<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 December 31, 1996
------------------------------------------------
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 425,540
------------ -----------------------
Class Shares Outstanding
as of February 13, 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>
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1996 and June 30, 1996. 1
Consolidated Statements of Operations for the three months and 2
six months ended December 31, 1996 and 1995.
Consolidated statements of Cash Flows for the six months ended 3
December 31, 1996 and 1995.
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 10
Signatures 11
Index of Exhibits 12
Exhibits 13
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, June 30,
Assets 1996 1996
- ------ ------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 2,319,310 $ 3,470,538
Securities available for sale 17,632.380 18,049,483
Loans receivable, net 51,222,307 49,104,188
Real Estate 572,078 504,457
Stock in Federal Home Loan Bank, at cost 632,600 558,800
Office property and equipment, net 1,075.024 1,133,315
Accrued interest receivable 487,695 513,629
Prepaid expenses and other assets 101,874 129,776
------------ ------------
Total assets $ 74,043,268 $ 73,464,186
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 55,439,740 $ 54,758,967
Advances from Federal Home Loan Bank 10,131,842 9,661,271
Advance payments by borrowers for taxes and insurance 172,709 386,272
Accrued taxes on income:
Current 14,167 36,347
Deferred 15,380 11,000
Accrued expenses and other liabilities 176,940 220,103
------------ ------------
Total liabilities 65,950,778 65,073,960
------------ ------------
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 4,769,362 4,752,930
Retained earnings, substantially restricted 5,121,652 5,157,486
Treasury stock, at cost (1,360,275) (1,022,921)
Unearned employee stock ownership plan shares (226,740) (260,303)
Unearned recognition and retention plan shares (65,763) (83,871)
Unrealized losses on assets available for sale (150,977) (158,326)
------------ ------------
Total stockholders' equity 8,092,490 8,390,226
------------ ------------
Total liabilities and stockholders' equity $ 74,043,268 $ 73,464,186
============ ============
</TABLE>
-1-
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
----- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $1,091,557 $1,027,106 $2,164,896 $2,018,601
Interest on securities available for sale 302,215 291,988 645,503 579,391
Other interest earning assets 34,540 50,086 50,549 95,748
---------- ---------- ---------- ----------
Total interest income 1,428,312 1,369,180 2,860,948 2,693,740
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits 679,392 652,244 1,325,033 1,299,209
Interest on advances and other borrowing 154,643 131,843 317,128 263,456
---------- ---------- ---------- ----------
Total interest expense 834,035 784,087 1,642,161 1,562,665
---------- ---------- ---------- ----------
Net interest income 594,277 585,093 1,218,787 1,131,075
Provision for losses on loans 12,000 6,000 107,073 12,000
---------- ---------- ---------- ----------
Net interest income after provision for
Losses on loans 582,277 579,093 1,111,714 1,119,075
---------- ---------- ---------- ----------
Non-interest income:
Fees, commissions and service charges 90,243 82,961 175,093 173,586
Profit on securuties available for sale, net 57,759 23,421 57,759 23,421
Other 1,510 3,974 7,085 45,577
---------- ---------- ---------- ----------
Total non-interest income 149,512 110,356 239,937 242,584
---------- ---------- ---------- ----------
Non-interest expense:
Compensation, payroll taxes and
employee benefits 259,007 249,217 517,687 472,574
Advertising 9,438 11,538 30,883 23,635
Office property and equipment 75,862 79,465 150,081 155,581
Federal insurance premiums 31,300 29,442 393,100 58,400
Data processing services 26,167 25,394 52,179 44,335
Other real estate expense, net 4,020 8,443 26,756 16,014
Other 75,019 73,754 132,988 139,860
---------- ---------- ---------- ----------
Total non-interest expense 480,813 477,253 1,303,674 910,399
---------- ---------- ---------- ----------
Earnings before taxes on income 250,976 212,196 47,977 451,260
Taxes on income 93,600 65,500 17,900 150,100
---------- ---------- ---------- ----------
Net earnings $ 157,376 $ 146,696 $ 30,077 $ 301,160
========== ========== ========== ==========
Earnings per common share -
primary and fully diluted $ 0.38 $ 0.33 $ 0.07 $ 0.66
========== ========== ========== ==========
Weighted average common shares outstanding 427,866 471,437 437,901 480,379
========== ========== ========== ==========
</TABLE>
-2-
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended
December 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 30,077 $ 301,160
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 76,841 82,815
Amortization of fees, premiums and accretion of discounts, net 21,585 32,363
Provision for losses on loans 107,073 12,000
Realized profit on assets available for sale 57,759 23,421
(Increase) decrease in accrued interest receiveable 25,934 (85,318)
FHLB stock dividend - - - (9,500)
Amortization of stock compensation plans 51,671 47,026
Other, net 24,332 85,112
----------- -----------
Net cash provided by operating activities 395,272 489,079
----------- -----------
Cash flows from investing activities:
Principal collected on assets available for sale 758,041 722,705
Proceeds from sale of assets available for sale 4,186,696 1,024,580
Purchase of assets available for sale (4,595,413) (2,266,867)
Purchase Federal Home Loan Bank Stock (73,800) (14,100)
Loans to customers, net (2,339,622) (2,055,407)
Proceeds from sale of real estate - - - 190,000
Purchase of office property and equipment, net (16,918) (36,680)
Investment in real estate - - - (65,000)
----------- -----------
Net cash used in investing activities (2,081,016) (2,500,769)
----------- -----------
Cash flows from financing activities:
Increase in customer deposit accounts, net 680,773 2,536,577
Decrease advance payments by borrowers for taxes and insurance (223,563) (253,987)
Proceeds from advances from FHLB 3,000,000 4,000,000
Principal payments on advances from FHLB (2,529,429) (3,027,748)
Payment of dividends (65,911) (75,432)
Treasury stock acquired (337,354) (322,555)
----------- -----------
Net cash provided by financing activities 534,516 2,856,855
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,151,228) 845,165
Cash and cash equivalents at beginning of year 3,470,538 3,811,665
----------- -----------
Cash and cash equivalents at end of year $ 2,319,310 $ 4,656,830
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 1,656,119 $ 1,597,189
Cash paid for taxes 48,307 76,000
Transfers of loans to real estate aquired through foreclosures 114,430 - - -
=========== ===========
To mark assets available for sale to fair value:
Change in fair value $ (11,565) $ (199,222)
Less deferred taxes 4,216 74,310
----------- -----------
Change in valuation allowance $ 7,349 $ 124,912
=========== ===========
</TABLE>
-3-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HORIZON FINANCIAL SERVICES CORPORATION
1. BASIS OF PRESENTATION
The consolidated financial statements for the three and six months ended
December 31, 1996 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 December 31, 1996 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 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 subsidiaries, 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-
<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.
FINANCIAL CONDITION
The Company's total assets at December 31, 1996 of $74.0 million increased
$500,000, or .68%, from $73.5 million at June 30, 1996. This increase was
reflected in a $2.1 million increase in net loans receivable, $67,000 increase
in real estate and a $74,000 increase in Federal Home Loan Bank Stock. This
increase was partially offset by a $1.2 million decrease in cash and cash
equivalents and a $417,000 decrease in securities available for sale. Total
liabilities increased $877,000 to $65.9 million on December 31, 1996 from $65.1
million on June 30, 1996, primarily due to a $681,000 increase in deposits to
$55.4 million on December 31, 1996 from $54.7 million on June 30, 1996. Advances
from the Federal Home Loan Bank increased $470,000 to $10.1 million on December
31, 1996 from $9.6 million on June 30, 1996.
-5-
<PAGE>
Advance payments by borrowers for taxes and insurance decreased $213,000 from
$386,000 at June 30, 1996 to $173,000 at December 31, 1996. 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 and six month periods ended December 31, 1996 and
December 31, 1995
GENERAL
Net income for the three months ended December 31, 1996 increased $10,000 to
$157,000 from $147,000 for the three month period ended December 31, 1995. For
the six months ended December 31, 1996, net earnings decreased $271,000 to
$30,000 for the comparable period in 1995. The increase for the three month
period ended December 31, 1996 compared to the three month period ended December
31, 1995 was attributable to increases in net interest income and non-interst
income (primarily gains on securities available for sale), offset in part by
increases in loan loss provisions and taxes on income. The decrease for the six
month period was primarily due to the special assessment of $207,000, net of
taxes, by the FDIC to recapitalize the SAIF.
INTEREST INCOME
Interest income increased $59,000 to $1,428,000 for the three month period ended
December 31, 1996 compared to $1,369,000 for the three month period ended
December 31, 1995 and $167,000 to $2.9 million for the six month period ended
December 31, 1996 compared to $2.7 million for the comparable period ended
December 31, 1995. The increase was primarily the result of an increase in
average interest-earning assets, consisting primarily of mortgage loans and
assets available for sale, of approximately $3.1 million and $3.9 million for
the three and six months ended December 31, 1996, respectively, over the
comparable periods in 1995, and, to a lesser extent, the upward adjustment of
the rates on the Bank's adjustable-rate mortgage loans which repriced during
1996. The weighted average yield on average interest-earning assets increased to
8.15% for the six months ended December 31, 1996 from 8.13% for the same period
in 1995.
INTEREST EXPENSE
Interest expense increased $50,000 to $834,000 from $784,000 for the three month
period and increased $79,000 to $1,642,000 from $1,563,000 for the six month
period ended December 31, 1996 as compared to the same periods in 1995. The
increase in interest expense was attributable to increased advances from the
Federal Home Loan Bank and increased deposits, which primarily were used to fund
mortgage loan growth. The weighted average interest rates paid on average
interest bearing liabilities decreased to 4.95% for the six months ended
December 31, 1996 from 5.11% for the same period in 1995.
-6-
<PAGE>
NET INTEREST INCOME
Net interest income was $594,000 and $1.2 million for the three months and six
months ended December 31, 1996, respectively, compared to $585,000 and $1.1
million for the comparable periods in 1995. 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 3.20% for the six month period ended
December 31, 1996 compared to 3.02% for the same period in 1995.
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 six
month period ended December 31, 1996 the Company's provision for losses on loans
was $107,000 compared to $12,000 for the six month period ended December 31,
1995. The increase in the provision for losses on loans was predominantly
attributable to a $75,000 commercial business operating loan classified as a
loss and written off during the first quarter of the fiscal year. During the
three month period ended December 31, 1996, the Company's provision for loan
losses was $12,000 compared to $6,000 for the three month period ended December
31, 1995. As of December 31, 1996, 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 $1.0 million or 1.35% of
total assets, compared to $935,000 or 1.27% of total assets as of June 30, 1996.
As of December 31, 1996 the Company's allowance for losses on loans was
$294,000, representing 29.3% of non-performing assets and .57% 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.
NON-INTEREST INCOME
Non-interest income was $149,000 and $240,000 for the three and six months ended
December 31, 1996 respectively, compared to $110,000 and $242,000 for the same
periods ended December 31, 1995. The increase in non-interest income was
primarily attributable to profit on sale of securities which increased $34,000
for the three and six month periods ended December 31, 1996 from the
corresponding period in 1995. Other non-interest income decreased $38,000 from
$45,000 for the six month period ended December 31, 1995 to $7,000 for the same
period in 1996 primarily due to a special non-recurring patronage dividend which
was not received from the data processing services in 1996.
-7-
<PAGE>
NON-INTEREST EXPENSE
Total non-interest expense was $481,000 and $1.3 million for the three and six
months ended December 31, 1996, respectively, compared to $477,000 and $910,000
for the same periods in 1995, reflecting increases of $4,000 and $393,000,
respectively. The increase for the six month period was primarily the result of
the one-time special assessment of $ 331,000 by the FDIC to recapitalize the
SAIF. There were no other significant changes in the components of non-interest
expense.
TAXES ON INCOME
The Company had a $28,000 increase in taxes on income for the three month period
ended December 31, 1996 as a result of increased net earnings and a $132,000
decrease for the six month period primarily a result of decreased net earnings
for the period.
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 Banks liquidity ratio was 5.1%
at December 31, 1996 and 6.65% on June 30, 1996.
At December 31 1996, the Company had $10.1 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 December
31, 1996, the Company had outstanding commitments to extend credit which
amounted to $881,000 (including $473,000 in available revolving commercial lines
of credit). At December 31, 1996, certificates of deposit scheduled to mature in
one year or less totaled $20.4 million. Management beloeves 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.
-8-
<PAGE>
At December 31, 1996 the Bank had tangible and core capital of $5.7 million, or
7.9% of adjusted total assets, which was approximately $4.6 million and $3.5
million above the minimum requirements of 1.5% and 3.0%, respectively, of the
adjusted total assets in effect on that date. At December 31, 1996 the Bank had
risk-based capital of $5.9 million (including $5.7 million in core capital), or
14.3% of risk-weighted assets of $41.6 million. This amount was $2.6 million
above the 8.0% requirement in effect on that date.
-9-
<PAGE>
OTHER INFORMATION
PART II
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
(a) Annual meeting date: October 24, 1996
(c) The matters approved by stockholders at the Meeting
and number of votes cast for, against or withheld (as
well as the number of abstentions and broker non-
votes) as to each matter are set forth below:
Proposal Number of Votes
-------- ---------------
For Withheld
--- --------
Election of the following director for a three year term:
1) Robert W. DeCook 351,127 1,100
Ratification of the appointment of KPMG Peat For Against Abstain
Marwick LLP as the Company's auditors for the --- ------- -------
fiscal year ending June 30, 1997 332,702 19,525 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
-10-
<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: February 14, 1997 /s/ Robert W. DeCook
-------------------- ------------------------------------------
Robert W. DeCook
President and Chief Executive Officer
Date: February 14, 1997 /s/ Sharon McCrea
--------------------- -------------------------------------------
Sharon McCrea
Vice President and Chief Financial Officer
-11-
<PAGE>
INDEX OF EXHIBITS
Exhibit Page
- ------- ----
11. Statement regarding computation of per share earnings 13
27. Financial Data Schedule 14
-12-
<PAGE>
EXHIBIT 11
Statement Regarding Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Six Months
Ended 12/31/96 Ended 12/31/96
-------------- --------------
<S> <C> <C>
Net Earnings $ 157.378 $ 30,077
========= =========
Primary earnings per share:
Weighted average shares outstanding 427,866 437,901
Less unearned employee stock ownership plan shares (23,082) (23,976)
Average option shares granted 37,021 37,021
Less assumed purchase of shares using treasury method (27,683) (28,073)
========= =========
Common and common equivalent shares outstanding 414,122 422,873
========= =========
Earnings per common share - primary $ 0.38 $ 0.07
========= =========
Fully - diluted earnings per share:
Weighted average shares outstanding 427,866 437,901
Less unearned employee stock ownership plan shares (23,082) (23,976)
Average option shares granted 37,021 37,021
Less assumed purchase of shares using treasury method (27,134) (27,134)
========= =========
Common and common equivalent shares outstanding 414,671 423,812
========= =========
Earnings per common share - fully diluted $ 0.38 $ 0.07
========= =========
</TABLE>
-13-
<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 THREE AND SIX MONTH PERIODS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 2,319 2,319
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 17,632 17,632
<INVESTMENTS-CARRYING> 0 0
<INVESTMENTS-MARKET> 0 0
<LOANS> 51,222 51,222
<ALLOWANCE> 294 294
<TOTAL-ASSETS> 74,043 74,043
<DEPOSITS> 55,440 55,440
<SHORT-TERM> 10,132 10,132
<LIABILITIES-OTHER> 379 379
<LONG-TERM> 0 0
<COMMON> 5 5
0 0
0 0
<OTHER-SE> 8,087 8,087
<TOTAL-LIABILITIES-AND-EQUITY> 74,043 74,043
<INTEREST-LOAN> 1,092 2,165
<INTEREST-INVEST> 302 645
<INTEREST-OTHER> 34 51
<INTEREST-TOTAL> 1,428 2,861
<INTEREST-DEPOSIT> 679 1,325
<INTEREST-EXPENSE> 834 1,642
<INTEREST-INCOME-NET> 594 1,219
<LOAN-LOSSES> 12 107
<SECURITIES-GAINS> 58 58
<EXPENSE-OTHER> 481 1,304
<INCOME-PRETAX> 251 48
<INCOME-PRE-EXTRAORDINARY> 251 251
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 157 30
<EPS-PRIMARY> 0.38 0.07
<EPS-DILUTED> 0.38 0.07
<YIELD-ACTUAL> 8.15 8.15
<LOANS-NON> 662 662
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 20 143
<LOANS-PROBLEM> 536 536
<ALLOWANCE-OPEN> 387 318
<CHARGE-OFFS> 107 133
<RECOVERIES> 2 2
<ALLOWANCE-CLOSE> 294 294
<ALLOWANCE-DOMESTIC> 294 294
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 16 16
</TABLE>
