<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1995 Commission File Number: 0-11672
------------- -------
HORIZON BANCORP, INC.
---------------------
(Exact name of registrant as specified in its charter)
WEST VIRGINIA 55-0631939
------------------------------- -------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
BOX D, BECKLEY, WV 25802-2803
------------------------------- -------------------------------
(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code (304) 255-7000
---------------------
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.
Class Outstanding at July 20, 1995
----------------------------- ----------------------------
COMMON STOCK, $1.00 PAR VALUE 2,832,670 SHARES
<PAGE> 2
HORIZON BANCORP, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-June 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Income For The Three Months Ended
June 30, 1995 and 1994 and for the Six Months Ended June 30, 1995 and 1994
Condensed Consolidated Statement of Changes in Shareholders' Equity For
The Six Months Ended June 30, 1995
Condensed Consolidated Statements of Cash Flows For The Six Months Ended
June 30, 1995 and 1994
Notes to Condensed Consolidated Financial Statements-June 30, 1995
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
EXHIBIT 11
Computation of Earnings Per Share
Exhibit 27
Financial Data Schedule
<PAGE> 3
CONDENSED CONSOLIDATED BALANCE SHEETS
HORIZON BANCORP, INC. & SUBSIDIARIES
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) JUNE 30, DECEMBER 31,
1995 1994
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
------
Cash and Due From Banks $ 16,177 $ 19,082
Federal Funds Sold 11,600 5,350
-------- --------
Total Cash and Cash Equivalents 27,777 24,432
Investment Securities:
Available-For-Sale (At Fair Value) 62,478 57,569
Held-To-Maturity (Approximate Fair Value of $83,092
at June 30, 1995 and $93,445 at December 31, 1994) 83,227 97,581
Loans:
Commercial 96,755 100,169
Real Estate 199,696 188,323
Loans to Individuals 119,073 93,119
-------- --------
Total Loans 415,524 381,611
Less: Unearned Income (7,470) (4,701)
Allowance for Loan Losses (6,478) (6,328)
-------- --------
Net Loans 401,576 370,582
-------- --------
Premises and Equipment-Net 9,081 7,097
Other Assets 13,201 12,674
-------- --------
Total Assets $597,340 $569,935
======== ========
LIABILITIES
-----------
Deposits:
Non-Interest Bearing $ 69,221 $ 70,781
Interest Bearing 432,387 412,774
-------- --------
Total Deposits 501,608 483,555
Short-Term Borrowings 17,555 16,797
Other Liabilities 9,994 6,001
-------- --------
Total Liabilities 529,157 506,353
-------- --------
SHAREHOLDERS' EQUITY
--------------------
Common Stock (Par Value $1.00 Per Share,
Authorized 5,000,000 Shares, 2,835,670 Issued
and Outstanding, Including 3,000 Shares in
Treasury at June 30, 1995) 2,835 2,835
Capital Surplus 12,262 12,262
Retained Earnings 52,632 49,903
Treasury Stock (92) 0
Unrealized Gain (Loss) on Available-for-Sale
Securities, Net of Deferred Income Taxes 546 (1,297)
Deferred ESOP Benefit 0 (121)
-------- --------
Total Shareholders' Equity 68,183 63,582
-------- --------
Total Liabilities and Shareholders' Equity $597,340 $569,935
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
HORIZON BANCORP, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED, DOLLARS IN THOUSANDS, JUNE 30 JUNE 30
EXCEPT PER SHARE DATA) 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
---------------
Interest and Fees on Loans $ 8,651 $ 7,372 $17,062 $14,443
Investment Securities:
Taxable 1,718 1,883 3,464 3,869
Exempt from Federal Taxes 512 520 1,027 1,052
Federal Funds Sold and Other 199 178 340 308
------- ------- ------- -------
Total Interest Income 11,080 9,953 21,893 19,672
INTEREST EXPENSE
----------------
Interest on Deposits 4,268 3,514 8,041 7,000
Interest on Borrowings 121 127 234 259
------- ------- ------- -------
Total Interest Expense 4,389 3,641 8,275 7,259
------- ------- ------- -------
Net Interest Income 6,691 6,312 13,618 12,413
Provision for Loan Losses 268 303 485 629
------- ------- ------- -------
Net Interest Income After Provision for
Loan Losses 6,423 6,009 13,133 11,784
OTHER INCOME
------------
Service Charges and Fees 373 343 796 824
Investment Securities (Losses) Gains 0 0 (131) 18
Other 525 293 836 429
------- ------- ------- -------
Total Other Income 898 636 1,501 1,271
OTHER OPERATING EXPENSES
------------------------
Salaries and Employee Benefits 2,183 1,970 4,239 4,006
Net Occupancy 553 497 1,112 975
Other Expenses 1,568 1,806 3,202 3,300
------- ------- ------- -------
Total Other Operating Expenses 4,304 4,273 8,553 8,281
------- ------- ------- -------
Income Before Income Taxes 3,017 2,372 6,081 4,774
Applicable income taxes 951 629 1,934 1,446
------- ------- ------- -------
$ 2,066 $ 1,743 $ 4,147 $ 3,328
======= ======= ======= =======
Net Income Per Common Share $ 0.73 $ 0.61 $ 1.46 $ 1.17
======= ======= ======= =======
Dividends Per Share $ 0.25 $ 0.24 $ 0.50 $ 0.48
======= ======= ======= =======
Average Common Shares Outstanding 2,835 2,835 2,835 2,835
======= ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 5
CONDENSED
CONSOLIDATED STATEMENT
OF SHAREHOLDERS' EQUITY
HORIZON BANCORP, INC. AND SUBSIDIARIES
(UNAUDITED, DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON CAPITAL RETAINED DEFERRED UNREALIZED
STOCK SURPLUS EARNINGS ESOP GAIN LOSS ON
BENEFIT AVAILABLE-
FOR-SALE TREASURY
SECURITIES STOCK TOTAL
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1994 $ 2,835 $12,262 $49,903 $ (121) $(1,297) $ - $63,582
Net Income Six
Months Ended
June 30, 1995 4,147 4,147
Cash Dividends ($0.50
Per Share) (1,418) (1,418)
Change in Unrealized
Loss on Available-for-Sale
Securities, Net of Deferred
Income Taxes 1,843 1,843
Reduction in ESOP
Indebtedness 121 121
Purchase of Treasury Stock (92) (92)
------- ------- ------- ------- ------- ----- -------
BALANCE, JUNE 30, 1995 $ 2,835 $12,262 $52,632 0 $ 546 $ (92) $68,183
======= ======= ======= ======= ======= ===== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 6
HORIZON BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(UNAUDITED, DOLLARS IN THOUSANDS) SIX MONTHS ENDED
JUNE 30
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net Income $ 4,147 $ 3,328
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 512 338
Amortization 92 85
Provision for Loan Losses 485 629
Loss (Gain) on Sale of Investments 131 (18)
Change in Other Assets (480) (485)
Change in Other Liabilities 2,886 (274)
-------- --------
Net Cash Provided by Operating Activities 7,773 3,603
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Proceeds from Maturities of Interest-Bearing Deposits 0 453
Proceeds from Maturities of Available-for-Sale Investments 4,327 10,907
Proceeds from Sales of Available-for-Sale Investments 4,873 531
Proceeds from Maturities of Held-to-Maturity Investments 18,563 18,363
Purchases of Available-for-Sale Investments (14,298) (7,924)
Purchases of Held-to-Maturity Investments (1,084) (8,818)
Net Change in Loans (14,083) (18,056)
Purchases of Premises and Equipment (2,496) (157)
Cash Received to Purchase Bank Branches,
Net of Cash Paid 3,456 0
-------- --------
Net Cash Used in Investing Activities (742) (4,701)
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Net Change in Deposits (2,934) 1,058
Net Change in Short-Term Borrowings 758 (830)
Payments on Long-Term Borrowings 0 (600)
Cash Dividends Paid (1,418) (1,362)
Purchase of Treasury Shares (92) 0
-------- --------
Net Cash Provided by Financing Activities (3,686) (1,734)
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 3,345 (2,823)
Cash and Cash Equivalents:
Beginning of Period 24,432 21,672
-------- --------
End of Period $ 27,777 $ 18,840
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
HORIZON BANCORP, INC. AND SUBSIDIARIES
JUNE 30, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared by Horizon Bancorp, Inc. ("Horizon"), in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been included. The
results of operations for the six months period ended June 30, 1995, are not
necessarily indicative of the results to be expected for the year ending
December 31, 1995.
These financial statements are to be read in conjunction with the financial
statements and notes included in the 1994 Annual Report and Form 10-K of
Horizon Bancorp, Inc.
NOTE 2. ACQUISITIONS
Horizon, through two of its subsidiary banks, entered into purchase and
assumption agreements with Huntington National Bank ("Huntington") under which
Horizon's subsidiary banks purchased certain assets and assumed certain
liabilities of Huntington.
Greenbrier Valley National Bank acquired the Huntington office located at
Fairlea, Greenbrier County with assets of approximately $2,471 on March 31,
1995. Bank of Raleigh acquired Huntington offices located at Beaver and
Sophia, Raleigh County, and at Oak Hill in Fayette County on May 12, 1995. The
assets of these offices acquired by Bank of Raleigh totaled approximately
$15,628.
<PAGE> 8
NOTE 3. SUMMARY OF LOAN LOSS EXPERIENCE
A summary of the changes in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1995 1994
---- ----
<S> <C> <C>
Balance at Beginning of Period $6,328 $5,651
Charge-offs
Commercial 26 76
Real Estate 27 75
Loans to Individuals 466 292
------ ------
519 443
Recoveries
Commercial 62 17
Real Estate 1 2
Loans to Individuals 121 133
------ ------
184 152
Net Charge-offs 335 291
Provision for Loan Losses 485 629
------ ------
Balance at End of Period $6,478 $5,989
====== ======
Percentage of Annualized Net Charge-offs
During the Periods to Average Net Loans
Outstanding During the Period 0.17% 0.16%
Percentage of Allowance for Loan Losses
to Period-End Loans, Net of Unearned Income 1.59% 1.61%
Percentage of Nonaccrual Loans
to Period-End Loans, Net of Unearned Income 0.63% 2.02%
</TABLE>
<PAGE> 9
NOTE 4: INVESTMENT SECURITIES
The following is a summary of available-for-sale securities and
held-to-maturity securities:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
-----------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
JUNE 30, 1995
U.S. Treasury Securities and
Obligations of U.S. Government
Agencies and Corporations $ 46,415 $1,273 $ (248) $ 47,440
Mortgage-backed Securities 10,195 123 (142) 10,176
---------------------------------------------------
Total Debt Securities $ 56,610 $1,396 $ (390) $ 57,616
Equity Securities 4,959 0 (97) 4,862
---------------------------------------------------
Totals $ 61,569 $1,396 $ (487) $ 62,478
===================================================
</TABLE>
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
---------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
JUNE 30, 1995
U.S. Treasury Securities and
Obligations of U.S. Government
Agencies and Corporations $ 40,242 $ 319 $ (250) $ 40,311
Obligations of States and
Political Subdivisions 41,503 359 (617) 41,245
Other Debt Securities 1,482 54 0 1,536
---------------------------------------------------
Totals $ 83,227 $ 732 $ (867) $ 83,092
===================================================
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
-----------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. Treasury Securities
and Obligations of U.S.
Government Agencies
and Corporations $ 44,787 $ 4 $(1,411) $ 43,380
Mortgage-backed Securities 10,579 15 (584) 10,010
Other Securities 4,365 -- (186) 4,179
---------------------------------------------------
Totals $ 59,731 $ 19 $(2,181) $ 57,569
===================================================
</TABLE>
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
---------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
U.S. Treasury Securities
and Obligations of U.S.
Government Agencies
and Corporations $ 55,290 $ 45 $(1,429) $ 53,906
Obligations of States and
Political Subdivisions 40,749 79 (2,786) 38,042
Mortgage-backed Securities 62 2 -- 64
Other Debt Securities 1,480 -- (47) 1,433
---------------------------------------------------
Totals $ 97,581 $126 $(4,262) $ 93,445
===================================================
</TABLE>
The appropriate classification of securities is determined by management at the
time of purchase. If management has the intent and the Company has the ability
at the time of purchase to hold securities until maturity, they are classified
as held-to-maturity investments and carried at amortized historical cost
adjusted for amortization of premiums and accretion of discounts, which are
recognized as adjustments to interest income.
Securities to be held for indefinite periods of time, including securities that
management intends to utilize as part of its asset/liability strategy, or that
may be sold in response to changes in interest rates, changes in prepayment
risk, changes in regulatory capital requirements, or other similar factors, are
classified as available-for-sale and are carried at fair value.
<PAGE> 11
NOTE 5. NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan". SFAS No. 114 requires that impaired
loans be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a practical expedient,
at the loan's observable market price or fair value of the collateral if the
loan is collateral dependent. Horizon adopted SFAS No. 114 as of January 1,
1995 and impaired loans approximated $2,545, for which the related allowance
for loan losses was $679. As of June 30, 1995, impaired loans approximated
$2,360, for which the related allowance for loan losses was $599. Horizon
records interest income on impaired loans using the cash method.
<PAGE> 12
HORIZON BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
JUNE 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following is a discussion and analysis focused on significant changes in
the financial condition and a review of the results of operations of Horizon
Bancorp, Inc. Horizon is a multi-bank holding company whose subsidiaries are
Bank of Raleigh, First National Bank in Marlinton, Greenbrier Valley National
Bank, and National Bank of Summers of Hinton. The financial information in
this section should be read in conjunction with the December 31, 1994
consolidated financial statements and the accompanying notes to the
financial statements.
RESULTS OF OPERATIONS
For the six months ended June 30, 1995, Horizon's net income totaled $4,147, as
compared to $3,328 for the same period of 1994. This represents an increase of
$819 or 24.61% in net income for the first six months of 1995 as compared to
the same period of 1994. Earnings per average common share for the six months
ended June 30, 1995 and 1994 were $1.46 and $1.17, respectively.
Contributing factors to the increase in Horizon's net income for the six months
ended June 30, 1995, included an increase of $1,205 in net interest income, a
decrease in provision for loan losses of $144, and an increase in other income
of $230. These factors were offset by an increase of $272 in total other
operating expenses, and an increase of $488 in applicable income taxes.
Return on average assets (ROA) measures the effectiveness of the utilization of
assets in generating earnings while return on average equity (ROE) measures the
amount of income earned relative to the amount of shareholders' investment. For
the six months ended June 30, 1995, Horizon's ROA approximated 1.44% and
compared to 1.19% for the six months ended June 30, 1994. For the six months
ended June 30, 1995, Horizon's ROE was 12.57%, an increase from the June 30,
1994, total of 10.86%.
Net income for the three months ended June 30, 1994, was $2,066 as compared to
$1,743 for the same period of 1994. This represents an increase of $323 or
18.53% in net income for the comparable second quarter periods.
Factors contributing to the increase in net income for the three-month period
ended June 30, 1995, included an increase of $379 in net interest income, a
decrease of $35 in provision for loan losses, and an increase of $262 in other
income. These factors were offset by an increase of $31 in total other
operating expenses, and an increase of $322 in applicable income taxes.
<PAGE> 13
NET INTEREST INCOME
Horizon's net interest income represents the excess of interest earned on
loans, investment securities and other interest-earning assets over the
interest incurred on deposits and borrowings and is the largest source of
earnings. Net interest income is influenced by the volume and relative yield
(or cost) of earning assets and interest-bearing liabilities as well as the
relative sensitivity of such assets and liabilities to changes in interest
rates. Within this discussion, net interest income is presented on a
taxable-equivalent basis to adjust for the tax favored status of earnings from
certain loans and investments, principally obligations of state and local
governments.
During the first six months of 1995, Horizon's net interest income (FTE)
increased $1,268 or 9.79% from June 30, 1994. Horizon's net yield on
interest-earning assets for the period ended June 30, 1995, increased to 5.2%
from 4.9% for the same period of 1994. This increase can be attributed to the
weighted average yield on interest-earning assets increasing at a more rapid
pace than the weighted average cost of interest-bearing liabilities.
At June 30, 1995, Horizon's average interest-earning assets increased $11,832
or 2.22% from the June 30, 1994, total of $533,811. This increase resulted
primarily from a growth in loans of $27,498 or 7.68%. Included in this average
is approximately $17,396 in loans purchased from Huntington National Bank. The
remaining increase in loans resulted from higher demand for commercial, real
estate, and consumer loans, and reflected marketing efforts and cyclical
factors. A major portion of the growth in loans has been funded by a decrease
in total securities. Investment securities decreased $12,935 or 8.00% from an
average balance of $161,719 at June 30, 1994 to an average balance of $148,784
at June 30, 1995.
Average interest-bearing liabilities increased $4,690 or 1.09% from $431,217 at
June 30, 1994 to $435,907 at June 30, 1995. Increases, primarily in time
savings, were somewhat offset by decreased interest-bearing demand deposits,
regular savings deposits, and other borrowings over the reported period. The
weighted average cost of funds increased from 3.4% for the six months ended
June 30, 1994, to 3.8% for the six months ended June 30, 1995. The weighted
average cost of funds increased in the time savings category 100 basis points,
while regular short-term borrowings declined 50 basis points in cost,
interest-bearing demand deposits declined 30 basis points, and savings deposits
declined 10 basis points.
The following chart illustrates the average distribution of assets, liabilities
and shareholders' equity, interest earnings and expense, and average rates, for
the six months ended June 30, 1995 and 1994.
<PAGE> 14
AVERAGE RATES
AVERAGE DISTRIBUTION OF ASSETS, LIABILITIES AND
SHAREHOLDERS' EQUITY, INTEREST EARNINGS & EXPENSES,
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
------------------------------ ------------------------------
AVERAGE EARNINGS/ YIELD/ AVERAGE EARNINGS/ YIELD/
BALANCES EXPENSE RATE BALANCES EXPENSE RATE
------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans, net of unearned
interest $385,719 $17,076 8.9% $358,221 $14,443 8.1%
Securities
Taxable 107,725 3,464 6.4% 120,779 3,869 6.4%
Tax-exempt 41,059 1,556 7.6% 40,940 1,594 7.8%
-------- ------- ---- -------- ------- ----
Total Securities 148,784 5,020 6.7% 161,719 5,463 6.6%
-------- ------- ---- -------- ------- ----
Interest-bearing deposits
with other banks 0 0 0.0% 1,658 88 10.6%
Federal funds sold & other 11,140 324 5.8% 12,213 220 3.6%
-------- ------- ---- -------- ------- ----
Total interest-earning
assets 545,643 22,420 8.2% 533,811 20,214 7.6%
-------- ------- ---- -------- ------- ----
Noninterest-earning assets:
Cash and due from banks 15,835 15,005
Premises and equipment-net 7,801 7,059
Other assets 12,218 9,630
Allowance for loan losses (6,373) (5,770)
-------- --------
Total assets $575,124 $559,735
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities:
Interest-bearing demand
deposits $ 85,382 $ 1,063 2.5% $ 90,144 $ 1,263 2.8%
Regular savings 119,222 1,912 3.2% 132,965 2,177 3.3%
Time savings 213,409 4,988 4.7% 191,005 3,560 3.7%
Other borrowings 17,894 234 2.6% 17,103 259 3.1%
-------- -------- ---- -------- ------- ----
Total interest-bearing
liabilities 435,907 8,197 3.8% 431,217 7,259 3.4%
-------- -------- ---- -------- ------- ----
Noninterest-bearing liabilities:
Demand deposits 69,028 61,405
Other liabilities 4,194 5,831
-------- --------
Total liabilities 509,129 498,453
-------- --------
Shareholders' equity 65,995 61,282
-------- --------
Total liabilities and
shareholders' equity $575,124 $559,735
======== ========
NET INTEREST EARNINGS $14,223 $12,955
======= =======
NET YIELD ON INTEREST-EARNING ASSETS 5.2% 4.9%
=== ===
</TABLE>
<PAGE> 15
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was $6,478 at June 30, 1995, compared to $6,328
at December 31, 1994. Expressed as a percentage of total loans, net of
unearned income, the allowance for loan losses was 1.59% at June 30, 1995,
and 1.68% at December 31, 1994.
For the six-month period ended June 30, 1995, charge-offs have increased $79
or 17.83% from the applicable period in 1994. Charge-offs of commercial loans
decreased $50 or 65.79%. The decline in charge-offs is an indication of
improvement in the local economy. Real estate loan charge-offs declined $48 or
64.00% from the applicable period in 1994. The decrease was due to minimal
foreclosures on residential properties. Charge-offs on loans to individuals
increased $174 or 59.59% for the six months ended June 30, 1995, from the
applicable six months period in 1994. This was a result of more aggressive
charge-offs and collection procedures.
Horizon's provision for loan losses totaled $485 for the six months ended
June 30, 1995, representing a 22.89% decrease from the provision charged to
income for the six months ended June 30, 1994. The decreased provision for
loan losses was deemed prudent in light of an improvement in the level of
asset quality as evidenced by a decline of $5,035 or 66.29% in nonaccrual
loans from June 30, 1994 to June 30, 1995.
Horizon's loans, 90 days or more delinquent and still accruing interest at June
30, 1995, decreased from $1,781 at December 31, 1994, to $1,416 at June 30,
1995, or 20.49%. Expressed as a percentage of total loans, Horizon's loans 90
or more days delinquent totaled 0.35% at June 30, 1995, as compared to 0.47%
at December 31, 1994.
Horizon's policy is to place in nonaccrual status those loans (including loans
impaired under SFAS No. 114) which are past due over 90 days, unless the loans
are adequately secured and in the process of collection. Nonaccrual loans
totaled $2,560 at June 30, 1995, and have decreased $421 or 14.12% from
December 31, 1994. A major portion of the decrease was noted in nonaccrual
real estate loans which decreased $382 or 21.87% from $1,747 at December 31,
1994 to $1,252 at June 30, 1995.
<PAGE> 16
Nonperforming assets as of June 30, 1995, and December 31, 1994 were:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
<S> <C> <C>
Nonaccruing Loans $ 2,560 $ 2,981
Loans Past Due 90 Days or
More and Still Accruing Interest 1,416 1,781
------- ------
Total $ 3,976 $ 4,762
======= =======
Total Nonaccrual Loans as a
% of Total Loans 0.63% 0.79%
Loans Past Due 90 Days or More and
Still Accruing Interest as a
% of Total Loans 0.35% 0.47%
</TABLE>
Based upon management's current assessment of the loan portfolio, there are no
additional significant loans which have been identified as potential problem
loans or would cause the allowance for loan losses to be materially misstated.
Horizon's foreclosed real estate totaled $823 at June 30, 1995, and has
increased $61 or 8.01% from the total of $762 at December 31, 1994. Management
is actively seeking disposition of all tracts with a minimal amount of loss
anticipated.
NONINTEREST INCOME
For the six months ended June 30, 1995, noninterest income totaled $1,501 and
has increased $230 or 18.10% from the $1,271 reported in the same period in
1994. Noninterest income represents all sources of income except that derived
from interest on earning assets.
Service charges on deposit accounts and other fee income totaled $796 for the
first six months of 1995 and have decreased $28 or 3.40% from the 1994
period.
For the six month period ended June 30, 1995, other noninterest income
increased $407 or 94.87% and was due to an increase of $101 in trust income
and insignificant increases in the other categories.
Investment securities losses were $131 during the first six months of 1995 as
compared to securities gains of $18 during the first six months of 1994. These
losses were incurred to take advantage of the purchase of higher yielding
investments.
For the three month period ended June 30, 1995, noninterest income increased
$262 or 41.19% and is primarily due to an increase of $232 or 13.14% in other
income. This increase is not due to any particular item but is due to
insiginificant increases in the various categories that constitute the total.
<PAGE> 17
NONINTEREST EXPENSE
Horizon's noninterest expense for the six months ended June 30, 1995, totaled
$8,553, an increase of $272 or 3.28% from the six months ended June 30, 1994,
total of $8,281. Primary contributors to the increase included a $233 or
5.82% increase in salaries and employee benefits and a $137 or 14.05% increase
in net occupancy expenses. The increase in net occupancy expense is primarily
due to $202 depreciation on computer equipment purchases during the first half
of 1995.
For the three-month period ended June 30, 1995, noninterest expenses were
$4,304, an increase of $31 or 0.73% from the levels incurred for the second
quarter of 1994.
INCOME TAXES
The effective tax rate was 31.80% for the six months ended June 30, 1995,
and compares to 30.29% for the six-month period ended June 30, 1994. For the
three-month period ended June 30, 1994, the effective tax rate was 31.52% and
compares to 26.52% for the three-month period ended June 30, 1994.
BALANCE SHEET ANALYSIS
Total assets increased $27,405 or 4.81% from the December 31, 1994, total. At
June 30, 1995, total assets were $597,340 and is compared to the December 31,
1994, total of $569,935. This increase is due to the acquisition of
approximately $18,000 in assets from Huntington National Bank abd core growth.
Federal funds sold increased $6,250 or 116.82% from the December 31, 1994,
total of $5,350. This increase is due to loan commitments scheduled to be
funded in the third quarter of 1995. Horizon is experiencing stronger loan
demand as a result of cyclical factors, a more active officer call program, and
a marketing program which continues to emphasize the locally-owned status of
the corporation.
Investment securities totaled $145,705 at June 30, 1995, and have decreased
$9,445 or 6.09% from the December 31, 1994, total of $155,150. This is
attributable to loan demand and is reflective of management's strategy to fund
portions of loan growth through maturities of investment securities.
Stronger loan demand is evidenced by growth in total loans in the first half of
1995 of $33,913 or 8.89% which included $17,396 in loans purchased from
Huntington National Bank. Growth occurred in consumer loans which increased
$25,954 or 27.87% from year-end 1994 due primarily to the acquisition of assets
from Huntington National Bank. Real estate loans increased $11,373 or 6.04%
from December 31, 1994, and evidences increasing construction and residential
purchases in the market area of the subsidiary banks. Commercial loans have
declined $3,414 or 3.41% from December 31, 1994. It is noted that the
subsidiary banks currently have commitments to fund additional commercial
loans totaling $10,303.
<PAGE> 18
Because of higher loan volume, collection efforts, and refinements in the loan
review process, the allowance for loan losses increased during the first
half of 1995. At June 30, 1995, the allowance for loan losses was $6,478
and has increased $150 or 2.37% from the year-end 1994 total of $6,328.
Net premises and equipment have increased $1,984 or 27.96% from $7,097 at
December 31, 1994 to $9,081 at June 30, 1995. Significant items in the
increase include $855 for construction of a subsidiary bank building, $200 for
purchase of real estate, and $902 for purchase of computer equipment.
Total deposits at June 30, 1995 are $501,608 and have increased $18,053 or
3.73% from the December 31, 1994, total of $483,555. The loans-to-deposits
ratio was 81.55% at June 30, 1994, and compares to 77.95% at December 31,
1994.
At June 30, 1995, short-term borrowings consist of securities sold
under agreements to repurchase and are offered for customer accommodation.
Total repurchase agreements of $17,555 represent an increase of $758 or
4.51% from the total of $16,797 at December 31, 1994.
Shareholders' equity increased $4,601 or 7.24% from the total at December 31,
1994, and is attributable to retention of earnings and the change in unrealized
loss on available-for-sale securities of $1,297 to an unrealized gain on
available-for-sale securities of $546.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Horizon's liquidity position is believed to be adequate for the availability of
funds for loan growth and deposit withdrawals, and provides for other
transaction requirements. Liquidity is provided primarily by investments in
cash and cash equivalents and maturities of investments and loans. The
liquidity position is monitored regularly and management is not aware of any
trends, commitments, or events that are likely to result in a liquidity
increase or decrease in a material amount.
Interest rate risk is measured through a static gap analysis which is shown in
the following table. Within the three months or less time frame are balances
of interest-bearing transaction accounts and regular savings totaling $198,828.
This is the primary reason that Horizon is in a negative gap position for that
period. The subsidiary banks are currently experiencing an increase in
certificates of deposit as consumers are responding to an upward trend in
market interest rates.
<PAGE> 19
The following table represents the interest sensitivity gap for periods
presented taking into consideration the periodic payments on loans and
contractual repricing of interest-bearing assets or interest-bearing
liabilities.
<TABLE>
<CAPTION>
ASSETS & LIABILITIES AFTER AFTER
MATURITIES & RATE 3 MONTHS 1 YEAR
SENSITIVITY 3 MONTHS WITHIN WITHIN OVER
JUNE 30, 1995 OR LESS 12 MONTHS 5 YEARS 5 YEARS TOTAL
-------- ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans* $ 90,763 $ 121,001 $163,567 $ 37,633 $413,053
Investments 11,032 15,750 66,917 52,006 145,705
Federal Funds Sold 11,600 0 0 0 11,600
----------------------------------------------------------------
Total Interest-
Earning Assets 113,395 136,751 230,484 89,639 570,358
INTEREST-BEARING
LIABILITIES
Interest-Bearing
Transaction Accounts 82,517 0 0 0 82,517
Savings 116,311 0 0 0 116,311
Time Savings 71,610 111,640 50,309 0 233,559
Borrowed Funds 17,555 0 0 0 17,555
----------------------------------------------------------------
Total Interest-
Bearing Liabilities 287,993 111,640 50,309 0 449,942
----------------------------------------------------------------
Interest Sensitivity
Gap $(174,598) $ 25,111 $180,175 $ 89,639 $120,327
================================================================
Cumulative Interest
Sensitivity Gap $(174,598) $(149,487) $ 30,688 $120,327
===================================================
Ratio of Interest-
Sensitive Assets to
Interest-Sensitive
Liabilities 39.37% 122.49%
=====================
Ratio of One Year Cumulative
Interest Sensitivity Gap to Total
Assets (25.03%)
<FN>
*Nonaccrual loans are not included.
Noninterest-bearing demand deposits are not considered in this analysis.
</TABLE>
<PAGE> 20
CAPITAL RESOURCES AND DIVIDENDS
Beginning January 1, 1994, FAS 115 required available-for-sale investments to
be carried at fair value with a corresponding adjustment, net of tax, included
in shareholders' equity. At June 30, 1995, shareholders' equity included an
unrealized net gain on available-for-sale investments of $546. Because bond
rates experienced a general decline in the first quarter of 1995, the unrealized
net gain or loss on available-for-sale securities charged from an unrealized
net loss of ($1,297) at December 31, 1994 to an unrealized net gain of
$546 at June 30, 1995.
Shareholders' equity when expressed as a percentage of total assets totaled
11.41% on June 30, 1995, an increase of 2.24% from the 11.16% reported on
December 31, 1994. The primary capital ratio, which includes equity and the
allowance for loan losses, was 12.36% on June 30, 1995, and has increased
1.90% from the 12.13% reported on December 31, 1994. The federal regulatory
agencies have adopted risk-based capital guidelines; Horizon continues to be
well above the minimum guidelines for all risk-based ratios.
Pertinent capital ratios were:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Shareholders' Equity/Total Assets 11.41% 11.16%
Primary Capital Ratio 12.36 12.13
Risk-Adjusted Capital:
Tier I 16.54 17.86
Tier I and II 17.70 19.65
Leverage 11.31 11.19
</TABLE>
<PAGE> 21
HORIZON BANCORP, INC.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings, other than ordinary litigation incidental to
the business, to which Horizon Bancorp or any of its subsidiaries are a party to
or of which any of their property is subject. Management believes that the
liability, if any, resulting from current litigation will not be material to
the reported financial statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
11. Statement of Computation of Earnings per Share - attached.
27. Financial Data Schedule.
Information included in Exhibit 27 is incorporated here-in by reference.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the first and second
quarters of 1995.
<PAGE> 22
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, INC.
--------------------------
(Registrant)
Date: July 20, 1995 /s/ Frank S. Harkins, Jr.
------------- --------------------------
Frank S. Harkins, Jr.
Chairman of the Board
Date: July 20, 1995 /s/ David W. Hambrick
------------- --------------------------
David W. Hambrick
Executive Vice President and
Chief Financial Officer
<PAGE> 1
HORIZON BANCORP, INC.
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 2,835,637 2,835,670 2,835,653 2,835,670
Net effect of options 85 0 85 0
---------- ---------- ---------- ----------
Total 2,835,722 2,835,670 2,835,738 2,835,670
========== ========== ========== ==========
Net Income $2,066,000 $1,743,000 $4,147,000 $3,328,000
========== ========== ========== ==========
Earnings Per Share $0.73 $0.61 $1.46 $1.17
===== ===== ===== =====
FULLY DILUTED:
Average shares outstanding 2,835,637 2,835,670 2,835,653 2,835,670
Net effect of options 85 0 85 0
---------- ---------- ---------- ----------
Total 2,835,722 2,835,670 2,835,738 2,835,670
========== ========== ========== ==========
Net Income $2,066,000 $1,743,000 $4,147,000 $3,328,000
========== ========== ========== ==========
Earnings Per Share $0.73 $0.61 $1.46 $1.17
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000730025
<NAME> HORIZON BANCORP
<MULTIPLIER> 1,000,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 16,177
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62,478
<INVESTMENTS-CARRYING> 83,227
<INVESTMENTS-MARKET> 83,092
<LOANS> 408,054
<ALLOWANCE> 6,478
<TOTAL-ASSETS> 597,340
<DEPOSITS> 501,608
<SHORT-TERM> 17,555
<LIABILITIES-OTHER> 9,994
<LONG-TERM> 0
<COMMON> 2,835
0
0
<OTHER-SE> 65,348
<TOTAL-LIABILITIES-AND-EQUITY> 597,340
<INTEREST-LOAN> 17,062
<INTEREST-INVEST> 4,491
<INTEREST-OTHER> 340
<INTEREST-TOTAL> 21,893
<INTEREST-DEPOSIT> 8,041
<INTEREST-EXPENSE> 8,275
<INTEREST-INCOME-NET> 13,618
<LOAN-LOSSES> 485
<SECURITIES-GAINS> (131)
<EXPENSE-OTHER> 8,553
<INCOME-PRETAX> 6,081
<INCOME-PRE-EXTRAORDINARY> 6,081
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,147
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.46
<YIELD-ACTUAL> 5.20
<LOANS-NON> 2,560
<LOANS-PAST> 1,416
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,328
<CHARGE-OFFS> 519
<RECOVERIES> 184
<ALLOWANCE-CLOSE> 6,478
<ALLOWANCE-DOMESTIC> 6,478
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 713
</TABLE>
