company's primary source of
earnings, fluctuates with significant interest rate movements.
To lessen the impact of these margin swings, the balance sheet
should be structured so that repricing opportunities exist for
both assets and liabilities in roughly equivalent amounts at
approximately the same time intervals. Imbalances in these
repricing opportunities at any point in time constitute interest
rate sensitivity.
Interest rate sensitivity refers to the responsiveness of
interest-bearing assets and liabilities to changes in market
interest rates. The rate sensitive position, or gap, is the
difference in the volume of rate sensitive assets and
liabilities, at a given time interval. The general objective of
gap management is to manage actively rate sensitive assets and
liabilities so as to reduce the impact of interest rate
fluctuations on the net interest margin. Management generally
attempts to maintain a balance between rate sensitive assets and
liabilities as the exposure period is lengthened to minimize the
Company's overall interest rate risks. The asset mix of the
balance sheet is continually evaluated in terms of several
variables: yield, credit quality, appropriate funding sources
and liquidity. To effectively manage the liability mix of the
balance sheet focuses on expanding the various funding sources.
The interest rate sensitivity position at year-end 1999 is
presented below. Since all interest rates and yield do not
adjust at the same velocity, the gap is only a general indicator
of rate sensitivity (dollars in thousands):
After
three After
months After one year
but six but
Within within but within After
three six within five five
months months one year year years Total
------ ------ -------- ------ ----- -----
EARNING ASSETS
Loans $880 $ 58 $ - - $2,888 $102 $3,928
Securities - - - - - - - - 678 678
Federal funds sold 855 - - - - - - - - 855
------ ---- ------ ------ ---- ------
Total earning assets $1,735 $ 58 $ - - $2,888 $780 $5,461
====== ==== ====== ====== ==== ======
SUPPORTING
SOURCES OF FUNDS
Interest-bearing demand
Deposits and savings $ 786 $ - - $ - - $ - - $ - - $ 786
Certificates,
Less than $100M - - 52 - - 148 - - 200
Certificates,
$100M and over - - - - - - 100 - - 100
------ ------ ------ ------ ------- -----
Total
interest-bearing
liabilities $ 786 $ 52 $ - - $ 248 $ - - $1,086
===== ====== ======= ====== ======= ======
Interest rate
Sensitivity gap $ 949 $ 6 - - $2,640 $ 780 $4,375
Cumulative gap 949 955 955 3,595 4,375 4,375
Interest rate sensitivity
gap ratio 2.21 1.11 - - 11.65 N/A 5.03
Cumulative interest rate
sensitivity gap ratio 2.21 2.14 2.14 4.31 5.03 5.03
As evidenced by the table above, the Company is asset
sensitive at all times. In a declining interest rate environment,
a liability sensitive position (a gap ratio of less than 1.0) is
generally more advantageous since liabilities are repriced sooner
than assets. Conversely, in a rising interest rate environment,
an asset sensitive position (a gap ratio over 1.0) is generally
more advantageous, as earning assets are repriced sooner than
liabilities. With respect to the Company, an increase in
interest rates would increase income for all time periods.
Conversely, a decline in interest rates would reduce income for
all time periods. This, however, assumes that all other factors
affecting income remain constant.
As the Company continues to grow, management will
continuously structure its rate sensitivity position to best
hedge against rapidly rising or falling interest rates. The
Bank's Asset/Liability Committee meets on a quarterly basis and
develops management's strategy for the upcoming period. Such
strategy includes anticipations of future interest rate
movements. Interest rate risk will, nonetheless, fall within
previously adopted policy parameters to contain any risk.
Liquidity represents the ability to provide steady sources of
funds for loan commitments and investment activities and to
maintain sufficient funds to cover deposit withdrawals and
payment of debt and operating obligations. These funds can be
obtained by converting assets to cash or by attracting new
deposits. The Company's primary source of liquidity comes from
its ability to maintain and increase deposits through the Bank.
Below are pertinent liquidity balances and ratios for the year
ended December 31, 1999 (dollars in thousands):
Cash and cash equivalents $607,744
CDs, over $100,000 to total deposits ratio 7.3%
Loan to deposit ratio 278.6%
Securities to total assets ratio 9.9%
Brokered deposits - -
As the above balances and ratios indicate, management
believes that the Company's 1999 liquidity position is
satisfactory. Note that a high loan to deposit ratio for new
banks in growth areas is acceptable. Management is unaware of
any trends, demands, commitments, events or uncertainties that
will result in or are reasonably likely to result in the
Company's liquidity increasing or decreasing in any material way.
The Company is not aware of any current recommendations by the
regulatory authorities which, if implemented, would have a
material effect on the Company's liquidity, capital resources or
results of operations.
Capital Adequacy
- ----------------
There are now two primary measures of capital adequacy for
banks and bank holding companies: (i) risk-based capital
guidelines; and (ii) the leverage ratio.
The risk-based capital guidelines measure the amount of a
bank's required capital in relation to the degree of risk
perceived in its assets and its off-balance sheet items. For
example, cash and Treasury Securities are placed under a zero
percent risk category while commercial loans are placed under the
one hundred percent risk category. Banks are required to
maintain a minimum risk-based capital ratio of 8%, with at least
4% consisting of Tier 1 capital. Under the risk-based capital
guidelines, there are two "tiers" of capital. Tier 1 capital
consists of common shareholders' equity, non-cumulative and
cumulative (bank holding companies only), perpetual preferred
stock and minority interests. Goodwill is subtracted from the
total. Tier 2 capital consists of the allowance for loan losses,
hybrid capital instruments, term subordinated debt and
intermediate term preferred stock.
The second measure of capital adequacy relates to the
leverage ratio. The OCC has established a 3% minimum leverage
ratio requirement. Note that the leverage ratio is computed by
dividing Tier 1 capital into total assets. Banks that are not
rated CAMEL 1 by their primary regulator should maintain a
minimum leverage ratio of 3% plus an additional cushion of at
least 1% - 2%, depending upon risk profiles and other factors.
A new rule was recently adopted by the Federal Reserve Board,
the OCC and the FDIC that adds a measure of interest rate risk to
the determination of supervisory capital adequacy. In connection
with this new rule, the agencies also proposed a measurement
process to measure interest rate risk. Under this proposal, all
items reported on the balance sheet, as well as off-balance sheet
items, would be reported according to maturity, re-pricing dates
and cash flow characteristics. A bank's reporting position would
be multiplied by duration-based risk factors and weighted
according to rate sensitivity. The net risk weighted position
would be used in assessing capital adequacy. The objective of
this complex proposal is to determine the sensitivity of a bank
to various rising and declining interest rate scenarios. This
proposal is under consideration by the Federal banking
regulators.
The table below illustrates the Bank's and Company's
regulatory capital ratios at December 31, 1999:
Minimum
December 31, Regulatory
Bank 1999 Requirement
- ---- ------------ -----------
Tier 1 Capital 91.3% 4.0%
Tier 2 Capital 1.2% N/A
----- ----
Total risk-based capital ratio 92.5% 8.0%
===== ====
Leverage ratio 85.6% 3.0%
===== ====
Minimum
December 31, Regulatory
Company 1999 Requirement
- ------- ------------ -----------
Tier 1 Capital 104.2% 4.0%
Tier 2 Capital 1.2% N/A
------ ----
Total risk-based capital ratio 105.4% 8.0%
====== ====
Leverage ratio 100.4% 3.0%
====== ====
The above ratios indicate that the capital positions of the
Company and the Banks are sound and that the Company is well
positioned for future growth.
Item 7. Financial Statements and Supplementary Data.
The following financial statements are contained in this Item
7:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1999
Consolidated Statements of Income for the year ended December 31, 1999
Consolidated Statements of Cash Flows for the year ended
December 31, 1999
Notes to Consolidated Financial Statements
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
TABLE OF CONTENTS
REPORT OF INDEPENDENT ACCOUNTANTS...................................28
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets....................................29
Consolidated Statements of Operations..........................30
Consolidated Statements of Changes in Shareholders' Equity.....31
Consolidated Statements of Cash Flows..........................32
Notes to Consolidated Financial Statements.....................33
Report of Independent Accountants
Board of Directors
Horizon Bancorporation, Inc.
Bradenton, Florida
We have audited the accompanying consolidated balance sheets
of Horizon Bancorporation, Inc., Bradenton Florida (the
"Company") and subsidiary as of December 31, 1999 and 1998, and
the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the year ended December
31, 1999 and for the period from inception, May 27, 1998, to
December 31, 1998. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Horizon Bancorporation, Inc.,
and subsidiary at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for
the year ended December 31, 1999 and for the period from
inception, May 27, 1998, to December 31, 1998, in conformity with
generally accepted accounting principles.
/S/ Francis & Company, CPA's
Atlanta, Georgia
March 23, 2000
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
Consolidated Balance Sheets
ASSETS
------
As of December 31,
1999 1998
Cash and due from banks $ 607,744 $ 28,799
Federal funds sold, net (Note 3) 855,000 - -
--------- ---------
Total cash and cash equivalents $1,462,744 $ 28,799
Securities: (Notes 2, 4 & 5)
Available-for-sale at fair value 177,900 - -
Held-to-maturity (estimated market value
of $487,800 at December 31, 1999) 500,000 - -
Loans, net (Notes 2, 6, 7 & 13) 3,828,043 - -
Property and equipment, net (Notes 2 & 8) 802,997 4,293
Other assets 75,153 93,980
--------- -------
Total Assets $6,846,837 $ 127,072
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
- ------------
Deposits
Non-interest bearing deposits $ 286,965 $ - -
Interest bearing deposits 1,086,603 - -
--------- ---------
Total deposits (Note 10) $1,373,568 $ - -
Other liabilities 47,926 109,602
--------- ---------
Total Liabilities $1,421,494 $ 109,602
Commitments and Contingencies (Note 9)
- -----------------------------
Shareholders' Equity: (Notes 1, 13 & 15)
- ---------------------
Common stock, .01 par value, 25,000,000
shares authorized; 1,146,077 (1999) and
21,600 (1998) shares issued and outstanding $ 11,461 $ 216
Paid-in-capital 5,992,278 128,784
Retained (deficit) (578,396) (111,530)
--------- ---------
Total Shareholders' Equity $5,425,343 $ 17,470
--------- ---------
Total Liabilities and Shareholders' Equity $6,846,837 $ 127,072
========== ==========
Refer to notes to the consolidated financial statements.
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
Consolidated Statements of Operations
Year Ended Inception to
December 31, December 31,
Interest Income: 1999 1998
- ---------------- ------------ -------------
Interest and fees on loans (Note 2) $ 54,090 $ - -
Interest on investment securities 5,315 1,010
Interest on federal funds sold 16,944 - -
Interest; escrow agent 95,812 - -
-------- --------
Total interest income $ 172,161 $ 1,010
Interest Expense:
- -----------------
Interest on deposits and borrowings (Note 11) $ 31,358 $ 702
-------- --------
Net interest income $ 140,803 $ 308
Provision for possible loan losses (Note 7) 100,000 - -
-------- --------
Net interest income after provision for
possible loan losses $ 40,803 $ 308
-------- --------
Other Income:
- -------------
Service fees on deposit accounts $ 97 $ - -
Miscellaneous, other - - - -
-------- --------
Total other income $ 97 $ - -
-------- --------
Other Expenses:
Salaries and benefits $ 217,371 $ - -
Employee leasing 109,809 43,324
Professional fees 34,695 3,515
Organization expense 41,212 51,972
Supplies and printing 18,767 1,543
Rent expense 13,819 1,445
Other operating expenses (Note 12) 72,093 10,039
-------- --------
Total other expenses` $ 507,766 $ 111,838
-------- --------
(Loss) before income tax $(466,866) $(111,530)
Income tax (Notes 2 & 12) - - - -
-------- --------
Net loss $(466,866) $(111,530)
======== ========
Basic loss per share (Note 2) $ (.80) $ (5.16)
========= ========
Diluted loss per share (Note 2) (.80) $ N.A.
========= =========
Refer to notes to the consolidated financial statements.
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
Consolidated Statements of Changes in Shareholders' Equity
For the year ended December 31, 1999 and
from Inception (May 27, 1998) to December 31, 1998
Common Stock Paid-In- Retained
Shares Par Value Capital Earnings Total
------------------ ------- --------- -----
Sale of stock 21,600 $ 216 $ 107,784 $ - - $108,000
Subscribed stock - - - - 21,000 - - 21,000
Net loss, 1998 - - - - - - (111,530) (111,530)
Balance, December 31, 1998 21,600 $ 216 $ 128,784 $(111,530) $ 17,470
Sale of stock 1,124,477 11,245 6,173,378 - - 6,184,623
Selling costs - - - - (309,884) - - (309,884)
Net loss, 1999 - - - - - - (466,866) (466,866)
--------- ------- --------- ---------- --------
Balance, December 31, 1999 1,146,077 $11,461 $5,992,278 $(578,396) $5,425,343
========= ======= ========= ========== =========
Refer to notes to the consolidated financial statements.
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
Consolidated Statements of Cash Flows
Years Ended December 31,
Cash flows from operating activities: 1999 1998
- ------------------------------------- ---- ----
Net loss $ (466,866) $ (111,530)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 10,668 - -
Provision for loan losses 100,000 - -
(Increase) in receivables and other assets (63,051) (12,101)
Increase in payables and other liabilities 47,324 601
---------- ----------
Net cash used in operating activities $ (371,925) $ (123,030)
---------- ----------
Cash flows from investing activities:
- -------------------------------------
Purchase of securities, AFS $ (177,900) $ - -
Purchase of securities, HTM (500,000) - -
(Increase) in loans, net (3,928,043) - -
Purchase of premises and equipment (809,372) (4,293)
---------- ----------
Net cash used in investing activities $(5,415,315) $ (4,293)
---------- ----------
Cash flows from financing activities:
- -------------------------------------
Sale of common stock, net $ 5,956,617 $ 47,122
Increase in deposits 1,373,568 - -
(Decrease) in borrowings (109,000) 109,000
---------- ----------
Net cash provided by financing activities $ 7,221,185 $ 156,122
---------- ----------
Net increase in cash and cash equivalents $ 1,433,945 $ 28,799
Cash and cash equivalents, beginning of period 28,799 - -
---------- ----------
Cash and cash equivalents, end period $ 1,462,744 $ 28,799
========== ==========
Supplemental Information:
Income taxes paid $ - - $ - -
========== ==========
Interest paid $ 31,247 $ 101
========== ==========
Refer to notes to the consolidated financial statements.
HORIZON BANCORPORATION, INC.
BRADENTON, FLORIDA
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
Note 1 - Organization of the Business
- -------------------------------------
Manasota Group, Inc. ("Manasota") was incorporated on May
27, 1998, for the purpose of becoming a bank holding company with
respect to a proposed de novo bank, Horizon Bank (the "Bank") to
be located in Bradenton, Florida. Manasota was later renamed
Horizon Bancorporation, Inc., Bradenton, Florida (the "Company").
Accordingly, all financial transaction undertaken by Manasota are
reflected in the Company's financial statements as of and for the
year ended December 31, 1999. The Company commenced banking
operations on October 25, 1999 when Horizon Bank, its newly
formed subsidiary (the "Bank") opened for business. The Company
invested $5,280,000 as equity in the Bank immediately prior to
the Bank's opening.
The Company is authorized to issued up to 25.0 million
shares of its $.01 par value per share common stock. Each share
is entitled to one vote and shareholders have no preemptive or
conversion rights. As of December 31, 1999, there were 1,146,077
shares of the Company's common stock issued and outstanding.
Additionally, the Company has authorized the issuance of up to
1.0 million shares of its $.01 par value per share preferred
stock. The Company's Board of Directors may, without further
action by the shareholders, direct the issuance of preferred
stock for any proper corporate purpose with preferences, voting
powers, conversion rights, qualifications, special or relative
rights and privileges which could adversely affect the voting
power or other rights of shareholders of common stock. As of
December 31, 1999, there were no shares of the Company's
preferred stock issued or outstanding.
The Company's Articles of Incorporation and Bylaws contain
certain provisions that might be deemed to have potential
defensive "anti takeover" effect. These certain provisions
include: (i) The Board of Directors is divided into three classes
with members of each class serving three-year terms with the
election of each class in successive years; (ii) membership on
the Board of Directors may range from six to twenty members and
may increase or decrease only by a majority vote of the directors
then in office; (iii) Board vacancies, including an increase in
the number of directors, can be filled for the remainder of the
unexpired term only by a majority vote of the directors then in
office; (iv) directors may be removed if at least two-thirds of
the directors then in office approve the removal as well as by a
majority vote of the Company's voting stock; (v) special meetings
of shareholders may be called by a majority vote of the directors
then in office or by the holders of at least 25% of the
outstanding voting stock of the Company; (vi) shareholders shall
not be entitled to take any action by written consent in lieu of
taking such action at an annual or special meeting of
shareholders; (vii) certain transactions, such as mergers or
consolidations, may be approved by the vote of at least two-
thirds of the directors then in office as well as by a majority
vote of the Company's voting stock; (viii) amendments to the
Company's Articles of Incorporation can be approved by a vote of
at least two-thirds of the directors then in office as well as by
a majority vote of the Company's voting stock; (ix) amendments to
the Company's Bylaws can be approved by the Board of Directors or
by the shareholders at a duly constituted meeting, where such
action by the Board of Directors requires the vote of two-thirds
of the directors then in office or the affirmative vote of
holders of at least two-thirds of the outstanding voting stock of
the Company; and (x) the issuance of preferred stock, described
in the previous paragraph, which may also be deemed to have an
"anti takeover" effect.
The Company filed a Registration Statements on Form SB-1
with the Securities and Exchange Commission offering for sale a
minimum of 1,050,000 and a maximum of 1,500,000 shares of its
$.01 par value common stock (the "Offering"). The sales price
for each share of common stock is $5.50. The Company raised
$6,003,739, net of selling expenses, upon the completion of the
Offering on December 31, 1999 and the sale of 1,146,077 of the
Company's common stock. On October 25, 1999, upon commencement
of banking operations, the Company ceased to be categorized as a
"Development Stage Enterprise".
Note 2 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Basis of Presentation and Reclassification.
-------------------------------------------
The consolidated financial statements include the accounts
of the Company and the Bank. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Certain prior year amounts have been reclassified to conform to
the current year presentation. Such reclassifications had no
impact on net income or the aggregate balance of shareholders'
equity.
Basis of Accounting.
--------------------
The accounting and reporting policies of the Company conform
to generally accepted accounting principles and to general
practices in the banking industry. In preparing the financial
statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and income
and expenses during the reporting period. Actual results could
differ significantly from those estimates. Material estimates
that are particularly susceptible to significant change in the
near term relate to the determination of the allowance for loan
losses and the valuation of real estate acquired in connection
with foreclosures or in satisfaction of loans.
Investment Securities.
----------------------
Investment securities that the Company has the positive
intent and ability to hold to maturity are classified as held to
maturity and are reported at amortized cost. Investment
securities held for current resale are classified as trading
securities and are reported at fair value, with unrealized gains
and losses included in earnings. Investment securities not
classified either as securities held to maturity or trading
securities are classified as available for sale and reported at
fair value; net unrealized gains or losses, net of related taxes,
are excluded from earnings and reported as accumulated other
comprehensive income/(loss) within shareholders' equity. The
classification of investment securities as held to maturity,
trading or available for sale is determined at the date of
purchase.
Realized gains and losses from sales of investment
securities are determined based upon the specific identification
method. Premiums and discounts are amortized as an adjustment to
yield over the remaining lives of the securities using the level-
yield method.
Management periodically evaluates investment securities for
other than temporary declines in value and records losses, if
any, through an adjustment to earnings.
Loans, Interest and Fee Income on Loans.
----------------------------------------
Loans are stated at the principal balance outstanding.
Unearned discount, unamortized loan fees and the allowance for
possible loan losses are deducted from total loans in the
statement of condition. Interest income is recognized over the
term of the loan based on the principal amount outstanding.
Points on real estate loans are taken into income to the extent
they represent the direct cost of initiating a loan. The amount
in excess of direct costs is deferred and amortized over the
expected life of the loan.
Accrual of interest on loans is discontinued either when
reasonable doubt exists as to the full or timely collection of
interest or principal or when a loan becomes contractually past
due by 90 days or more with respect to interest or principal.
When a loan is placed on non-accrual status, all interest
previously accrued but not collected is reversed against current
period interest income. Income on such loans is then recognized
only to the extent that cash is received and where the future
collection of principal is probable. Loans are returned to
accruing status only when they are brought fully current with
respect to interest and principal and when, in the judgment of
management, the loans are estimated to be fully collectible as to
both principal and interest.
Impaired loans are (i) non-performing loans that have been
placed on nonaccrual status and (ii) loans which are performing
according to all contractual terms of the loan agreement, but may
have substantive indication of potential credit weakness.
Accounting standards require impaired loans to be measured based
on the present value of expected future cash flows discounted at
the loan's original effective interest rate, or at the loan's
observable market price, or the fair value of the collateral if
the loan is collateral dependent.
Allowance for Loan Losses.
--------------------------
The allowance for loan losses is established through
provisions charged to operations. Loans deemed to be
uncollectible are charged against the allowance for loan losses,
and subsequent recoveries, if any, are credited to the allowance.
The adequacy of the allowance is based on management's evaluation
of the loan portfolio under current economic conditions, past
loan loss experience, adequacy of underlying collateral, changes
in the nature and volume of the loan portfolio, review of
specific problem loans, and such other factors which, in
management's judgment, deserve recognition in estimating loan
losses. The evaluation for the adequacy of the allowance is
inherently subjective as it requires material estimates,
including the amounts and timing of future cash flows expected to
be received on impaired loans that may be susceptible to
significant change. Various regulatory agencies, as an integral
part of their examination process, periodically review the
Company's allowance for loan losses. Such agencies may require
the Company to recognize additions to the allowance based on
their judgments about information available to them at the time
of their examination.
Property and Equipment.
-----------------------
Furniture and equipment are stated at cost, net of
accumulated depreciation. Depreciation is computed using the
straight line method over the estimated useful lives of the
related assets. Maintenance and repairs are charged to
operations, while major improvements are capitalized. Upon
retirement, sale or other disposition of property and equipment,
the cost and accumulated depreciation are eliminated from the
accounts, and gain or loss is included in income from operations.
Other Real Estate.
------------------
Other real estate represents property acquired through
foreclosure proceedings. Other real estate is carried at the
lower of: (i) cost; or (ii) fair value less estimated selling
costs. Fair value is determined on the basis of current
appraisals, comparable sales and other estimates of value
obtained principally from independent sources. Any excess of the
loan balance at the time of foreclosure over the fair value of
the real estate held as collateral is treated as a loan loss and
charged against the allowance for loan losses. Gain or loss on
the sale of the property and any subsequent adjustments to
reflect changes in fair value of the property are reflected in
the income statement. Recoverable costs relating to the
development and improvement of the property are capitalized
whereas routine holding costs are charged to expense.
Income Taxes.
-------------
The Company will be subject to taxation whenever taxable
income is generated. For the periods ended December 31, 1999 and
1998, since no taxable income was generated, the Company did not
incur a tax liability.
Statement of Cash Flows:
------------------------
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks and
federal funds sold. Generally, federal funds are purchased or
sold for one day periods.
Stock Options and Warrants.
---------------------------
There are two major accounting standards that address the
accounting for stock options/warrants. Entities are allowed to
freely choose between the two distinct standards. The first
standard, APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") measures stock options/warrants by the
intrinsic value method. Under the above method, if the exercise
price is the same or above the quoted market price at the date of
grant, no compensation expense is recognized. The second
standard, SFAS No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"), may recognize a compensation expense even in cases
where the exercise price is the same or above the quoted market
price. SFAS 123 takes into account the time value of the
options/warrants; that is, the value of being able to defer a
decision on whether or not to exercise the option/warrants until
the expiration date. The Company follows the accounting
standards of APB 25. Had the Company followed the accounting
standards of SFAS 123, net income for the years ended December
31, 1999 and 1998 would have been reduced by $34,740 and zero,
respectively. On a per share basis, basic and diluted earnings
per share would have been reduced by $.06 in 1999 and by zero in
1998.
Earnings Per Share ("EPS").
-----------------------------
The Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128
establishes standards for computing and presenting EPS. Because
the Company has a complex capital structure, it is required to
report: (i) basic EPS; and (ii) diluted EPS. Basic EPS is
defined as the amount of earnings available to each share of
common stock outstanding during the reporting period. Diluted
EPS is defined as the amount of earnings available to each share
of common stock outstanding during the reporting period and to
each share that would have been outstanding assuming the issuance
of common stock for all dilutive potential common stock
outstanding during the reporting period.
Basic EPS is computed by dividing income available to common
shareholders by the weighted-average number of common shares
outstanding during the period. Diluted EPS is computed assuming
the conversion of all warrants and options.
For the year ended December 31, 1999, basic EPS and diluted
EPS were computed as follows :
Basic EPS Diluted EPS
Numerator Denominator Numerator Denominator
Net loss $(466,866) - - $(466,866) - -
Weighted average shares - - 584,766 - - 584,766
Options, warrants - - - - - - - -
-------- ------- -------- -------
Totals $(466,866) 584,766 $(466,866) 584,766
======== ======= ======== =======
EPS $(.80) $(.80)
===== =====
Basic and diluted EPS for the year ended December 31, 1999
were identical because the stock options and warrants were not
dilutive.
For the period ended December 31, 1998, there were no stock
options and warrants outstanding. Accordingly, only basic EPS is
computed. Basic EPS from inception (May 27, 1998) to December
31, 1998 amounted to a (loss) of $(5.16).
Recent Accounting Pronouncements.
---------------------------------
In March 1998, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use". SOP 98-1 provides guidance for
capitalizing and expensing the costs of computer software
developed or obtained for internal use. SOP 98-1 is effective
for financial statements for fiscal years beginning after
December 15, 1998. The adoption of SOP 98-1 did not have a
material impact on the accompanying consolidated financial
statements.
SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued in June, 1998 and is effective for all
calendar-year entities beginning in January, 2000. This
Statement applies to all entities and requires that all
derivatives be recognized as assets or liabilities in the balance
sheet, at fair values. Gains and losses of derivative
instruments not designated as hedges will be recognized in the
income statement. Since the Company does not invest in
derivative instruments, SFAS 133 will not have a material impact
on the Company's financial statements.
SFAS 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise" amends prior accounting
standards, primarily SFAS 65, with respect to the classification
of retained interests, such as mortgage-backed securities,
following a securitization of mortgage loans held for sale. This
statement became effective for the first quarter of 1999. Since
the Company does not securitize mortgage loans, no financial
statement impact has resulted from adopting this statement.
Note 3 - Federal Funds Sold
- ---------------------------
The Bank is required to maintain legal cash reserves
computed by applying prescribed percentages to its various types
of deposits. When the Bank's cash reserves are in excess of the
required amount, the Bank may lend the excess to other banks on a
daily basis. At December 31, 1999, the Bank sold $855,000, to
other banks through the federal funds market.
Note 4 - Securities Available-for-Sale
- --------------------------------------
The amortized costs and estimated market values of
securities available-for-sale as of December 31, 1999 follow:
Gross
Amortized Unrealized Estimated
Description Costs Gains Losses Market Values
- ----------- ---------- ------ ------ -------------
FRB stock $135,600 $ - - $ - - $135,600
IBB stock 42,300 - - - - 42,300
-------- ------ ------ --------
Total securities $177,900 $ - - $ - - $177,900
======== ====== ====== ========
All banks that are members of the Federal Reserve Board
System are required to hold FRB stock. No ready market exists
for the FRB stock nor does the stock have a quoted market value.
Accordingly, the FRB stock is reported at cost. The IBB stock
is reported at cost as well since no ready market exists for it.
The amortized costs and estimated market values of
securities available-for-sale at December 31, 1999, by
contractual maturity , are shown in the following chart.
Expected maturities may differ from contractual maturities
because issuers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Amortized Estimated
Costs Market Values
------------- -------------
FRB and IBB stock (no maturity) $ 177,900 $ 177,900
Total securities $ 177,900 $ 177,900
There were no sales of securities during 1999. At December
31, 1999, none of the securities was pledged.
Note 5 - Securities Held-to-Maturity
- ------------------------------------
The amortized costs and estimated market values of
securities held-to-maturity as of December 31, 1999 follow:
Gross
Amortized Unrealized Estimated
Description Costs Gains Losses Market Values
- ----------- ---------- ------ ------ -------------
U.S. Agencies $500,000 $ - - $(12,200) $487,800
Total securities 500,000 - - (12,200) 487,800
======== ====== ========= ========
The amortized costs and estimated market values of
securities held-to-maturity at December 31, 1999, by
contractual maturity , are shown in the following chart.
Expected maturities may differ from contractual maturities
because issuers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Amortized Estimated
Costs Market Values
Due in five through ten years $ 500,000 $ 487,800
------------- -------------
Total securities $ 500,000 $ 487,800
------------- -------------
There were no sales of securities during 1999. At December
31, 1999, none of the securities was pledged.
Note 6 - Loans
- --------------
The composition of net loans by major loan category, as of
December 31, 1999, follows:
December 31,
1999
----
Commercial, financial, agricultural $ 1,745,868
Real estate - mortgage 2,029,523
Installment 152,652
--------------
Loans, gross $ 3,928,043
Deduct:
Allowance for loan losses (100,000)
--------------
Loans, net $ 3,828,043
==============
At December 31, 1999, all loans were accruing interest and
none was impaired.
Note 7 - Allowance for Possible Loan Losses
- -------------------------------------------
The allowance for possible loan losses is a valuation
reserve available to absorb future loan charge-offs. The
allowance is increased by provisions charged to operating
expenses and by recoveries of loans which were previously written-
off. The allowance is decreased by the aggregate loan balances,
if any, which were deemed uncollectible during the year.
Activity within the allowance for loan losses account for
the year ended December 31, 1999 follows:
December 31,
1999
Balance, beginning of year $ - -
Add: Provision for loan losses 100,000
Add: Recoveries of previously charged off amounts - -
-----------
Total $ 100,000
Deduct: Amount charged-off - -
-----------
Balance, end of year $ 100,000
===========
Note 8- Property and Equipment
- ------------------------------
Furniture and equipment are stated at cost less accumulated
depreciation. Construction in progress was not depreciated since
the property was not usable at December 31, 1999. Components of
property and equipment included in the consolidated balance
sheets at December 31, 1999 and 1998 follow:
December 31,
1999 1998
---- ----
Land $ 410,078 $ - -
Furniture, equipment 274,705 4,293
Construction in progress 128,882 - -
------------- ----------
Property and equipment, gross $ 813,665 $ 4,293
Deduct:
Accumulated depreciation (10,668) - -
------------- ----------
Property and equipment, net $ 802,997 $ 4,293
============= ==========
Depreciation expense for the years ended December 31, 1999
and 1998 amounted to $10,668 and zero, respectively.
Depreciation is charged to operations over the estimated useful
lives of the assets. The estimated useful lives and methods of
depreciation for the principal items follow:
Type of Asset Life in Years Depreciation Method
Furniture and equipment 3 to 40 Straight-line
Note 9 - Commitments and Contingencies
- --------------------------------------
Please refer to Note 13 concerning stock options and
warrants that were granted to the Board of Directors and the CEO.
Please refer to Note 14 concerning financial instruments
with off-balance sheet risk.
Note 10 - Deposits and Borrowings
- ---------------------------------
The following details deposit accounts and borrowings at
December 31, 1999 and 1998:
December 31,
1999 1998
---- ----
Non-interest bearing deposits $ 286,965 $ - -
Interest bearing deposits:
NOW accounts 127,143 - -
Money market 621,460 - -
Savings 37,650 - -
Time, less than $100,000 200,350 - -
Time, $100,000 and over 100,000 - -
Borrowings - - 109,000
--------------- ------------
Total deposits and borrowings $ 1,373,568 $ 109,000
=============== ============
In order to fund expenses incurred during the organizational
stage, the Company obtained a loan from an unrelated financial
institution in the amount of $300,000 and in the form of a one-
year non-revolving line of credit. The line of credit carries an
interest rate of prime minus 1%, with interest payable monthly.
The collateral includes the Company's furniture and equipment, as
well as the personal guarantees of certain organizers. As of
December 31, 1998, $109,000 was outstanding on this obligation.
There were no outstanding loans at December 31, 1999.
Note 11 - Interest on Deposits and Borrowings
- ---------------------------------------------
A summary of interest expense for the years ended December
31, 1999 and 1998 follows:
December 31,
1999 1998
---- ----
Interest on NOW accounts $ 736 $ - -
Interest on money market accounts 3,824 - -
Interest on savings accounts 126 - -
Interest on CDs under $100,000 363 - -
Interest on CDs $100,000 and over 963 - -
Interest on borrowings 25,346 702
------------ ---------
Total interest on deposits $ 31,358 $ 702
============ =========
Note 12 - Other Operating Expenses
- ----------------------------------
A summary of other operating expenses for the years ended
December 31, 1999 and 1998 follows:
December 31,
1999 1998
---- ----
Depreciation $ 10,668 $ - -
Data processing 9,920 - -
Telephone and utilities 9,565 599
Postage and courier 8,284 450
Dues 8,857 792
Other 24,799 8,198
------------ ------------
Total other operating expenses $ 72,093 $ 10,039
============ ============
Note 13 - Related Party Transactions
- ------------------------------------
Certain organizers of the Company received warrants based on
the number of common stock purchased by each organizer. Each
warrant entitles its holder to purchase one share of the
Company's common stock for $5.50 for a period of ten years from
the date the Bank opened for business (October 25, 1999). The
warrants will vest over a period of three years, at one-third per
year and beginning on the first anniversary from commencement of
banking operations. In addition to the passage of time, the
vesting of warrants requires each organizer to attend a minimum
of 75% of the Board of Directors meetings for each year during
the vesting period. The organizers, as a group, were granted
206,280 warrants as of December 31, 1999, none of which vested
yet, exercised or canceled. The Company also granted on October
28, 1999, 34,380 options to its CEO. Each option is convertible
to one share of the Company's common stock when surrendered with
$5.50. The options will vest equally over a period of five years
and are exercisable no later than October 27, 2009. As of
December 31, 1999, 6,876 stock options were vested in connection
with the options granted to the CEO.
On October 28, 1998, the Company and its CEO entered into an
employment agreement (the "Employment Agreement") which became
effective on October 25, 1999, the day the Bank commenced
operations. This Employment Agreement replaced the Consulting
Agreement discussed below. The Employment Agreement provides for
an annual salary of $96,000 plus an annual salary increase based
upon the Consumer Price Index. In addition, the CEO may receive
a performance bonus ranging from 10% to 50% of his annual base
salary if certain performance objectives are met. The CEO would
also be entitled to other customary benefits such as annual
vacation, medical and life insurance, etc. The Employment
Agreement also provides for the granting of stock options to
purchase shares equal to 3% of the total shares sold in the
Offering. As discussed above, on October 28, 1999, the CEO was
granted 34,380 stock options. Prior to the effective date of the
Employment Agreement, the CEO entered into a Consulting Agreement
with the Company where he received from $5,000 to $8,000 per
month, depending on the status of the Bank opening. The
Consulting Agreement provided for other customary benefits,
including a bonus payment upon commencement of banking
operations.
Payments to Directors.
----------------------
Two directors received, in the aggregate, $21,637 for
products and services sold to the Company during the year ended
December 31, 1999.
Loans from and Deposits in the Bank.
------------------------------------
Certain directors, executive officers, and companies with
which they are affiliated, are customers of and have banking
transactions with the Bank, in the ordinary course of business.
As of December 31, 1999, there were $676,417 in loans outstanding
to directors, executive officers and their related interests.
Deposits by directors and their related interests, as of December
31, 1999, approximated $368,567.
Note 14 - Financial Instruments with Off-Balance Sheet Risk
- -----------------------------------------------------------
In the ordinary course of business, and to meet the
financing needs of its customers, the Company is a party to
various financial instruments with off-balance sheet risk. These
financial instruments, which include commitments to extend credit
and standby letters of credit, involve, to varying degrees,
elements of credit and interest rate risk in excess of the
amounts recognized in the balance sheets. The contract amount of
those instruments reflects the extent of involvement the Company
has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is
represented by the contractual amounts of those instruments. The
Company uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet
instruments.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any material
condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may
require the payment of a fee. At December 31, 1999, there were
$1,097,872 in unfunded commitments to extend credit. If and when
there exists unfunded commitments to extend credit, the Company
evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by
the Company upon extension of credit, is based on management's
credit evaluation of the borrower. Collateral varies, but may
include accounts receivable, inventory, property, plant and
equipment, residential homes and income producing commercial
properties.
At December 31, 1999, there were no commitments under
letters of credit. The credit risk involved in issuing letters
of credit is essentially the same as that involved in extending
loan facilities to customers. Collateral varies but may include
accounts receivable, inventory, equipment, marketable securities
and property. Since most of the letters of credit are expected
to expire without being drawn upon, they do not necessarily
represent future cash requirements.
The Company makes commercial, real estate and consumer loans
to individuals and businesses located in and around Manatee
County, Florida. The Company does not have a significant
concentration of credit risk with any individual borrower.
Note 15 - Regulatory Matters
- ----------------------------
The Company and the Bank are subject to various regulatory
capital requirements administered by federal banking agencies.
Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by
regulators that, 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 action, the Company and the Bank must meet specific
capital guidelines that involve quantitative measures of the
Company's assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weighting and
other factors.
Qualitative measures established by regulation to ensure
capital adequacy require the Company and the Bank to maintain
minimum amounts and ratios (set forth in the table below) of
total and Tier 1 capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier 1 capital to average
assets (as defined). Management believes, as of December 31,
1999, that the Company and the Bank meet all capital adequacy
requirements to which they are subject.
As of December 31, 1999, the Bank was categorized as Well
Capitalized. To be categorized as Adequately Capitalized or Well
Capitalized, the Bank must maintain minimum total risk based,
Tier 1 risk-based and Tier 1 leverage ratios as set forth in the
table below. The actual capital amounts and rations are also
presented in the table below:
Minimum Regulatory Capital Guidelines for Banks
-----------------------------------------------
Adequately Well
(Dollars in thousands) Actual Capitalized Capitalized
------------- ------------- --------------
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1999:
Total capital-risk-based
(to risk-weighted assets):
Bank $4,885 92.5% $417 > 8% $521 > 10%
- -
Consolidated 5,490 105.5% 416 > 8% N/A N/A
-
Tier 1 capital-risk-based
(to risk-weighted assets):
Bank $4,820 92.5% $208 > 4% $313 > 6%
- -
Consolidated 5,425 104.2% 208 > 4% N/A N/A
-
Tier 1 capital-leverage
(to average assets):
Bank $4,820 85.6% $225 > 4% $282 > 5%
- -
Consolidated 5,425 100.4% 216 > 4% N/A N/A
-
Note 16 - Dividends
- -------------------
The primary source of funds available to the Company to pay
shareholder dividends and other expenses is from the Bank. Bank
regulatory authorities impose restrictions on the amounts of
dividends that may be declared by the Bank. For example, the
Company and the Bank may not declare and pay dividends until such
time as they are cumulatively profitable. As of December 31,
1999, neither the Company nor the Bank were cumulatively
profitable.
Note 17 - Parent Company Financial Information
- ----------------------------------------------
This information should be read in conjunction with the
other notes to the consolidated financial statements.
Parent Company Balance Sheets
-----------------------------
December 31,
Assets: 1999 1998
- ------- ---- ----
Cash $ 602,761 $ 28,799
Investment in Bank 4,820,359 - -
Other assets 44,037 98,273
---------- ----------
Total Assets $5,467,157 $ 127,072
Liabilities and Shareholders' Equity:
- -------------------------------------
Accounts payable $ 41,814 $ 602
Note payable - - 109,000
---------- ----------
Total Liabilities $ 41,814 $ 109,602
---------- ----------
Common stock $ 11,461 $ 216
Paid-in-capital 5,992,278 128,784
Retained (deficit) (578,396) (111,530)
---------- ----------
Total Shareholders' equity $5,425,343 $ 17,470
Total Liabilities and Shareholders' equity $5,467,157 $ 127,072
========== ==========
Parent Company Statements of Income
-----------------------------------
December 31,
1999 1998
---- ----
Interest income $ 95,812 $ 1,010
Miscellaneous expense (103,037) (112,540)
--------- ---------
Loss before income tax, and equity
in undistributed (loss) of the Bank $ (7,225) $(111,530)
Income tax expense - - - -
--------- ---------
Loss before equity in undistributed
(loss) of the Bank $ (7,225) $(111,530)
Equity in undistributed loss of the Bank (459,641) - -
--------- ---------
Net loss $(466,866) $(111,530)
========= =========
Parent Company Statements of Cash Flows
---------------------------------------
Year Ended Period Ended
December 31, December 31,
Cash flows from operating activities: 1999 1998
---- ----
Net loss $ (466,866) $ (11,530)
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in undistributed loss of the Bank 459,641 - -
(Increase) in other assets (31,935 (12,101)
Increase in payables 41,212 601
----------- ---------
Net cash provided by operating activities 2,052 $(123,030)
----------- ---------
Cash flows from investing activities:
Investment in Bank $(5,280,000) $ - -
Purchase of premises 4,293 (4,293)
----------- ---------
Net cash used in investing activities $(5,275,707) $ (4,293)
----------- ---------
Cash flows from financing activities:
Sale of common stock, net $ 5,956,617 $ 47,122
(Decrease) in borrowings (109,000) 109,000
----------- ---------
Net cash provided by financing activities $ 5,847,617 $ 156,122
----------- ---------
Net increase in cash and cash equivalents $ 573,962 $ 28,799
Cash and cash equivalents, beginning of year 28,799 - -
----------- ---------
Cash and cash equivalents, end of year $ 602,761 $ 28,799
=========== =========
Item 8. Changes in and Disagreements With Accountants and
Financial Disclosure.
The Registrant did not change accountants in 1999 and
continues to use the independent accounting firm of Francis &
Company, CPAs.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
A. Directors and Executive Officers.
The following table provides biographical information for
each director and executive officer of the Registrant. The Board
is divided into three equal classes, with the term of each class
staggered so that in any given year no more than one-third of the
total Board membership shall stand for re-election. Board
members are elected for a three-year term and serve until their
successors are elected and qualified. Except as otherwise
indicated, each individual has been or was engaged in his/her
present or last principal occupation, in the same or a similar
position, for more than five years.
Position with Company and
Name Age Bank and Principal Occupation
- ---- --- ------------------------------
Thomas C.
Bennett, Jr. 76 Mr. Bennett has been a director of the
Company since October 2, 1998 and of the Bank since October 25,
1999. He has been engaged in the real estate development
business in Manatee County for the last twelve years and in the
real estate brokerage business for the last two years. He served
as a director in two community banks, one of which was sold to
Barnett Bank in 1983 and the other to SouthTrust Bank, N.A., in
1995.
Charles S.
Conoley 41 Mr. Conoley has served as the President
and Chief Executive Officer of the Company since October 2, 1998,
and of the Bank since October 25, 1999. From 1993-1998, he was a
Vice President and commercial loan officer for American Bank in
Bradenton, Florida, and prior that he was employed as a senior
executive for affiliates of Barnett Bank in Miami and Bradenton,
Florida. Mr. Conoley received his MBA in Finance and Accounting
from Indiana University in Bloomington, Indiana and his
undergraduate degree from Purdue University.
Michael Shannon
Glasgow 31 Mr. Glasgow has served as a director of
the Company since October 2, 1998 and of the Bank since October
25, 1999. He has been employed for the past five years with USA
Steel Fence, Inc., a commercial and residential fence company
that has operations in Bradenton, Lakeland, Gibsonton, Englewood
and St. Petersburg, Florida, serving for the last three years as
President and, prior to that, for two years as vice president.
Mr. Glasgow is also the owner of USA Pawn, USA Land Company, and
USA Used Cars, all of Bradenton, Florida. He also serves as Vice
President for USA Group, Inc., USA Real Estate, and Approved
Roofing, Inc., also of Bradenton, Florida.
C. Donald
Miller, Jr. 62 Mr. Miller has served as a director of
the Company since October 2, 1998 and of the Bank since October
25, 1999. He has served as President of Miller Enterprises of
Manatee, Inc., which is engaged in real estate investments and
other businesses, for the last five years. He is a past
President of the Manatee County Chamber of Commerce.
Stephen C.
Mullen 46 Mr. Mullen has served as a director of
the Company since October 2, 1998 and of the Bank since October
25, 1999. For the past five years, he has served as
owner/operator of Park Inn International Hotel in Bradenton and,
for the last year, as owner/operator of the Quality Inns & Suites
at Sarasota/Bradenton Airport. He is also the president of
Granjac Resorts, Inc., a hotel management company, and Mullen
Development, Inc., a real estate company.
David K.
Scherer 38 Mr. Scherer has served as a director of
the Company since October 2, 1998 and of the Bank since October
25, 1999. For the past eleven years, he has served as principal
and the President of TDS Construction, Inc., a construction
company that specializes in the construction of retail stores
throughout the United States. The company has been headquartered
in Bradenton, Florida, for the past six years and was previously
located in Elizabethtown, Kentucky.
Bruce R.
Shackelford 44 Bruce R. Shackelford has served as a
director of the Company since October 2, 1998 and of the Bank
since October 25, 1999. He has, for the past five years, served
as President of Four Star Tomato, Inc., R&S Sales and Management,
Inc. and Western Tomato Growers & Shippers, Inc., all companies
engaged in food production and distribution. He is also the
general partner of Triple-S Farms, a farming operation.
Mary Ann P.
Turner 39 Mary Ann P. Turner has served as a
director of the Company since October 2, 1998 and of the Bank
since October 25, 1999. For the past five years, she has served
as the Vice President and CFO of Len-Tran, Inc., a commercial
landscape contracting company with offices in Bradenton and
Naples, Florida.
Clarence R.
Urban 54 Clarence R. Urban has served as
Chairman of the Company's Board of Directors since October 2,
1998 and of the Bank's Board since October 25, 1999. For the
past five years, he has served as the owner and President of
Arcade Lithographing Corporation and, for the last year, as owner
and President of Superior Color Plate, Inc. of Bradenton and
Sarasota. Arcade is one of the largest commercial printers on
the West Coast of Florida, and Superior is a leader in color
separations for printers throughout the Southeast and Caribbean.
B. Compliance with Section 16(a)
Because the Company had no class of equity securities
registered pursuant to Section 12 of the Exchange Act during the
period covered by this report, its securities were not subject to
the reporting requirements of Section 16(a) of the Exchange Act.
Item 10. Executive Compensation.
A. Named Executive Officer.
The following table sets forth the compensation paid to the
sole named executive officer of the Company for the Company's
completed fiscal year:
SUMMARY COMPENSATION TABLE
Annual Compensation
- -------------------
Name and Principal Year Salary Bonus Other Comp.
Position (a) (b) (c) (d) (e)
Charles S. Conoley, 1999 $79,154 $16,000 $0
President, Chief Executive 1998 $35,000 $0 $0
Officer and Secretary of the
Company
Long Term Compensation
- ----------------------
Securi-
Re- ties and All
stricted Underlying LTIP Other
Stock Options Pay- Compen-
Name and Principal Awards /SARs outs sation
Position (a) (f) (g) (h) (i)
Charles S. Conoley, $0 34,380 $0 $0
President, Chief Executive Officer
Officer and Secretary of the Company
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company granted the following stock options or warrants
during fiscal year 1999:(1)
Number of Percent of
Securities Total Options/
Underlying SARs Granted
Options/SAR's to Employees Exercise or Expiration
Name Granted in Fiscal Year Base Price Date
(a) (b) (c) (d) (e)
Charles S. Conoley 34,380 100% $5.50 October 28, 2008
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Shares Options/SARs Options/SARs
Acquired at FY-End at FY-End
on Value Exercisable Exercisable
Name Exercise Realized /Unexercisable /Unexercisable
(a) (b) (c) (d) (e)(2)
Charles S. Conoley 0 0 6,876/27,504 0/0
(1) On January 1, 2000, the Company granted certain non-
executive employees of the Company non-qualified stock options to
purchase 29,460 shares of the Common Stock subject to a three-
year vesting schedule. All such options lapse or expire on
December 31, 2009 unless sooner terminated in whole or in part.
(2) Dollar values have been calculated by determining the
difference between the estimated fair market value of the Common
Stock at December 31, 1999 (i.e., $5.50 per share) and the
exercise price of such options (i.e., $5.50).
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
On March 24, 2000, the Company had 826 shareholders of
record.
The following table sets forth share ownership information as
of March 24, 2000, with respect to the Common Stock, with respect
to any person known to the Registrant to be a beneficial owner of
more than 5% of the Common Stock:
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS*
Name and Address of Number Percent
Beneficial Owner of Shares of Class(1)
Tommy Duncan
417 Pullian Lane
Royston, Georgia 30540 72,728 6.34%
* Information relating to beneficial ownership of the Common
Stock is based upon "beneficial ownership" concepts set forth in
rules of the SEC under Section 13(d) of the Securities Exchange
Act of 1934, as amended. Under such rules, a person is deemed to
be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct
the voting of such security, or "investment power," which
includes the power to dispose of or to direct the disposition of
such security. A person is also deemed to be a beneficial owner
of any security of which that person has the right to acquire
beneficial ownership within 60 days. Under the rules, more than
one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner
of securities as to which he has no beneficial interest. For
instance, beneficial ownership includes spouses, minor children
and other relatives residing in the same household, and trusts,
partnerships, corporations or deferred compensation plans which
are affiliated with the principal.
(1) The percentages are based on 1,146,077 shares of Common
Stock outstanding, plus shares of Common Stock that may be
acquired by the beneficial owner within 60 days of March 24,
2000, by exercise of options and/or warrants.
The following table sets forth share ownership information as
of March 24, 2000 of the Common Stock with respect to (i) each
director and named executive officer of the Registrant who
beneficially owns Common Stock; and (ii) all directors and named
executive officers of the Registrant as a group:
SHARE OWNERSHIP OF MANAGEMENT*
Name and Address of
Beneficial Owner Number of Shares Percent of Class(1)
- ------------------- ---------------- ----------------
Thomas C. Bennett, Jr. 2,000 .17%
6144-9th Avenue Circle, N.E.
Bradenton, Florida 34202
Charles S. Conoley 46,742(2) 4.05%
Suite C, 3005-26th Street West
Bradenton, Florida 34205
Michael Shannon Glasgow 48,350(3) 4.22%
1209-44th Avenue East
Bradenton, Florida 34203
C. Donald Miller, Jr. 4,000(4) 0.35%
1111-3rd Avenue West
Bradenton, Florida 34205
Stephen C. Mullen 22,725(5) 1.98%
8440 North Tamiami Trail
Sarasota, Florida 34243
David K. Scherer 51,000(6) 4.45%
4239-63rd Street West
Bradenton, Florida34209
Bruce E. Shackelford 22,725(7) 1.98%
P. O. Box 91
Ellington, Florida 34222
Mary Ann P. Turner 54,566 4.76%
1205-64th Street Court East
Bradenton, Florida 34208
Clarence R. Urban 46,365 4.05%
2108 Whitfield Park Loop
Sarasota, Florida 34243
All directors and named 298,473 25.80%
executive officers
as a group(8)
_______________________
* Information relating to beneficial ownership of the Common
Stock is based upon "beneficial ownership" concepts set forth in
rules of the SEC under Section 13(d) of the Securities Exchange
Act of 1934, as amended. Under such rules, a person is deemed to
be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct
the voting of such security, or "investment power," which
includes the power to dispose of or to direct the disposition of
such security. A person is also deemed to be a beneficial owner
of any security of which that person has the right to acquire
beneficial ownership within 60 days. Under the rules, more than
one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner
of securities as to which he has no beneficial interest. For
instance, beneficial ownership includes spouses, minor children
and other relatives residing in the same household, and trusts,
partnerships, corporations or deferred compensation plans which
are affiliated with the principal.
(1) The percentages are based on 1,146,077 shares of Common Stock
outstanding, plus shares of Common Stock which may be acquired by
the beneficial owner, or group of beneficial owners, within 60
days of March 24, 2000, by exercise of options and/or warrants.
The percentage total differs from the sums of the individual
percentages due to the differing denominators with respect to
each calculation.
(2) Includes 1,500 shares held as custodian for Max Conoley and
1,500 shares held as custodian for Alexandra Conoley, as to which
Mr. Conoley disclaims beneficial ownership. Also includes 500
shares owned jointly with Mr. Conoley's wife. Also includes the
right to acquire 6,876 shares pursuant to currently exercisable
options.
(3) Includes 800 shares held as custodian for Savannah Glasgow as
to which Mr. Glasgow disclaims beneficial ownership. Also
includes 2,000 shares held jointly with mother Anita Glasgow, 10,
910 shares held by Glasgow Horizon Limited Partnership, an
affiliate, and 100 shares held by USA Investments, a general
partnership between Mr. Glasgow and his father L. H. Glasgow.
(4) Includes 2,000 shares held by wife Martha Miller, as to which
Mr. Miller disclaims beneficial ownership.
(5) Held jointly with wife Mary Mullen.
(6) Includes 50,000 shares held jointly with wife Terri Scherer.
Also includes 500 shares held as custodian for David M. Scherer
and 500 shares held as custodian for Sarah M. Scherer, as to all
of which Mr. Scherer disclaims beneficial ownership.
(7) Held by Triple S Forms Profit Sharing for the benefit of Mr.
Shackelford.
(8) Warrants to purchase Common Stock at the original offering
price of $5.50 per share were issued to each director of the
Company and the Bank on the basis, subject to a certain
limitation, of one warrant to purchase .8467 shares of Common
Stock for each share that such director purchased in the
Offering. None of the warrants is immediately exercisable, with
the right to exercise the warrants vesting for one-third (1/3) of
the shares covered by each warrant on each anniversary of the
date the Bank opened for business so long as the holder has
served continuously as a director of the Company and the Bank
from the Bank's opening until the particular anniversary and has
attended a minimum of 75% of the meetings during such period. A
total of 240,660 warrants were issued on October 25, 1999 (the
date the Bank opened for business.) All the warrants expire on
October 25, 2009.
Item 12. Certain Relationships and Related Transactions.
During 1999 the Bank loaned funds to certain of the Company's
executive officers and directors in the ordinary course of
business, on substantially the same terms as those prevailing at
the time for comparable transactions with other customers, and
which did not involve more than the normal risk of collectibility
or present other unfavorable features.
Item 13. Exhibits List and Reports on Form 8-K.
A. Exhibits.
Exhibit
Number Sequential Description
3(i) Amended and Restated Articles of Incorporation of Registrant
dated October 2, 1998, incorporated by reference to Exhibit
2.1 of Registration Statement on Form SB-1, File No.
333-71773, filed on February 9, 1999.
3(ii) Amended and Restated Bylaws of Registrant, incorporated by
reference to Exhibit 2.2 of Registration Statement on Form
SB-1, File No. 333-71773, filed on February 9, 1999.
21 Subsidiaries of Registrant
27 Financial Data Schedule
B. Reports on Form 8-K.
The Company filed no reports on Form 8-K during the fourth
quarter of the fiscal year ended December 31, 1999.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HORIZON BANCORPORATION, INC.
(Registrant)
BY: /s/ Charlse S. Conoley
----------------------------------------
Charles S. Conoley, President, Principal
Executive Officer, Principal Financial Officer
Date: March 27, 2000
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Signature Title Date
/S/ Thomas C. Bennett, Jr.
- -------------------------------------- Director March 27, 2000
Thomas C. Bennett, Jr.
/S/ Charles S. Conoley
- -------------------------------------- Director March 27, 2000
Charles S. Conoley
/S/ C. Donald Miller, Jr.
- -------------------------------------- Director March 27, 2000
C. Donald Miller, Jr.
/S/ Stephen C. Mullen
- -------------------------------------- Director March 27, 2000
Stephen C. Mullen
/S/ David K. Scherer
- -------------------------------------- Director March 27, 2000
David K. Scherer
/S/ Bruce E. Shackelford
- -------------------------------------- Director March 27, 2000
Bruce E. Shackelford
/S/ Mary Ann P. Turner
- -------------------------------------- Director March 27, 2000
Mary Ann P. Turner
/S/ Clarence R. Urban
- -------------------------------------- Director March 27, 2000
Clarence R. Urban
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
HORIZON BANK
Suite C, 3005-26th Street West
Bradenton, Florida 34205
Exhibit 27 - Financial Data Schedule
This schedule contains summary financial information extracted
from the financial statements of Horizon Bancorporation, Inc. for
the period from January 1, 1999 to December 31, 1999, and is
qualified in its entirety by reference to such financial
statements.
12-MOS
FISCAL-YEAR-END DEC-31-1999
PERIOD START JAN-1-1999
PERIOD END DEC-31-1999
CASH 607,744
INT-BEARING-DEPOSITS -0-
FED-FUNDS-SOLD 855,000
TRADING-ASSETS -0-
INVESTMENTS-HELD-FOR-SALE 177,900
INVESTMENTS-CARRYING 500,00
INVESTMENTS-MARKET 487,800
LOANS 3,928,043
ALLOWANCE 100,000
TOTAL-ASSETS 6,846,837
DEPOSITS 1,373,568
SHORT-TERM -0-
LIABILITIES-OTHER 47,926
LONG-TERM -0-
PREFERRED-MANDATORY -0-
PREFERRED -0-
COMMON 11,461
OTHER-SE 5,413,882
TOTAL-LIABILITIES-AND-EQUITY 6,846,837
INTEREST-LOAN 54,090
INTEREST-INVEST 5,315
INTEREST-OTHER 112,756
INTEREST-TOTAL 172,161
INTEREST-DEPOSIT 6,012
INTEREST-BORROWINGS 25,346
INTEREST-EXPENSE 31,358
INTEREST-INCOME-NET 140,803
LOAN-LOSSES -0-
SECURITIES-GAINS -0-
EXPENSE-OTHER 507,766
INCOME-PRETAX (466,866)
INCOME-PRE-EXTRAORDINARY (466,866)
EXTRAORDINARY -0-
CHANGES -0-
NET-INCOME 466,866
EPS-BASIC (.80)
EPS-DILUTED (.80)
YIELD-ACTUAL 5.23%
LOANS-NON -0-
LOANS-PAST -0-
LOANS-TROUBLED -0-
LOANS-PROBLEM -0-
ALLOWANCE-OPEN -0-
CHARGE-OFFS -0-
RECOVERIES -0-
ALLOWANCE-CLOSE 100,000
ALLOWANCE-DOMESTIC 50,000
ALLOWANCE-FOREIGN -0-
ALLOWANCE-UNALLOCATED 50,000
