<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 MARCH 31, 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 April 20, 1995
- ----------------------------- -----------------------------
Common stock, $1.00 par value 2,835,670 shares
<PAGE> 2
HORIZON BANCORP, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets-March 31, 1995 and December 31, 1994
Condensed Consolidated Statements of Income For The Three Months Ended
March 31, 1995 and 1994
Condensed Consolidated Statement of Changes in Shareholders' Equity For
The Three Months Ended March 31, 1995
Condensed Consolidated Statements of Cash Flows For The Three Months Ended
March 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements-March 31, 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
<PAGE> 3
CONDENSED CONSOLIDATED BALANCE SHEETS
HORIZON BANCORP, INC. & SUBSIDIARIES
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31, DECEMBER 31,
1995 1994
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
ASSETS
- ------
Cash and Due From Banks $ 15,609 $ 19,082
Federal Funds Sold 13,980 5,350
-------- --------
Total Cash and Cash Equivalents 29,589 24,432
Investment Securities:
Available-For-Sale (At Fair Value) 61,866 57,569
Held-To-Maturity (Approximate Fair Value of $85,318
at March 31, 1995 and $93,445 at December 31, 1994) 87,161 97,581
Loans:
Commercial 99,041 100,169
Real Estate 195,668 188,323
Loans to Individuals 94,077 93,119
-------- --------
Total Loans 388,786 381,611
Less: Unearned Income (5,185) (4,701)
Allowance for Loan Losses (6,412) (6,328)
-------- --------
Net Loans 377,189 370,582
-------- --------
Premises and Equipment-Net 8,699 7,097
Other Assets 12,184 12,674
-------- --------
Total Assets $576,688 $569,935
======== ========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 67,010 $ 70,781
Interest Bearing 417,359 412,774
-------- --------
Total Deposits 484,369 483,555
Short-Term Borrowings 19,135 16,797
Other Liabilities 7,268 6,001
-------- --------
Total Liabilities 510,772 506,353
-------- --------
SHAREHOLDERS' EQUITY
- --------------------
Common Stock (Par Value $1.00 Per Share,
Authorized 5,000,000 Shares, 2,835,670 Issued
and Outstanding) 2,835 2,835
Capital Surplus 12,262 12,262
Retained Earnings 51,275 49,903
Deferred ESOP Benefit (86) (121)
Unrealized Loss on Available-for-Sale
Securities, Net of Deferred Income Taxes (370) (1,297)
-------- --------
Total Shareholders' Equity 65,916 63,582
-------- --------
Total Liabilities and Shareholders' Equity $576,688 $569,935
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
HORIZON BANCORP, INC. AND SUBSIDIARIES
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(UNAUDITED, DOLLARS IN THOUSANDS, MARCH 31
EXCEPT PER SHARE DATA) 1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME
- ---------------
Interest and Fees on Loans $ 8,411 $ 7,071
Investment Securities:
Taxable 1,746 1,986
Exempt from Federal Taxes 515 532
Federal Funds Sold and Other 141 130
------- -------
Total Interest Income 10,813 9,719
INTEREST EXPENSE
- ----------------
Interest on Deposits 3,773 3,486
Interest on Borrowings 113 132
------- -------
Total Interest Expense 3,886 3,618
------- -------
Net Interest Income 6,927 6,101
Provision for Loan Losses 217 326
------- -------
Net Interest Income After Provision for
Loan Losses 6,710 5,775
OTHER INCOME
- ------------
Service Charges and Fees 423 481
Investment Securities (Losses) Gains (131) 18
Other 311 136
------- -------
Total Other Income 603 635
OTHER OPERATING EXPENSES
- ------------------------
Salaries and Employee Benefits 2,056 2,036
Net Occupancy 559 478
Other Expenses 1,634 1,494
------- -------
Total Other Operating Expenses 4,249 4,008
------- -------
Income Before Income Taxes 3,064 2,402
Applicable income taxes 983 817
------- -------
Net Income $ 2,081 $ 1,585
======= =======
Net Income Per Common Share $ 0.73 $ 0.54
======= =======
Average Common Shares Outstanding 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 LOSS ON
BENEFIT AVAILABLE-
FOR-SALE
SECURITIES TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994 $ 2,835 $12,262 $49,903 $ (121) $(1,297) $63,582
Net Income Three
Months Ended
March 31, 1995 2,081 2,081
Cash Dividends ($0.25
Per Share) (709) (709)
Change in Unrealized
Loss on Available-for-Sale
Securities, Net of Deferred
Income Taxes of $478 927 927
Reduction in ESOP
Indebtedness 35 35
------- ------- ------- ------- ------- -------
Balance, March 31, 1995 $ 2,835 $12,262 $51,275 (86) $ (370) $65,916
======= ======= ======= ======= ======= =======
</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) THREE MONTHS ENDED
MARCH 31
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net Income $ 2,081 $ 1,585
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 248 169
Amortization (26) 43
Provision for Loan Losses 217 326
Loss (Gain) on Sale of Investments 131 (18)
Change in Other Assets (460) (1,081)
Change in Other Liabilities 729 696
-------- --------
Net Cash Provided by Operating Activities 3,861 1,720
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Proceeds from Maturities of Interest-Bearing Deposits 0 466
Proceeds from Maturities of Available-for-Sale Investments 1,500 2,606
Proceeds from Sales of Available-for-Sale Investments 5,128 549
Proceeds from Maturities of Held-to-Maturity Investments 13,201 13,538
Purchases of Available-for-Sale Investments (11,535) (4,344)
Purchases of Held-to-Maturity Investments (767) (7,075)
Net Change in Loans (6,824) (2,338)
Purchases of Premises and Equipment (1,850) (112)
-------- --------
Net Cash (Used in) Provided by Investing Activities (1,147) 3,290
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Net Change in Deposits 814 2,742
Net Change in Short-Term Borrowings 2,338 221
Payments on Long-Term Borrowings 0 (400)
Cash Dividends Paid (709) (681)
-------- --------
Net Cash Provided by Financing Activities 2,443 1,882
-------- --------
Increase in Cash and Cash Equivalents 5,157 6,892
Cash and Cash Equivalents:
Beginning of Period 24,432 21,672
-------- --------
End of Period $ 29,589 $ 28,564
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE> 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
HORIZON BANCORP, INC. AND SUBSIDIARIES
MARCH 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed 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 Article 10 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 three month period ended March 31, 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, has entered into purchase and
assumption agreements with Huntington National Bank ("Huntington") under which
Horizon's subsidiary banks will purchase certain assets and assume certain
liabilities of Huntington.
Greenbrier Valley National Bank acquired the Huntington office located at
Fairlea, Greenbrier County with assets of approximately $4,627 on March 31,
1995. Bank of Raleigh will acquire 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 to be acquired by Bank of Raleigh are expected to total
approximately $13,649.
<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>
THREE MONTHS ENDED
MARCH 31
1995 1994
---- ----
<S> <C> <C>
Balance at Beginning of Period $6,328 $5,651
Charge-offs
Commercial 22 91
Real Estate 0 73
Loans to Individuals 214 137
---- ---
236 301
Recoveries
Commercial 42 10
Real Estate 1 1
Loans to Individuals 60 68
------ ------
103 79
Net Charge-offs 133 222
Provision for Loan Losses 217 326
------ ------
Balance at End of Period $6,412 $5,755
====== ======
Percentage of Annualized Net Charge-offs
During the Periods to Average Net Loans
Outstanding During the Period 0.14% 0.25%
Percentage of Allowance for Loan Losses 1.67% 1.64%
to Period-End Loans, Net of Unearned Income
Percentage of Nonaccrual Loans 0.61% 2.21%
to Period-End Loans, Net of Unearned Income
</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>
MARCH 31, 1995
U.S. Treasury Securities and
Obligations of U.S. Government
Agencies and Corporations $ 47,324 $ 398 $ (599) $ 47,123
Mortgage-backed Securities 10,336 66 (345) 10,057
---------------------------------------------------
Total Debt Securities $ 57,660 $ 464 $ (944) $ 57,180
Equity Securities 4,833 7 (154) 4,686
---------------------------------------------------
Totals $ 62,493 $ 471 $(1,098) $ 61,866
===================================================
</TABLE>
<TABLE>
<CAPTION>
HELD-TO-MATURITY SECURITIES
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
MARCH 31, 1995
U.S. Treasury Securities and
Obligations of U.S. Government
Agencies and Corporations $ 44,685 $ 192 $ (768) $ 44,109
Obligations of States and
Political Subdivisions 40,849 175 (1,444) 39,580
Mortgage-backed Securities 61 3 -- 64
Other Debt Securities 1,566 14 (15) 1,565
---------------------------------------------------
Totals $ 87,161 $ 384 $(2,227) $ 85,318
===================================================
</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. Included in this amount is
approximately $2,545 of impaired loans for which the related allowance for
loan losses is $679. As of March 31, 1995, impaired loans approximated $2,517.
Included in this amount is approximately $2,517 of impaired loans for which
the related allowance for loan losses is $647. 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
MARCH 31, 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 three months ended March 31, 1995, Horizon's net income totaled $2,081,
as compared to $1,585 for the same period of 1994. This represents an increase
of $496 or 31.29% in net income for the first three months of 1995 as compared
to the same period of 1994. Earnings per common share for the three months
ended March 31, 1995 and 1994 were $0.73 and $0.56, respectively.
Contributing factors to the increase in Horizon's net income for the three
months ended March 31, 1995, included an increase of $826 in net interest
income and a decrease in provision for loan losses of $109. These factors
were offset by a decrease of $32 in total other operating income, an increase
of $241 in total other operating expenses, and an increase of $166 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 three months ended March 31, 1995, Horizon's ROA approximated 1.47%
and compares to 1.14% for the three months ended March 31, 1994. For the
three months ended March 31, 1995, Horizon's ROE was 12.79%, an increase from
the March 31, 1994, total of 10.46%.
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 constitutes 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 three months of 1995, Horizon's net interest income (FTE)
increased $837 or 13.09% from March 31, 1994. Horizon's net yield on
interest-earning assets for the period ended March 31,
<PAGE> 13
1995, increased to 5.4% from 4.8% 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.
Horizon's average interest-earning assets increased $5,757 or 10.8% from the
March 31, 1994, total of $532,056. This increase resulted primarily from a
growth in loans of $30,768 or 8.81%. This increase in loans resulted from
higher demand for commercial, real estate, and consumer loans, and is
reflective of 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 $19,974 or 11.75% from an average balance of
$170,019 for the first quarter of 1994 to an average balance of $150,045 for
the first quarter of 1995.
Average interest-bearing liabilities increased $1,373 or 0.32% from $429,971 at
March 31, 1994 to $430,202 at March 31, 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 three months ended
March 31, 1994, to 3.6% for the three months ended March 31, 1995. The
weighted average cost of funds increased in the time savings category 60 basis
points, while regular short-term borrowings declined 40 basis points in cost.
The other categories of interest-bearing liabilities remained unchanged.
The following chart illustrates the average distribution of assets, liabilities
and shareholders' equity, interest earnings and expense, and average rates, for
the three months ended March 31, 1995 and 1994.
<PAGE> 14
AVERAGE RATES
AVERAGE DISTRIBUTION OF ASSETS, LIABILITIES AND
SHAREHOLDERS' EQUITY, INTEREST EARNINGS & EXPENSES,
<TABLE>
<CAPTION>
MARCH 31, 1995 MARCH 31, 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 $379,097 $ 8,451 8.9% $348,329 $ 7,091 8.1%
Securities
Taxable 108,986 1,746 6.4% 128,823 1,986 6.2%
Tax-exempt 41,059 780 7.6% 41,196 806 7.8%
-------- ------- ---- -------- ------- ----
Total Securities 150,045 2,526 6.7% 170,019 2,792 6.6%
-------- ------- ---- -------- ------- ----
Interest-bearing deposits
with other banks 0 0 0.0% 1,821 41 9.0%
Federal funds sold & other 8,671 141 6.5% 11,887 89 3.0%
-------- ------- ---- -------- ------- ----
Total interest-earning
assets 537,813 11,118 8.3% 532,056 10,013 7.5%
-------- ------- ---- -------- ------- ----
Noninterest-earning assets:
Cash and due from banks 16,484 14,250
Premises and equipment-net 7,441 7,108
Other assets 12,121 10,441
Allowance for loan losses (6,328) (5,705)
-------- --------
Total assets $567,531 $558,150
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities:
Interest-bearing demand
deposits $ 86,340 $ 581 2.7% $ 90,684 $ 636 2.8%
Regular savings 120,809 964 3.2% 131,994 1,091 3.3%
Time savings 206,149 2,228 4.3% 190,350 1,760 3.7%
Other borrowings 16,904 113 2.7% 16,943 131 3.1%
-------- -------- ---- -------- ----- ----
Total interest-bearing
liabilities 430,202 3,886 3.6% 429,971 3,618 3.4%
-------- -------- ---- -------- ----- ----
Noninterest-bearing liabilities:
Demand deposits 68,458 60,405
Other liabilities 3,805 7,157
-------- --------
Total liabilities 502,465 497,533
-------- --------
Shareholders' equity 65,066 60,617
-------- --------
Total liabilities and
shareholders' equity $567,531 $558,150
======== ========
NET INTEREST EARNINGS $ 7,232 $ 6,395
======== =======
NET YIELD ON INTEREST-EARNING ASSETS 5.4% 4.8%
=== ===
</TABLE>
<PAGE> 15
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was $6,412 at March 31, 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 1.67% at March 31, 1995,
and 1.68% at December 31, 1994.
For the three-month period ended March 31, 1995, charge-offs have decreased $65
or 21.59% from the applicable period in 1994. Charge-offs of commercial loans
decreased $69 or 75.82%. The decline in charge-offs is an indication of
improvement in the local economy. Real estate loan charge-offs declined $73 or
100% from the applicable period in 1994. The decrease was due to minimal
foreclosures on residential properties. Charge-offs on loans to individuals
increased $77 or 56.20% for the three months ended March 31, 1995, from the
applicable period in 1994. This was a result of more aggressive collection
procedures.
Horizon's provision for loan losses totaled $217 for the three months ended
March 31, 1995, representing a 33.44% decrease from the provision charged to
income for the three months ended March 31, 1994. The decreased provision for
loan losses was deemed prudent in light of a decrease of $89 or 40.09% in net
charge-offs and an improvement in the level of asset quality as evidenced by a
decline of $5,392 or 69.58% in nonaccrual loans from March 31, 1994 to March
31, 1995.
Horizon's loans 90 days or more delinquent and still accruing interest at March
31, 1995, decreased from $1,781 at December 31, 1994, to $1,549 at March 31,
1995, or 13.03%. Expressed as a percentage of total loans, Horizon's loans 90
or more days delinquent totaled 0.40% at March 31, 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 $2,357 at March 31, 1995, and have decreased $624 or 20.93% from
December 31, 1994. A major portion of the decrease was noted in nonaccrual
real estate loans which decreased $495 or 28.33% from $1,747 at December 31,
1994 to $1,252 at March 31, 1995.
<PAGE> 16
Nonperforming assets as of March 31, 1995, and December 31, 1994 were:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
<S> <C> <C>
Nonaccruing Loans $ 2,357 $ 2,981
Loans Past Due 90 Days or
More and Still Accruing Interest 1,549 1,781
------- ------
Total $ 3,906 $ 4,762
======= =======
Total Nonaccrual Loans as a
% of Total Loans 0.61% 0.78%
Loans Past Due 90 Days or More and
Still Accruing Interest as a
% of Total Loans 0.40% 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 $888 at March 31, 1995, and has
increased $126 or 16.54% 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 three months ended March 31, 1995, noninterest income totaled $603 and
has decreased $32 or 5.04% from the $635 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 $423 for the
first three months of 1995 and have decreased $58 or 12.06% from the 1994
period.
For the three month period ended March 31, 1995, other noninterest income
increased $175 or 128.68% 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 three months of 1995 as
compared to securities gains of $18 during the first three months of 1994. These
losses were incurred to take advantage of the purchase of higher yielding
investments.
<PAGE> 17
NONINTEREST EXPENSE
Horizon's noninterest expense for the three months ended March 31, 1995,
totaled $4,249, an increase of $241 or 6.01% from the three months ended March
31, 1994, total of $4,008. Primary contributors to the increase included an
$81 or 16.95% increase in net occupancy expense and a $140 or 9.37% increase in
other expenses.
Increase in net occupancy expense is due to $100 depreciation on computer
equipment purchases during the first quarter of 1995. Included in other
operating expenses for the three months ended March 31, 1995, are $30 in legal
fees associated with the purchase of the Huntington branches and $60 in
expenses related to the data processing conversion of two subsidiary banks in
the second quarter of 1995.
INCOME TAXES
The effective tax rate was 32.08% for the three months ended March 31, 1995,
and compares to 34.01% for the three month period ended March 31, 1994.
BALANCE SHEET ANALYSIS
Total assets increased $6,753 or 1.18% from the December 31, 1994, total. At
March 31, 1995, total assets were $576,688 and is compared to the December 31,
1994, total of $569,935.
Federal funds sold increased $8,630 or 161.31% from the December 31, 1994,
total of $5,350. This increase is due to loan commitments scheduled to be funded
in the second 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 $149,027 at March 31, 1995, and have decreased
$6,123 or 3.95% 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 quarter
of 1995 of $4,794 or 1.27% and is exclusive of $2,381 in loans purchased from
Huntington. Minimal growth occurred in consumer loans which increased $958 or
1.03% from year-end 1994. Real estate loans increased $7,345 or 3.90%
from December 31, 1994, and evidences increasing construction and residential
purchases in the market area of the subsidiary banks. Commercial loans have
declined $1,128 or 1.13% from December 31, 1994. It is noted that the
subsidiary banks currently have commitments to fund commercial loans totaling
$14,467.
Because of higher loan volume, collection efforts, and refinements in the loan
review process, the allowance for loan losses increased during the first
quarter of 1995. At March 31, 1995, the allowance for loan losses was $6,412
and has increased $84 or 1.33% from the year-end 1994 total of $6,328.
<PAGE> 18
Net premises and equipment has increased $700 or 9.86% from $7,097 at December
31, 1994 to $7,797 at March 31, 1995. Significant items in the increase include
$448 for construction of a subsidiary bank building and $200 for purchase of
real estate, and $902 for purchase of computer equipment.
Total deposits at March 31, 1995 are $484,369 and have increased $814 or 0.17%
from the December 31, 1994, total of $483,555. The loans-to-deposits ratio
was 79.20% at March 31, 1994, and compares to 77.95% at December 31, 1994.
At March 31, 1995, short-term borrowings primarily consist of securities sold
under agreements to repurchase and are offered for customer accommodation.
Total repurchase agreements of $19,135 represent an increase of $2,338 or
13.92% from the total of $16,797 at December 31, 1994, and is due to seasonal
increases in anticipation of income tax payments.
Shareholder's equity increased $2,334 or 3.67% from the total at December 31,
1994, and is attributable to retention of earnings and the decrease in
unrealized loss on available-for-sale securities of $927.
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 $202,199.
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
MARCH 31, 1995 OR LESS 12 MONTHS 5 YEARS 5 YEARS TOTAL
-------- ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
EARNING ASSETS
Loans* $129,242 $63,496 $53,778 $34,728 $381,244
Investments 12,604 13,152 71,242 52,029 149,027
Federal Funds Sold 13,980 0 0 0 13,980
---------------------------------------------------------------
Total Interest-
Earning Assets 155,826 76,648 225,020 86,757 544,251
INTEREST-BEARING
LIABILITIES
Interest-Bearing
Transaction Accounts 84,991 0 0 0 84,991
Savings 117,208 0 0 0 117,208
Time Savings 60,256 105,660 25,644 23,600 215,160
Borrowed Funds 19,135 0 0 0 19,135
---------------------------------------------------------------
Total Interest-
Bearing Liabilities 281,590 105,660 25,644 23,600 436,494
---------------------------------------------------------------
Interest Sensitivity
Gap $(125,764) $(29,012) $199,376 $63,157 $107,757
================================================================
Cumulative Interest
Sensitivity Gap $(125,764) $(154,776) $44,600 $107,757
==================================================
Ratio of Interest-
Sensitive Assets to
Interest-Sensitive
Liabilities 55.34% 72.54%
=====================
Ratio of One Year Cumulative
Interest Sensitivity Gap to Total
Assets (26.84%)
<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 March 31, 1995, shareholders' equity included an
unrealized net loss on available-for-sale investments of $370. Because bond
rates experienced a general decline in the first quarter of 1995, the unrealized
net loss on available-for-sale securities declined $927 or 71.47% from $1,297
at December 31, 1994 to $370 at March 31, 1995.
Shareholders' equity when expressed as a percentage of total assets totaled
11.43% on March 31, 1995, an increase of 2.42% from the 11.16% reported on
December 31, 1994. The primary capital ratio, which includes equity and the
allowance for loan losses, was 12.40% on March 31, 1995, and has increased
2.23% 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>
March 31, December 31,
1995 1994
---- ----
<S> <C> <C>
Shareholders' Equity/Total Assets 11.43% 11.16%
Primary Capital Ratio 12.40 12.13
Risk-Adjusted Capital:
Tier I 17.70 17.86
Tier I and II 18.85 19.65
Leverage 11.33 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 is 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
No reports on Form 8-K were filed during the first quarter 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: April 20, 1995 /s/ Frank S. Harkins, Jr.
-------------- --------------------------
Frank S. Harkins, Jr.
Chairman of the Board
Date: April 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>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
PRIMARY:
Average shares outstanding 2,835,670 2,835,670
Net effect of options 85 0
---------- ----------
Total 2,835,755 2,835,670
========== ==========
Net Income $2,081,000 $1,538,000
========== ==========
Earnings Per Share $0.73 $0.54
===== =====
FULLY DILUTED:
Average shares outstanding 2,835,670 2,835,670
Net effect of options 85 0
---------- ----------
Total 2,835,755 2,835,670
========== ==========
Net Income $2,081,000 $1,538,000
========== ==========
Earnings Per Share $0.73 $0.54
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from December 31,
1994 audited financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000730025
<NAME> HORIZON BANCORP
<MULTIPLIER> 1,000,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<CASH> 15,609
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,980
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 61,866
<INVESTMENTS-CARRYING> 87,161
<INVESTMENTS-MARKET> 85,318
<LOANS> 383,601
<ALLOWANCE> 6,412
<TOTAL-ASSETS> 576,688
<DEPOSITS> 484,369
<SHORT-TERM> 19,135
<LIABILITIES-OTHER> 7,268
<LONG-TERM> 0
<COMMON> 2,835
0
0
<OTHER-SE> 63,081
<TOTAL-LIABILITIES-AND-EQUITY> 576,688
<INTEREST-LOAN> 8,411
<INTEREST-INVEST> 2,261
<INTEREST-OTHER> 141
<INTEREST-TOTAL> 10,813
<INTEREST-DEPOSIT> 3,773
<INTEREST-EXPENSE> 3,886
<INTEREST-INCOME-NET> 6,927
<LOAN-LOSSES> 217
<SECURITIES-GAINS> (131)
<EXPENSE-OTHER> 4,249
<INCOME-PRETAX> 3,064
<INCOME-PRE-EXTRAORDINARY> 3,064
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,081
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
<YIELD-ACTUAL> 5.40
<LOANS-NON> 2,357
<LOANS-PAST> 1,549
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,328
<CHARGE-OFFS> 236
<RECOVERIES> 103
<ALLOWANCE-CLOSE> 6,412
<ALLOWANCE-DOMESTIC> 6,412
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 705
</TABLE>
