<PAGE> 1
HORIZON BANCORP
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
450 5th Street N.W.
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended SEPTEMBER 30, 2000 commission file number 0-10792
------------------ -------
HORIZON BANCORP
---------------
(Exact name of registrant as specified in its charter)
INDIANA 35-1562417
---------------------------------------------- -------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
515 FRANKLIN SQUARE, MICHIGAN CITY, INDIANA 46360
------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (219) 879-0211
--------------
Securities registered pursuant to Section 12(b) of the Act:
NONE
----------
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
670,352 at OCTOBER 19, 2000
------- ----------------
<PAGE> 2
HORIZON BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------------ ----------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 31,812 $ 34,670
Interest-bearing demand deposits 432 174
Federal funds sold 3,800
--------- ---------
Cash and cash equivalents 36,044 34,844
Interest-bearing deposits 236 232
Investment securities, available for sale 66,611 67,880
Loans, net of allowance for loan losses of $4,493 and $3,273 399,045 391,084
Premises and equipment 17,275 18,134
Federal Reserve and Federal Home Loan Bank stock 6,238 5,897
Interest receivable 3,012 2,780
Other assets 5,745 5,145
--------- ---------
Total assets $ 534,206 $ 525,996
========= =========
LIABILITIES
Deposits
Noninterest bearing $ 39,599 $ 44,890
Interest bearing 376,456 318,778
--------- ---------
Total deposits 416,055 363,668
Short-term borrowings 6,757 24,500
Federal Home Loan Bank advances 75,320 105,000
Interest payable 1,362 920
Other liabilities 3,628 2,909
--------- ---------
Total liabilities 503,122 496,997
--------- ---------
COMMITMENTS AND CONTINGENCIES
EQUITY RECEIVED FROM CONTRIBUTIONS AND
DIVIDENDS TO THE ESOP 6,883 7,808
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $1 stated value
Authorized -- 5,000,000 shares
Issued-- 1,038,428 shares, less ESOP shares of
139,637 and 165,309 899 873
Additional paid-in capital 14,064 13,153
Retained earnings 24,752 22,629
Accumulated other comprehensive loss (782) (1,201)
Less treasury stock, at cost, 360,423 and 350,293 shares (14,732) (14,263)
--------- ---------
Total stockholders' equity 24,201 21,191
--------- ---------
Total liabilities and stockholders' equity $ 534,206 $ 525,996
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
HORIZON BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollar Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable $ 9,641 $ 6,254 $ 27,392 $ 18,371
Investment securities:
Taxable 1,255 1,268 3,682 3,844
Tax exempt 3 3 8 164
-------- -------- -------- --------
Total interest income 10,899 7,525 31,082 22,379
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 4,706 3,060 12,667 9,184
Federal funds purchased and short-term borrowings
144 10 473 13
Federal Home Loan Bank advances 1,324 745 3,929 2,196
-------- -------- -------- --------
Total interest expense 6,174 3,815 17,069 11,393
-------- -------- -------- --------
NET INTEREST INCOME 4,725 3,710 14,013 10,986
Provision for loan losses 503 200 1,508 545
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
4,222 3,510 12,505 10,441
-------- -------- -------- --------
OTHER INCOME
Service charges on deposit accounts 534 523 1,517 1,537
Fiduciary activities 671 518 2,048 1,536
Commission income from insurance agency 216 206 619 621
Income from reinsurance company 27 39 87 120
Gain on sale of mortgage loans 127 297 10
Gain on sale of securities 33 209
Wire transfer fee income 114 381 31
Other income 112 147 301 310
-------- -------- -------- --------
Total other income 1,801 1,466 5,250 4,374
-------- -------- -------- --------
OTHER EXPENSES
Salaries and employee benefits 2,279 2,279 6,672 6,664
ESOP termination expense 1,959 1,959
Net occupancy expenses 441 458 1,330 1,252
Data processing and equipment expenses 527 517 1,586 1,545
Other expenses 1,226 1,223 3,605 3,236
-------- -------- -------- --------
Total other expenses 4,473 6,436 13,193 14,656
-------- -------- -------- --------
Income Before Income Tax 1,550 (1,460) 4,562 159
Income tax expense 349 132 1,532 634
-------- -------- -------- --------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 1,201 (1,592) 3,030 (475)
-------- -------- -------- --------
</TABLE>
<PAGE> 4
HORIZON BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME - CONTINUED
(Dollar Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
DISCONTINUED OPERATIONS
Income (loss) from operation of discontinued
subsidiary (less tax benefit of
$6 in 2000 and $56 in 1999) $ 12 $ $ 22 $ (81)
Loss on disposal of subsidiary, including
provision for operating losses
during phase-out period (less tax benefit
of $32 in 1999) (20) (70)
--------- --------- --------- ---------
Total income (loss) from discontinued operations 12 (20) 22 (151)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 1,213 $ (1,612) $ 3,052 $ (626)
========= ========= ========= =========
Basic and Diluted Earnings (Loss) per Share from continuing
operations $ 1.75 $ (2.63) $ 4.40 $ (0.95)
Basic and Diluted Earnings (Loss) per Share from income (loss)
on discontinued operations 0.02 (0.03) 0.03 (0.23)
--------- --------- --------- ---------
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 1.77 $ (2.66) $ 4.43 $ (1.18)
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
HORIZON BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Table Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Stock Paid-in Comprehensive Retained Comprehensive Treasury
Capital Income Earnings Loss Stock Total
------------- ----------- --------------- ---------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1999 $873 $13,153 $22,629 $(1,201) $(14,263) $21,191
Net income $3,052 3,052 3,052
Other comprehensive income, net
of tax
Unrealized gain on securities
419 419 419
---------------
Comprehensive income
$3,471
===============
Cash dividends ($1.35 per share)
(929) (929)
Re-issuance of 1,476 shares of
treasury stock 12
48 60
Purchase of 11,760 shares of
treasury stock
(517) (517)
Net purchases and distributions
with ESOP
26 899 925
------------- ----------- ---------- ---------------- ----------- ------------
BALANCES, SEPTEMBER 30, 2000 $899 $14,064 $24,752 $ (782) $(14,732) $24,201
============= =========== ========== ================ =========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
HORIZON BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
-------------------------------------
2000 1999
----------------- -------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 3,052 $ (626)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for loan losses 1,508 545
Provision for loan losses, discontinued operations 250
Additional paid-in capital from release of ESOP shares 304
Depreciation and amortization 1,085 1,040
Deferred income tax (888) (23)
Investment securities amortization, net 76 142
Gain on sale of investment securities (176)
Loss on disposal of fixed assets 90
Loss on other real estate owned
Gain on sale of loans (297)
Proceeds from sales of loans 24,475 5,087
Deferred loan fees (42) (45)
Unearned income (163) 221
Net change in:
Interest receivable (232) (117)
Interest payable 442 (49)
Other assets 14 1,600
Other liabilities 719 2,436
----------------- -------------------
Net cash provided by operating activities 29,749 10,679
----------------- -------------------
INVESTING ACTIVITIES
Net change in interest-bearing deposits (4) (4)
Purchases of securities available for sale (7,908) (35,250)
Proceeds from maturities, calls, and principal repayments
of securities available for sale 9,794 16,342
Proceeds from sales of securities available for sale 11,562
Proceeds from maturities, calls, and principal repayments of
securities held to maturity 2,000
Purchase of Federal Home Loan Bank stock (341)
Net change in loans (33,710) (19,012)
Recoveries on loans previously charged-off 268 289
Purchases of premises and equipment (226) (1,093)
----------------- -------------------
Net cash used by investing activities (32,127) (25,166)
----------------- -------------------
FINANCING ACTIVITIES
Net change in
Deposits 52,387 4,107
Short-term borrowings (17,743) (3,350)
Federal Home Loan Bank advance 85,320
Repayment of Federal Home Loan Bank advance (115,000)
Re-issuance of treasury stock 60
Dividends paid (929) (855)
Purchase of treasury stock (517) (2,339)
----------------- -------------------
Net cash provided (used) by financing activities 3,578 (2,437)
----------------- -------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,200 (16,924)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,844 31,869
----------------- -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $36,044 $14,945
================= ===================
ADDITIONAL CASH FLOWS INFORMATION
Interest paid $ 17,511 $ 11,442
Income tax paid 1,780 230
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
HORIZON BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table Dollar Amounts in Thousands)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Horizon Bancorp (Horizon) and its wholly-owned subsidiaries, Horizon Bank, N.A.
(Bank), HBC Insurance Group, Inc. (Insurance Company) and The Loan Store, Inc.
All intercompany balances and transactions have been eliminated. The results of
operations for the periods ended September 30, 2000 and September 30, 1999 are
not necessarily indicative of the operating results for the full year of 2000 or
1999. These interim financial statements are prepared without audit and reflect
all adjustments (consisting of normal recurring adjustments) which, in the
opinion of management, are necessary to present fairly the consolidated position
of Horizon Bancorp at September 30, 2000 and its results of operations and cash
flows for the periods presented. The accompanying consolidated financial
statements do not purport to contain all the necessary financial disclosure
required by generally accepted accounting principles that might otherwise be
necessary in the circumstances and should be read in conjunction with the 1999
Horizon Bancorp consolidated financial statements and related notes thereto
included in its Annual Report for the year ended December 31, 1999.
NOTE 2 - INVESTMENT SECURITIES
<TABLE>
<CAPTION>
2000
-----------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
September 30 Cost Gains Losses Value
------------------------------------------------------ ----------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury and federal agencies $ 24,528 $ 11 $ (565) $ 23,974
State and municipal 5,236 31 (82) 5,185
FHLMC mortgage-backed securities 5,860 27 (64) 5,823
FNMA mortgage-backed securities 14,124 27 (154) 13,997
GNMA collateralized mortgage obligation
8,032 (532) 7,500
FHLMC collateralized mortgage obligation
7,719 86 (9) 7,796
FNMA collateralized mortgage obligation
2,086 (25) 2,061
Marketable equity securities 315 (40) 275
----------------- ----------------- ---------------- ------------------
Total available for sale $ 67,900 $ 182 $ (1,471) $ 66,611
================= ================= ================ ==================
</TABLE>
<PAGE> 8
HORIZON BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Table Dollar Amounts in Thousands)
NOTE 2 - INVESTMENT SECURITIES
<TABLE>
<CAPTION>
1999
-------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
December 31 Cost Gains Losses Value
---------------------------------------------------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury and federal agencies $30,428 $18 $ (866) $29,580
State and Municipal 4,230 (130) 4,100
FHLMC mortgage-backed securities 6,722 14 (127) 6,609
FNMA mortgage-backed securities 16,843 40 (267) 16,616
GNMA collateralized mortgage obligations 8,051 (582) 7,469
FHLMC collateralized mortgage obligation 964 (19) 945
FNMA collateralized mortgage obligations 2,307 (32) 2,275
Marketable equity securities 315 (29) 286
----------------- ----------------- ------------------ ------------------
Total investment securities $69,860 $72 $(2,052) $67,880
================= ================= ================== ==================
</TABLE>
The amortized cost and fair value of securities available for sale at September
30, 2000, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale
-----------------------------------
Amortized Fair
Cost Value
----------------- -----------------
<S> <C> <C>
Within one year $ 9,027 $ 8,945
One to five years 8,570 8,443
Five to ten years 8,871 8,700
After ten years 3,296 3,071
----------------- -----------------
29,764 29,159
Mortgage-backed securities 19,984 19,820
Collateralized mortgage obligations 17,837 17,357
Marketable equity securities 315 275
----------------- -----------------
$ 67,900 $ 66,611
================= =================
</TABLE>
There were no sales of securities available for sale during the nine months
ended September 30, 2000.
During 1999, debt securities with an amortized cost of $10.050 million were
transferred from held to maturity to available for sale so the Bank could
minimize the tax consequences of holding tax-exempt securities. The securities
had an unrealized gain of approximately $350 thousand. There were no transfers
between classifications in the nine months ended September 30, 2000.
<PAGE> 9
HORIZON BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Table Dollar Amounts in Thousands)
NOTE 3 - LOANS
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
2000 1999
--------------------- -------------------
<S> <C> <C>
Commercial loans $ 85,915 $ 89,361
Mortgage warehouse loans 104,093 85,542
Real estate loans 138,759 154,717
Installment loans 74,771 64,737
--------------------- -------------------
Total loans $403,538 $394,357
===================== ===================
</TABLE>
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
2000 1999
--------------------- -------------------
<S> <C> <C>
Allowance for loan losses
Balances, beginning of period $ 3,273 $ 2,787
Provision for losses, operations 1,508 1,100
Provision for losses, discontinued operations 250
Recoveries on loans 268 363
Loans charged off (556) (1,227)
--------------------- -------------------
Balances, end of period $ 4,493 $ 3,273
===================== ===================
</TABLE>
NOTE 5 - NONPERFORMING ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
2000 1999
--------------------- -------------------
<S> <C> <C>
Nonperforming loans $ 1,796 $ 1,574
Other real estate owned 126
--------------------- -------------------
Total nonperforming assets $ 1,922 $ 1,574
===================== ===================
</TABLE>
<PAGE> 10
HORIZON BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Table Dollar Amounts in Thousands)
NOTE 6 - OTHER COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Nine Months Ended September 30 2000
------------------
<S> <C>
Unrealized gains on securities:
Unrealized holding gains arising during the period $ 694
Less: reclassification adjustment for gains (losses) realized in net income
--------
Net unrealized gains 694
--------
Tax expense (275)
----------
Other comprehensive income $ 419
========
</TABLE>
NOTE 7 - DISCONTINUED OPERATIONS
At its April 1999 meeting, the Board of Directors of Horizon Bancorp approved
discontinuing the operations of The Loan Store, Inc., a wholly owned subsidiary
of Horizon Bancorp. On August 13, 1999, substantially all of the assets of The
Loan Store, Inc. were sold. On March 31, 2000, loans totaling approximately $250
thousand were repurchased from the purchaser as outlined in the purchase
agreement. No further recourse exists as a result of this transaction. As of
September 30, 2000, the remaining loans of The Loan Store, Inc. were $172
thousand.
NOTE 8 - ESOP
On July 20, 1999, the Board of Directors of Horizon Bancorp authorized the
termination of the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") as of
December 31, 1999. The debt owed by the ESOP was repaid with the proceeds from
the sale of a portion of the unallocated shares to Horizon Bancorp. All
remaining shares were allocated to participants. The expense related to the
termination of the ESOP was recorded in the third quarter of 1999 and resulted
in an expense of $2.073 million for the year ended December 31, 1999. The
expense recorded was based upon the price of Horizon Bancorp stock. An
independent valuation firm performed a valuation of Horizon Stock and determined
the market price of the stock was $44.00 per share as of December 31, 1999. The
retirement plans of Horizon Bancorp own approximately 22% of the outstanding
shares.
<PAGE> 11
HORIZON BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2000
Item 2 - Introduction
The purpose of this discussion is to focus on Horizon's financial condition and
the results of operations in order to provide a better understanding of the
consolidated financial statements included elsewhere herein. This discussion
should be read in conjunction with the consolidated financial statements and the
related notes.
FINANCIAL CONDITION
LIQUIDITY
The Bank maintains a stable base of core deposits provided by long standing
relationships with consumers and local businesses. These deposits are the
principal source of liquidity for Horizon. Other sources of liquidity for
Horizon include earnings, loan repayment, investment security sales and
maturities, sale of real estate loans and borrowing relationships with
correspondent banks, including the Federal Home Loan Bank (FHLB). During the
nine months ended September 30, 2000, cash and cash equivalents increased by
$1.2 million. In addition to liquidity provided from the normal operating,
funding, and investing activities of Horizon, at September 30, 2000, the Bank
has available approximately $108 million in unused credit lines with various
money center banks and the FHLB.
There have been no other material changes in the liquidity of Horizon from
December 31, 1999 to September 30, 2000.
CAPITAL RESOURCES
The capital resources of Horizon and the Bank exceed regulatory capital ratios
for "well capitalized" banks at September 30, 2000. Stockholders' equity totaled
$31.084 million ($6.883 million from ESOP) as of September 30, 2000 compared to
$28.999 million ($7.808 million from ESOP) as of December 31, 1999. The change
in stockholders' equity during the nine months ended September 30, 2000 is the
result of repurchases of treasury stock and net income, net of dividends paid.
At September 30, 2000, the ratio of stockholders' equity to assets was 5.82%
compared to 5.51% at December 31, 1999. Horizon did not issue trust preferred
stock as anticipated and disclosed in the 1999 annual report.
There have been no other material changes in Horizon's capital resources from
December 31, 1999 to September 30, 2000.
<PAGE> 12
HORIZON BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2000
MATERIAL CHANGES IN FINANCIAL CONDITION - SEPTEMBER 30, 2000 COMPARED TO
DECEMBER 31, 1999
Because of the nature of its activities, Horizon is subject to pending and
threatened legal actions that arise in the normal course of business. In
management's opinion, after consultation with counsel, none of the litigation to
which Horizon or any of its subsidiaries is a party will have a material effect
on the consolidated financial position or results of operations of Horizon.
During the first nine months of 2000, deposits increased over $52 million,
primarily as a result of additional deposits from municipalities. The Bank sold
over $24 million in residential mortgage loans. These moneys were used to fund
growth in consumer loans and warehouse loans and to reduce short-term borrowings
and Federal Home Loan Bank advance debt. Horizon continues to monitor funding
sources to reduce the cost of funds and maintain adequate liquidity.
There have been no other material changes in the financial condition of Horizon
from December 31, 1999 to September 30, 2000.
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS - SEPTEMBER 30, 2000 COMPARED TO
SEPTEMBER 30, 1999
During the nine months ended September 30, 2000, net income totaled $3.052
million or $4.43 per share compared to a loss of $626 thousand or ($1.18) per
share for the same period in 1999.
Net interest income was $14.013 million for the nine months ended September 30,
2000 compared to $10.986 million for the same period 1999. The increase is
primarily attributable to the addition of the mortgage warehousing program which
began in October 1999.
The provision for loan losses totaled $1.508 million for the nine months ended
September 30, 2000 compared to $503 thousand for the same period in 1999. The
increase in the provision is primarily related to loan growth and the addition
of mortgage warehouse lending. The allowance for loan losses to total loans is
1.11% at September 30, 2000 compared to .83% at December 31, 1999.
Total non-interest income for the nine months ended September 30, 2000 increased
$876 thousand or 20% from the same period in 1999. The three primary components
of the change were an increase in fiduciary fees of $512 thousand, the increase
in the gain recorded on the sale of mortgage loans of $287 thousand and the
addition of wire transfer transaction fees related to the mortgage warehousing
program of $350 thousand.
Non-interest expense decreased $1.463 million or (10%) for the nine months ended
September 30, 2000 compared to the same period in 1999. In 1999, a $1.959
million ESOP termination expense was recorded.
<PAGE> 13
HORIZON BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2000
RESULTS OF OPERATIONS (CONTINUED)
At its April, 1999 meeting, the Board of Directors of Horizon Bancorp approved
discontinuing the operations of The Loan Store, Inc., a wholly-owned subsidiary
of Horizon Bancorp. On August 13, 1999 substantially all of the assets of The
Loan Store, Inc. were sold. On March 31, 2000, loans totaling approximately $250
thousand were repurchased from the purchaser as outlined in the purchase
agreement. No further recourse exists as a result of this transaction. As of
September 30, 2000, the remaining loans of The Loan Store, Inc. were $172
thousand.
On July 20, 1999, the Board of Directors of Horizon Bancorp authorized the
termination of the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") as of
December 31, 1999. The debt owed by the ESOP was repaid with the proceeds from
the sale of a portion of the unallocated shares to Horizon Bancorp. All
remaining shares were allocated to participants. The expense related to the
termination of the ESOP was recorded in the 3rd quarter of 1999 and resulted in
an expense of $2.073 million for the year ended December 31, 1999. The expense
recorded was based upon the price of Horizon Bancorp stock. An independent
valuation firm performed a valuation of Horizon Stock and determined the market
price of the stock was $44.00 per share as of December 31, 1999. The retirement
plans of Horizon Bancorp own approximately 22% of the outstanding shares.
There have been no other material changes in the results of operations of
Horizon for nine months ending September 30, 2000 and 1999.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company currently does not engage in any derivative or hedging activity.
Refer to the Company's 1999 10-K for analysis of the interest rate sensitivity.
The Company believes there have been no significant changes in the interest rate
sensitivity since it was reported in Form 10-K.
FORWARD-LOOKING STATEMENTS
Certain statements in this section constitute forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results, performance, or
achievements of the Company to differ materially from any future results,
performance, or achievements expressed or implied by such forward-looking
statements.
<PAGE> 14
HORIZON BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
ITEM 1. LEGAL PROCEEDINGS
See Management's Discussion and Analysis
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Financial Data Schedule
b. No reports on Form 8-K were filed during the nine months ended
September 30, 2000.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HORIZON BANCORP
10/24/2000 /s/ Robert C. Dabagia
--------------------------- ---------------------
Date: BY: Robert C. Dabagia
Chairman and Chief Executive Officer
10/24/2000 /s/ Diana E. Taylor
--------------------------- -------------------
Date: BY: Diana E. Taylor
Senior Vice President and Chief
Financial Officer
