<PAGE>
UNITED STATES
SECURITY AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from______________________to______________________
Commission File Number: 0-24036
-----------------------------------------------------
Horizon Financial Services Corporation
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- ----------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
42-1419757
- ----------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
301 First Avenue East, Oskaloosa, Iowa 52577
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(515)673-8328
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 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. [X] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock 426,050
------------ ----------------------
Class Shares Outstanding
as of November 7, 1997
Transitional Small Business Disclosure Format (check one):
Yes___: No X
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Financial Information Page
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1997 and June 30, 1997. 1
Consolidated Statements of Operations for the three months ended 2
September 30, 1997 and 1996.
Consolidated Statements of Cash Flows for the three months ended 3
September 30, 1997 and 1996.
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and 5
Results of Operations
Part II. Other Information 9
Signatures 10
Index of Exhibits 11
Exhibits 12
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
--------------------
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, June 30,
Assets 1997 1997
- ------ -------------- ---------------
<S> <C> <C>
Cash and cash equivalents $ 7,875,961 $ 5,621,242
Securities available for sale 22,240,158 24,942,234
Loans receivable, net 54,520,018 52,193,285
Real estate 333,502 550,690
Stock in Federal Home Loan Bank, at cost 1,104,600 955,600
Office property and equipment, net 1,085,112 1,082,013
Accrued interest receivable 559,438 554,239
Prepaid expenses and other assets 65,191 70,160
-------------- --------------
Total assets $ 87,783,980 $ 85,969,463
============== ==============
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $ 56,285,024 $ 57,641,372
Advances from Federal Home Loan Bank 22,086,042 19,101,533
Advance payments by borrowers for taxes and insurance 103,714 400,663
Accrued taxes on income:
Current 171,467 39,923
Deferred 92,614 51,000
Accrued expenses and other liabilities 308,548 322,311
-------------- --------------
Total liabilities 79,047,409 77,556,802
-------------- --------------
Stockholders' equity
- --------------------
Preferred stock, $.01 par value, authorized 250,000
shares, none issued --- ---
Common stock, $.01 par value, 1,500,000 shares
authorized, issued and outstanding 523,099 shares 5,231 5,231
Additional paid-in capital 4,810,100 4,795,400
Retained earnings, substantially restricted 5,520,169 5,305,946
Treasury stock, at cost (1,360,275) (1,360,275)
Unearned employee stock ownership plan shares (177,332) (193,798)
Unearned recognition and retention plan shares (38,601) (47,655)
Unrealized losses on securities available for sale (22,721) (92,188)
-------------- --------------
Total stockholders' equity 8,736,571 8,412,661
-------------- --------------
Total liabilities and stockholders' equity $ 87,783,980 $85,969,463
============== ==============
</TABLE>
-1-
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months
Ended September 30
1997 1996
---- ----
<S> <C> <C>
Interest income:
Loans $1,154,315 $1,073,339
Investment securities available for sale 423,746 343,288
Other investment income 57,064 16,009
------------- ------------
Total interest income 1,635,125 1,432.636
------------- ------------
Interest expense:
Deposits 667,490 645,641
Advance from Federal Home Loan Bank 303,015 162,485
------------- ------------
Total interest expense 970,505 808,126
------------- ------------
Net interest income 664,620 624,510
Provision for losses on loans 28,000 95,073
------------- ------------
Net interest income after provision for
losses on loans 636,620 529,437
------------- ------------
Noninterest income:
Fees, commissions and service charges 104,254 85,850
Gain on sale of securities, net 107,726 - - -
Other 28,646 5,575
------------- ------------
Total noninterest income 240,626 90,425
------------- ------------
Noninterest expense:
Compensation, payroll taxes and employee benefits 286,053 258,680
Advertising 14,642 21,445
Office property and equipment 96,377 74,219
Federal insurance premiums and special assessments 8,632 361,800
Data processing services 28,102 26,012
Other real estate expense, net 7,056 22,736
Other 57,560 57,969
------------- ------------
Total noninterest expense 498,422 822,861
------------- ------------
Earnings before taxes on income 378,824 (202,999)
Taxes on income 132,000 (75,700)
------------- -------------
Net earnings (loss) $ 246,824 ($ 127,299)
============= =============
Earnings(loss) per common share -
primary and fully diluted $ .58 ($ .29)
============= =============
Weighted average common shares outstanding 425,540 447,937
============= =============
</TABLE>
-2-
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended
September 30,
1997 1996
----------- ------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 246,824 (127,299)
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 39,765 38,421
Amortization of fees, premiums and accretion of discounts, net 31,099 12,092
Provision for losses on loans and real estate 28,000 95,073
Gain on sale of securities (107,726) - - -
(Increase) decrease in accrued interest receivable (5,198) 3,158
Amortization of stock compensation plans 25,520 26,148
Other, net 120,095 233,668
------------- -----------
Net cash provided by operating activities 378,379 281,261
------------- -----------
Cash flows from investing activities:
Principal collected on securities available for sale 719,224 563,267
Proceeds from sale of securities available for sale 7,278,901 - - -
Purchase of securities available for sale (5,108,798) (1,870,783)
Purchase of Federal Home Loan Bank stock (149,000) (73,800)
Loans to customers, net (2,344,733) (1,682,150)
Proceeds from sale of real estate 225,000 - - -
Purchase of office property and equipment, net (42,864) (5,323)
-------------- ---------------
Net cash provided by (used in) investing activities 577,730 (3,068,789)
------------- ---------------
Cash flows from financing activities:
(Decrease) increase in customer deposit accounts, net (1,356,348) 450,744
Decrease advance payments by borrowers for taxes and insurance (296,949) (301,518)
Proceeds from advances from FHLB 8,500,000 3,000,000
Principal payments on advances from FHLB (5,515,492) (14,606)
Payment of dividends (32,601) (33,843)
------------- --------------
Net cash provided by financing activities 1,298,610 3,100,777
------------ -------------
Net increase in cash and cash equivalents 2,254,719 313,249
Cash and cash equivalents at beginning of year 5,621,242 3,470,538
------------ -------------
Cash and cash equivalents at end of year $ 7,875,961 3,783,787
============ =============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 905,602 813,654
Cash paid for taxes - - - 7,429
Transfers of loans to real estate acquired through foreclosures - - - 114,430
============== =============
To mark assets available for sale to fair value:
Change in fair value $ (110,624) $ (61,807)
Less deferred taxes 41,157 23,101
--------------- -------------
Change in valuation allowance $ 69,467 $ 38,706
=============== =============
</TABLE>
-3-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HORIZON FINANCIAL SERVICES CORPORATION
1. BASIS OF PRESENTATION
The consolidated financial statements for the three months ended September 30,
1997 are unaudited. In the opinion of management of Horizon Financial Services
Corporation (the "Registrant" or "Company"), these financial statements reflect
all adjustments, consisting only of normal occurring accruals, necessary to
present fairly the consolidated financial position of the Company at September
30, 1997 and its results of operations and statements of cash flows for the
periods presented. Certain information and footnote disclosure normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted.
2. ORGANIZATION
The Company was organized as a Delaware corporation at the direction of Horizon
Federal Savings Bank (the "Bank") for the purpose of becoming a savings bank
holding company, as part of the conversion from a mutual to a stock institution.
The conversion was completed on June 28, 1994 with the sale to the public of
506,017 shares of the Company's common stock at a price of $10 per share. Total
proceeds from the conversion of $4,148,060 (net of issuance costs of $507,300
and ESOP shares of $404,810) have been recorded as common stock and paid-in
capital.
3. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, the Bank and the Bank's wholly owned subsidiary,
Horizon Investment Services, Inc. The principal business activity of Horizon
Investment Services, Inc. is to sell credit life insurance to customers of the
Bank. All material intercompany accounts and transactions have been eliminated.
4. EFFECT OF NEW ACCOUNTING STANDARDS
In February 1997, the FASB adopted SFAS No. 128, "Earnings Per Share" ("SFAS
28") which becomes effective for financial statements for both interim and
annual periods ending after December 15, 1997. SFAS 128 specifies the
computation, presentation, and disclosure requirements for earnings per share
(EPS) for entities with publicly held common stock. Management believes the
adoption of this statement will not have a material impact on the financial
condition or results of operations of the Company.
-4-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
-----------------------------------------------------------
GENERAL
- -------
Horizon Financial Services Corporation (the "Company") is a savings bank holding
company the primary asset of which is Horizon Federal Savings Bank (the "Bank").
The Company was incorporated in March 1994 and sold 506,017 shares of common
stock on June 28, 1994 for the purpose of acquiring all of the capital stock of
the Bank in connection with the Bank's conversion from mutual to stock form of
ownership (the "Conversion"). All references to the Company prior to June 28,
1994, except where otherwise indicated, are to the Bank and its subsidiary on a
consolidated basis.
The principal business of the Company (through its operating subsidiary, the
Bank), has historically consisted of attracting deposits from the general public
and making loans secured by residential and, to a lesser extent, other
properties. The Company's results of operations are primarily dependent on net
interest rate spread, which is the difference between the average yield on
loans, mortgage-backed and related securities and investments and the average
rate paid on deposits and other borrowing. The interest rate spread is affected
by regulatory, economic and competitive factors that influence interest rates,
loan demand and deposit flows. The Company, like other non-diversified savings
institution holding companies, is subject to interest rate risk to the degree
that its interest-earning assets mature or reprice at different times, or on a
different basis, than its interest-bearing liabilities.
The Company's results of operations are also affected by, among other things,
fee income received, loss or profit on securities available for sale, the
establishment of provisions for possible loan losses, income derived from
subsidiary activities, the level of operating expenses and income taxes. The
Company's operating expenses principally consist of employee compensation and
benefits, occupancy expenses, federal deposit insurance premiums, data
processing expenses and other general and administrative expenses.
The Company is significantly affected by prevailing economic conditions
including federal monetary and fiscal policies and federal regulation of
financial institutions. Deposit balances are influenced by a number of factors
including interest rates paid on competing personal investments and the level of
personal income and savings within the institution's market area. Lending
activities are influenced by the demand for housing as well as competition from
other lending institutions. The primary sources of funds for lending activities
include deposits, loan payments, borrowings and funds provided from operations.
Certain statements in this report that relate to the plans, objectives or future
performance may be deemed to be forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 ("PSLRA"). Words or phrases
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the PSLRA. Such statements
are based on Management's current expectations. Actual strategies and results in
future periods may differ materially from those currently expected because of
various risks and uncertainties. Additional discussion of factors affecting the
Company's business and prospects is contained in the Company's periodic filings
with the Securities and Exchange Commission. The Company disclaims any intent or
obligation to update these forward-looking statements.
-5-
<PAGE>
FINANCIAL CONDITION
- -------------------
The Company's total assets at September 30, 1997 of $87.8 million increased $1.8
million, or 2.11%, from $86.0 million at June 30, 1997. This increase was
reflected in a $2.3 million increase in net loans receivable and a $2.2 million
increase in cash and cash equivalents, partially offset by a $2.7 million
decrease in securities available for sale and a $217,000 decrease in real
estate. Total liabilities increased $1.5 million to $79.0 million on September
30, 1997 from $77.5 million on June 30, 1997, primarily due to a $3.0 million
increase in advances from the Federal Home Loan Bank to $22.1 million on
September 30, 1997 from $19.1 million on June 30, 1997. Deposits decreased $1.3
million from $57.6 million on June 30, 1997 to $56.3 million on September 30,
1997. Advances from the Federal Home Loan Bank were used to fund growth in the
Company's loan portfolio and for operations. Advance payments by borrowers for
taxes and insurance decreased $297,000 from $401,000 at June 30, 1997 to
$104,000 at September 30, 1997. There were no other significant changes in the
components of the Company's balance sheet.
RESULTS OF OPERATIONS
- ---------------------
The Company's results of operations depend primarily on the level of its net
interest income and non-interest income and the level of its operating expenses.
Net interest income depends upon the volume of interest-earning assets and
interest-bearing liabilities and interest rates earned or paid on such assets or
liabilities, respectively. The Company's non-interest income consists primarily
of fees charged on transaction accounts which help to offset the costs
associated with establishing and maintaining these accounts.
Comparison of three month periods ended September 30, 1997 and September 30,
1996.
GENERAL
- -------
Net income increased $374,000 to $247,000 for the three months ended September
30, 1997 from a loss of $127,000 for the three month period ended September 30,
1996. The increase was primarily attributable to the one time special assessment
of $207,000, net of taxes, by the Federal Deposit Insurance Corporation ("FDIC")
to recapitalize the Savings Association Insurance Fund ("SAIF") during the three
month period ended September 30, 1996 and a $150,000 increase in noninterest
income to $240,000 for the period ended September 30, 1997 from $90,000 for the
same period ended September 30, 1996.
INTEREST INCOME
- ---------------
Interest income increased $202,000, or 14.13%, to $1.6 million for the three
month period ended September 30, 1997 compared to $1.4 million for the three
month period ended September 30, 1996. The increase was primarily the result of
an increase in the average outstanding balance of interest-earning assets,
consisting primarily of mortgage loans and securities available for sale, of
approximately $11.1 million for the three month period ended September 30, 1997.
The weighted average yield on average interest-earning assets decreased slightly
to 7.99% for the three months ended September 30, 1997 from 8.10% for the same
period in 1996.
INTEREST EXPENSE
- ----------------
Interest expense increased $162,000, or 20.09%, to $970,000 for the three month
period ended September 30, 1997 compared to $808,000 for the three month period
ended September 30, 1996. The increase in interest expense was primarily due to
a $9.5 million increase in the average outstanding balance of advances from the
Federal Home Loan Bank to $20.9 million for the three month period
-6-
<PAGE>
ended September 30, 1997 as compared to $11.4 for the period ended September 30,
1996. The weighted average yield on interest-bearing liabilities increased 18
basis points to 5.04% for the three month period ended September 30, 1997 from
4.86% for the same period in 1996.
NET INTEREST INCOME
- -------------------
Net interest income increased $40,000 from $625,000 for the three month period
ended September 30, 1996 to $665,000 for the three month period ended September
30, 1997. The increase in net interest income was primarily a result of the
increase in interest income as discussed above. The Company's net interest
margin was 2.95% for the three month period ended September 30, 1997 compared to
3.24% for the same period in 1996.
PROVISION FOR LOSSES ON LOANS
- -----------------------------
The provision for losses on loans is a result of management's periodic analysis
of the adequacy of the Company's allowance for losses on loans. During the three
month period ended September 30, 1997 the Company's provision for losses on
loans was $28,000 compared to $95,000 for the three month period ended September
30, 1996. The decrease in the provision for losses on loans was predominantly
attributable to a $70,000 commercial business operating loan classified as a
loss for the period ended September 30, 1996 with no such loss for the period
ended September 30, 1997. As of September 30, 1997, the Company's non-performing
assets, consisting of nonaccrual loans, accruing loans 90 days or more
delinquent, real estate owned and repossessed consumer property, totaled
$826,000 or .94% of total assets, compared to $1,045,000 or 1.22% of total
assets as of June 30, 1997. As of September 30, 1997 the Company's allowance for
losses on loans was $366,000, representing 44.3% of non-performing assets and
.67% of net loans receivable.
The Company continues to monitor and adjust its allowance for losses on loans as
management's analysis of its loan portfolio and economic conditions dictate. The
Company believes it has taken an appropriate approach toward reserve levels,
consistent with the Company's loss experiences and considering, among other
factors, the composition of the Company's loan portfolio, the level of the
Company's classified and non-performing assets and their estimated value. Future
additions to the Company's allowance for losses on loans and any change in the
related ratio of the allowance for losses on loans to non-performing loans are
dependent upon the economy, changes in real estate values and interest rates.
Because the Company has had extremely low loan losses during its history,
management also considers the loss experience of similar portfolios in
comparable lending markets. In addition, federal regulators may require
additional reserves as a result of their examination of the Company.
Accordingly, the calculation of the adequacy of the allowance for losses on
loans is not based directly on the level of non-performing assets. The allowance
for losses on loans reflects what the Company currently believes is an adequate
level of reserves, although there can be no assurance that future losses will
not exceed the estimated amounts, thereby adversely affecting future results of
operations.
NONINTEREST INCOME
- ------------------
Noninterest income was $240,000 for the three months ended September 30, 1997 as
compared to $90,000 for the same period ended September 30, 1996. The increase
in noninterest income was primarily attributable to profit on sale of securities
which increased $108,000 for the three month period ended September 30, 1997
from the corresponding period in 1996.
NONINTEREST EXPENSE
- -------------------
Total noninterest expense decreased $325,000 from $823,000 for the three months
ended September 30, 1996 to $498,000 for the three month period ended September
30, 1997. The decrease was primarily due to the absence of the special
assessment of $331,000 by the FDIC to recapitalize the SAIF during the first
quarter of fiscal 1997 and a decrease of $22,000 in FDIC premiums for the three
month period ended September 30, 1997 as compared to the same period in 1996.
-7-
<PAGE>
TAXES ON INCOME
- ---------------
The Company had a $207,000 increase in taxes on income for the three month
period ended September 30, 1997 as a result of increased net earnings.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's principal sources of funds are deposits and principal and interest
payments collected on mortgage loans, investments and related securities. While
scheduled loan repayments and maturing investments are relatively predictable,
deposit flows and early loan prepayments are more influenced by interest rates,
general economic conditions and competition. Additionally, the Company may
borrow funds from the Federal Home Loan Bank ("FHLB") of Des Moines or utilize
other borrowings of funds based on need, comparative costs and availability at
the time.
The Office of Thrift Supervision (the "OTS") requires minimum levels of liquid
assets. OTS regulations presently require the Bank to maintain an average daily
balance of liquid assets (United States Treasury and federal agency securities
and other investments having maturities of five years of less) equal to at least
5.0% of the sum of its average daily balance of net withdrawable deposit
accounts and borrowings payable in one year or less. Such requirements may be
changed from time to time by the OTS to reflect changing economic conditions.
Such investments are intended to provide a source of relatively liquid funds
upon which the Bank may rely, if necessary, to fund deposit withdrawals and
other short-term funding needs. The Bank has historically maintained its
liquidity ratio in excess of that required. The Bank's liquidity ratio was 6.29%
on September 30, 1997 and 7.12% on June 30, 1997.
At September 30, 1997, the Company had $22.1 million of advances from the FHLB
of Des Moines outstanding. The Company uses its liquidity resources principally
to meet ongoing commitments, to fund maturing certificates of deposit and
deposit withdrawals, and to meet operating expenses. The Company anticipates
that it will have sufficient funds available to meet current loan commitments.
At September 30, 1997, the Company had outstanding commitments to extend credit
which amounted to $1,401,000 (including $415,000 in available revolving
commercial lines of credit). At September 30, 1997, certificates of deposit
scheduled to mature in one year or less totaled $20.8 million. Management
believes, based on its experience to date, that a significant portion of these
funds will remain with the Company. Management believes that loan repayments and
other sources of funds will be adequate to meet the Company's foreseeable
liquidity needs.
Liquidity management is both a daily and long-term responsibility of management.
The Bank adjusts its investments in liquid assets based upon management's
assessment of (i) expected loan demand, (ii) expected deposit flows, (iii)
yields available on interest-bearing investments and (iv) the objectives of its
asset/liability management program. Excess liquidity generally is invested in
interest-earning overnight deposits and other short-term government and agency
obligations.
At September 30, 1997 the Bank had tangible and core capital of $6.5 million, or
7.5% of adjusted total assets, which was approximately $5.2 million and $3.9
million above the minimum requirements of 1.5% and 3.0%, respectively, of the
adjusted total assets in effect on that date. At September 30, 1997 the Bank had
risk-based capital of $6.7 million (including $6.5 million in core capital), or
14.2% of risk-weighted assets of $47.4 million. This amount was $2.9 million
above the 8.0% requirement in effect on that date.
-8-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
-----------------
None
ITEM 2. Changes in Securities
---------------------
None
ITEM 3. Defaults Upon Senior Securities
-------------------------------
None
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
ITEM 5. Other Information
-----------------
None
ITEM 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits:
Exhibit 11 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
None
-9-
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HORIZON FINANCIAL SERVICES CORPORATION
Registrant
Date: November 13,1997 /s/ Robert W. DeCook
---------------- ------------------------------------------
Robert W. DeCook
President and Chief Executive Officer
Date: November 13, 1997 /s/ Sharon McCrea
----------------- ------------------------------------------
Sharon McCrea
Vice President and Chief Financial Officer
-10-
<PAGE>
INDEX OF EXHIBITS
Exhibit Page
- ------- ----
11. Statement regarding computation of per share earnings 12
27. Financial Data Schedule 13
-11-
<PAGE>
EXHIBIT 11
Statement Regarding Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months
Ended 9/30/97
-------------
<S> <C>
Net Earnings $ 246,824
===========
Primary earnings per share:
Weighted average shares outstanding 425,540
Less unearned employee stock ownership plan shares (18,019)
Average option shares granted 37,021
Less assumed purchase of shares using treasury method (21,480)
=========
Common and common equivalent shares outstanding 423,062
========
Earnings per common share - primary $ 0.58
===========
Fully - diluted earnings per share:
Weighted average shares outstanding 425,540
Less unearned employee stock ownership plan shares (18,019)
Average option shares granted 37,021
Less assumed purchase of shares using treasury method (20,520)
========
Common and common equivalent shares outstanding 424,022
=======
Earnings per common share - fully diluted $ 0.58
===========
</TABLE>
-12-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HORIZON FINANCIAL SERVICES CORPORATION FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 7,876
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,240
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 54,520
<ALLOWANCE> 366
<TOTAL-ASSETS> 87,784
<DEPOSITS> 56,285
<SHORT-TERM> 22,086
<LIABILITIES-OTHER> 676
<LONG-TERM> 0
0
0
<COMMON> 5
<OTHER-SE> 8,222
<TOTAL-LIABILITIES-AND-EQUITY> 87,784
<INTEREST-LOAN> 1,154
<INTEREST-INVEST> 424
<INTEREST-OTHER> 57
<INTEREST-TOTAL> 1,635
<INTEREST-DEPOSIT> 667
<INTEREST-EXPENSE> 970
<INTEREST-INCOME-NET> 665
<LOAN-LOSSES> 28
<SECURITIES-GAINS> 108
<EXPENSE-OTHER> 498
<INCOME-PRETAX> 379
<INCOME-PRE-EXTRAORDINARY> 379
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 247
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
<YIELD-ACTUAL> 7.99
<LOANS-NON> 493
<LOANS-PAST> 206
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 294
<ALLOWANCE-OPEN> 348
<CHARGE-OFFS> 10
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 366
<ALLOWANCE-DOMESTIC> 366
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 11
</TABLE>
