10-Q 1 l84526ae10-q.txt HORIZON BANCORP FORM 10-Q 1 HORIZON BANCORP FORM 10-Q SECURITIES AND EXCHANGE COMMISSION 450 5th Street N.W. Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended SEPTEMBER 30, 2000 commission file number 0-10792 ------------------ ------- HORIZON BANCORP --------------- (Exact name of registrant as specified in its charter) INDIANA 35-1562417 ---------------------------------------------- ------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer Identification or organization) No.) 515 FRANKLIN SQUARE, MICHIGAN CITY, INDIANA 46360 ------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (219) 879-0211 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE ---------- Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR VALUE ------------------ (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 670,352 at OCTOBER 19, 2000 ------- ---------------- 2 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollar Amounts in Thousands)
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------------ ---------------- ASSETS Cash and due from banks $ 31,812 $ 34,670 Interest-bearing demand deposits 432 174 Federal funds sold 3,800 --------- --------- Cash and cash equivalents 36,044 34,844 Interest-bearing deposits 236 232 Investment securities, available for sale 66,611 67,880 Loans, net of allowance for loan losses of $4,493 and $3,273 399,045 391,084 Premises and equipment 17,275 18,134 Federal Reserve and Federal Home Loan Bank stock 6,238 5,897 Interest receivable 3,012 2,780 Other assets 5,745 5,145 --------- --------- Total assets $ 534,206 $ 525,996 ========= ========= LIABILITIES Deposits Noninterest bearing $ 39,599 $ 44,890 Interest bearing 376,456 318,778 --------- --------- Total deposits 416,055 363,668 Short-term borrowings 6,757 24,500 Federal Home Loan Bank advances 75,320 105,000 Interest payable 1,362 920 Other liabilities 3,628 2,909 --------- --------- Total liabilities 503,122 496,997 --------- --------- COMMITMENTS AND CONTINGENCIES EQUITY RECEIVED FROM CONTRIBUTIONS AND DIVIDENDS TO THE ESOP 6,883 7,808 --------- --------- STOCKHOLDERS' EQUITY Common stock, $1 stated value Authorized -- 5,000,000 shares Issued-- 1,038,428 shares, less ESOP shares of 139,637 and 165,309 899 873 Additional paid-in capital 14,064 13,153 Retained earnings 24,752 22,629 Accumulated other comprehensive loss (782) (1,201) Less treasury stock, at cost, 360,423 and 350,293 shares (14,732) (14,263) --------- --------- Total stockholders' equity 24,201 21,191 --------- --------- Total liabilities and stockholders' equity $ 534,206 $ 525,996 ========= =========
See notes to consolidated financial statements. 3 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Dollar Amounts in Thousands, Except Per Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ---------------------- ---------------------- 2000 1999 2000 1999 -------- -------- -------- -------- INTEREST INCOME Loans receivable $ 9,641 $ 6,254 $ 27,392 $ 18,371 Investment securities: Taxable 1,255 1,268 3,682 3,844 Tax exempt 3 3 8 164 -------- -------- -------- -------- Total interest income 10,899 7,525 31,082 22,379 -------- -------- -------- -------- INTEREST EXPENSE Deposits 4,706 3,060 12,667 9,184 Federal funds purchased and short-term borrowings 144 10 473 13 Federal Home Loan Bank advances 1,324 745 3,929 2,196 -------- -------- -------- -------- Total interest expense 6,174 3,815 17,069 11,393 -------- -------- -------- -------- NET INTEREST INCOME 4,725 3,710 14,013 10,986 Provision for loan losses 503 200 1,508 545 -------- -------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 4,222 3,510 12,505 10,441 -------- -------- -------- -------- OTHER INCOME Service charges on deposit accounts 534 523 1,517 1,537 Fiduciary activities 671 518 2,048 1,536 Commission income from insurance agency 216 206 619 621 Income from reinsurance company 27 39 87 120 Gain on sale of mortgage loans 127 297 10 Gain on sale of securities 33 209 Wire transfer fee income 114 381 31 Other income 112 147 301 310 -------- -------- -------- -------- Total other income 1,801 1,466 5,250 4,374 -------- -------- -------- -------- OTHER EXPENSES Salaries and employee benefits 2,279 2,279 6,672 6,664 ESOP termination expense 1,959 1,959 Net occupancy expenses 441 458 1,330 1,252 Data processing and equipment expenses 527 517 1,586 1,545 Other expenses 1,226 1,223 3,605 3,236 -------- -------- -------- -------- Total other expenses 4,473 6,436 13,193 14,656 -------- -------- -------- -------- Income Before Income Tax 1,550 (1,460) 4,562 159 Income tax expense 349 132 1,532 634 -------- -------- -------- -------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS 1,201 (1,592) 3,030 (475) -------- -------- -------- --------
4 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME - CONTINUED (Dollar Amounts in Thousands, Except Per Share Data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------- ------------------------- 2000 1999 2000 1999 --------- --------- --------- --------- DISCONTINUED OPERATIONS Income (loss) from operation of discontinued subsidiary (less tax benefit of $6 in 2000 and $56 in 1999) $ 12 $ $ 22 $ (81) Loss on disposal of subsidiary, including provision for operating losses during phase-out period (less tax benefit of $32 in 1999) (20) (70) --------- --------- --------- --------- Total income (loss) from discontinued operations 12 (20) 22 (151) --------- --------- --------- --------- NET INCOME (LOSS) $ 1,213 $ (1,612) $ 3,052 $ (626) ========= ========= ========= ========= Basic and Diluted Earnings (Loss) per Share from continuing operations $ 1.75 $ (2.63) $ 4.40 $ (0.95) Basic and Diluted Earnings (Loss) per Share from income (loss) on discontinued operations 0.02 (0.03) 0.03 (0.23) --------- --------- --------- --------- BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 1.77 $ (2.66) $ 4.43 $ (1.18) ========= ========= ========= =========
See notes to consolidated financial statements. 5 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Table Dollar Amounts in Thousands)
Accumulated Additional Other Common Stock Paid-in Comprehensive Retained Comprehensive Treasury Capital Income Earnings Loss Stock Total ------------- ----------- --------------- ---------- ---------------- ----------- ------------ BALANCES, DECEMBER 31, 1999 $873 $13,153 $22,629 $(1,201) $(14,263) $21,191 Net income $3,052 3,052 3,052 Other comprehensive income, net of tax Unrealized gain on securities 419 419 419 --------------- Comprehensive income $3,471 =============== Cash dividends ($1.35 per share) (929) (929) Re-issuance of 1,476 shares of treasury stock 12 48 60 Purchase of 11,760 shares of treasury stock (517) (517) Net purchases and distributions with ESOP 26 899 925 ------------- ----------- ---------- ---------------- ----------- ------------ BALANCES, SEPTEMBER 30, 2000 $899 $14,064 $24,752 $ (782) $(14,732) $24,201 ============= =========== ========== ================ =========== ============
See notes to consolidated financial statements. 6 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Dollar Amounts in Thousands)
Nine Months Ended September 30 ------------------------------------- 2000 1999 ----------------- ------------------- OPERATING ACTIVITIES Net income (loss) $ 3,052 $ (626) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision for loan losses 1,508 545 Provision for loan losses, discontinued operations 250 Additional paid-in capital from release of ESOP shares 304 Depreciation and amortization 1,085 1,040 Deferred income tax (888) (23) Investment securities amortization, net 76 142 Gain on sale of investment securities (176) Loss on disposal of fixed assets 90 Loss on other real estate owned Gain on sale of loans (297) Proceeds from sales of loans 24,475 5,087 Deferred loan fees (42) (45) Unearned income (163) 221 Net change in: Interest receivable (232) (117) Interest payable 442 (49) Other assets 14 1,600 Other liabilities 719 2,436 ----------------- ------------------- Net cash provided by operating activities 29,749 10,679 ----------------- ------------------- INVESTING ACTIVITIES Net change in interest-bearing deposits (4) (4) Purchases of securities available for sale (7,908) (35,250) Proceeds from maturities, calls, and principal repayments of securities available for sale 9,794 16,342 Proceeds from sales of securities available for sale 11,562 Proceeds from maturities, calls, and principal repayments of securities held to maturity 2,000 Purchase of Federal Home Loan Bank stock (341) Net change in loans (33,710) (19,012) Recoveries on loans previously charged-off 268 289 Purchases of premises and equipment (226) (1,093) ----------------- ------------------- Net cash used by investing activities (32,127) (25,166) ----------------- ------------------- FINANCING ACTIVITIES Net change in Deposits 52,387 4,107 Short-term borrowings (17,743) (3,350) Federal Home Loan Bank advance 85,320 Repayment of Federal Home Loan Bank advance (115,000) Re-issuance of treasury stock 60 Dividends paid (929) (855) Purchase of treasury stock (517) (2,339) ----------------- ------------------- Net cash provided (used) by financing activities 3,578 (2,437) ----------------- ------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 1,200 (16,924) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,844 31,869 ----------------- ------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $36,044 $14,945 ================= =================== ADDITIONAL CASH FLOWS INFORMATION Interest paid $ 17,511 $ 11,442 Income tax paid 1,780 230
See notes to consolidated financial statements. 7 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table Dollar Amounts in Thousands) NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Horizon Bancorp (Horizon) and its wholly-owned subsidiaries, Horizon Bank, N.A. (Bank), HBC Insurance Group, Inc. (Insurance Company) and The Loan Store, Inc. All intercompany balances and transactions have been eliminated. The results of operations for the periods ended September 30, 2000 and September 30, 1999 are not necessarily indicative of the operating results for the full year of 2000 or 1999. These interim financial statements are prepared without audit and reflect all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the consolidated position of Horizon Bancorp at September 30, 2000 and its results of operations and cash flows for the periods presented. The accompanying consolidated financial statements do not purport to contain all the necessary financial disclosure required by generally accepted accounting principles that might otherwise be necessary in the circumstances and should be read in conjunction with the 1999 Horizon Bancorp consolidated financial statements and related notes thereto included in its Annual Report for the year ended December 31, 1999. NOTE 2 - INVESTMENT SECURITIES
2000 ----------------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair September 30 Cost Gains Losses Value ------------------------------------------------------ ----------------- ----------------- ---------------- ------------------ Available for sale U.S. Treasury and federal agencies $ 24,528 $ 11 $ (565) $ 23,974 State and municipal 5,236 31 (82) 5,185 FHLMC mortgage-backed securities 5,860 27 (64) 5,823 FNMA mortgage-backed securities 14,124 27 (154) 13,997 GNMA collateralized mortgage obligation 8,032 (532) 7,500 FHLMC collateralized mortgage obligation 7,719 86 (9) 7,796 FNMA collateralized mortgage obligation 2,086 (25) 2,061 Marketable equity securities 315 (40) 275 ----------------- ----------------- ---------------- ------------------ Total available for sale $ 67,900 $ 182 $ (1,471) $ 66,611 ================= ================= ================ ==================
8 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Table Dollar Amounts in Thousands) NOTE 2 - INVESTMENT SECURITIES
1999 ------------------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair December 31 Cost Gains Losses Value ---------------------------------------------------------- ----------------- ----------------- ------------------ ------------------ Available for sale U.S. Treasury and federal agencies $30,428 $18 $ (866) $29,580 State and Municipal 4,230 (130) 4,100 FHLMC mortgage-backed securities 6,722 14 (127) 6,609 FNMA mortgage-backed securities 16,843 40 (267) 16,616 GNMA collateralized mortgage obligations 8,051 (582) 7,469 FHLMC collateralized mortgage obligation 964 (19) 945 FNMA collateralized mortgage obligations 2,307 (32) 2,275 Marketable equity securities 315 (29) 286 ----------------- ----------------- ------------------ ------------------ Total investment securities $69,860 $72 $(2,052) $67,880 ================= ================= ================== ==================
The amortized cost and fair value of securities available for sale at September 30, 2000, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available for Sale ----------------------------------- Amortized Fair Cost Value ----------------- ----------------- Within one year $ 9,027 $ 8,945 One to five years 8,570 8,443 Five to ten years 8,871 8,700 After ten years 3,296 3,071 ----------------- ----------------- 29,764 29,159 Mortgage-backed securities 19,984 19,820 Collateralized mortgage obligations 17,837 17,357 Marketable equity securities 315 275 ----------------- ----------------- $ 67,900 $ 66,611 ================= =================
There were no sales of securities available for sale during the nine months ended September 30, 2000. During 1999, debt securities with an amortized cost of $10.050 million were transferred from held to maturity to available for sale so the Bank could minimize the tax consequences of holding tax-exempt securities. The securities had an unrealized gain of approximately $350 thousand. There were no transfers between classifications in the nine months ended September 30, 2000. 9 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Table Dollar Amounts in Thousands) NOTE 3 - LOANS
SEPTEMBER 30, December 31, 2000 1999 --------------------- ------------------- Commercial loans $ 85,915 $ 89,361 Mortgage warehouse loans 104,093 85,542 Real estate loans 138,759 154,717 Installment loans 74,771 64,737 --------------------- ------------------- Total loans $403,538 $394,357 ===================== ===================
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
SEPTEMBER 30, December 31, 2000 1999 --------------------- ------------------- Allowance for loan losses Balances, beginning of period $ 3,273 $ 2,787 Provision for losses, operations 1,508 1,100 Provision for losses, discontinued operations 250 Recoveries on loans 268 363 Loans charged off (556) (1,227) --------------------- ------------------- Balances, end of period $ 4,493 $ 3,273 ===================== ===================
NOTE 5 - NONPERFORMING ASSETS
SEPTEMBER 30, December 31, 2000 1999 --------------------- ------------------- Nonperforming loans $ 1,796 $ 1,574 Other real estate owned 126 --------------------- ------------------- Total nonperforming assets $ 1,922 $ 1,574 ===================== ===================
10 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Table Dollar Amounts in Thousands) NOTE 6 - OTHER COMPREHENSIVE INCOME
Nine Months Ended September 30 2000 ------------------ Unrealized gains on securities: Unrealized holding gains arising during the period $ 694 Less: reclassification adjustment for gains (losses) realized in net income -------- Net unrealized gains 694 -------- Tax expense (275) ---------- Other comprehensive income $ 419 ========
NOTE 7 - DISCONTINUED OPERATIONS At its April 1999 meeting, the Board of Directors of Horizon Bancorp approved discontinuing the operations of The Loan Store, Inc., a wholly owned subsidiary of Horizon Bancorp. On August 13, 1999, substantially all of the assets of The Loan Store, Inc. were sold. On March 31, 2000, loans totaling approximately $250 thousand were repurchased from the purchaser as outlined in the purchase agreement. No further recourse exists as a result of this transaction. As of September 30, 2000, the remaining loans of The Loan Store, Inc. were $172 thousand. NOTE 8 - ESOP On July 20, 1999, the Board of Directors of Horizon Bancorp authorized the termination of the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") as of December 31, 1999. The debt owed by the ESOP was repaid with the proceeds from the sale of a portion of the unallocated shares to Horizon Bancorp. All remaining shares were allocated to participants. The expense related to the termination of the ESOP was recorded in the third quarter of 1999 and resulted in an expense of $2.073 million for the year ended December 31, 1999. The expense recorded was based upon the price of Horizon Bancorp stock. An independent valuation firm performed a valuation of Horizon Stock and determined the market price of the stock was $44.00 per share as of December 31, 1999. The retirement plans of Horizon Bancorp own approximately 22% of the outstanding shares. 11 HORIZON BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 Item 2 - Introduction The purpose of this discussion is to focus on Horizon's financial condition and the results of operations in order to provide a better understanding of the consolidated financial statements included elsewhere herein. This discussion should be read in conjunction with the consolidated financial statements and the related notes. FINANCIAL CONDITION LIQUIDITY The Bank maintains a stable base of core deposits provided by long standing relationships with consumers and local businesses. These deposits are the principal source of liquidity for Horizon. Other sources of liquidity for Horizon include earnings, loan repayment, investment security sales and maturities, sale of real estate loans and borrowing relationships with correspondent banks, including the Federal Home Loan Bank (FHLB). During the nine months ended September 30, 2000, cash and cash equivalents increased by $1.2 million. In addition to liquidity provided from the normal operating, funding, and investing activities of Horizon, at September 30, 2000, the Bank has available approximately $108 million in unused credit lines with various money center banks and the FHLB. There have been no other material changes in the liquidity of Horizon from December 31, 1999 to September 30, 2000. CAPITAL RESOURCES The capital resources of Horizon and the Bank exceed regulatory capital ratios for "well capitalized" banks at September 30, 2000. Stockholders' equity totaled $31.084 million ($6.883 million from ESOP) as of September 30, 2000 compared to $28.999 million ($7.808 million from ESOP) as of December 31, 1999. The change in stockholders' equity during the nine months ended September 30, 2000 is the result of repurchases of treasury stock and net income, net of dividends paid. At September 30, 2000, the ratio of stockholders' equity to assets was 5.82% compared to 5.51% at December 31, 1999. Horizon did not issue trust preferred stock as anticipated and disclosed in the 1999 annual report. There have been no other material changes in Horizon's capital resources from December 31, 1999 to September 30, 2000. 12 HORIZON BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 MATERIAL CHANGES IN FINANCIAL CONDITION - SEPTEMBER 30, 2000 COMPARED TO DECEMBER 31, 1999 Because of the nature of its activities, Horizon is subject to pending and threatened legal actions that arise in the normal course of business. In management's opinion, after consultation with counsel, none of the litigation to which Horizon or any of its subsidiaries is a party will have a material effect on the consolidated financial position or results of operations of Horizon. During the first nine months of 2000, deposits increased over $52 million, primarily as a result of additional deposits from municipalities. The Bank sold over $24 million in residential mortgage loans. These moneys were used to fund growth in consumer loans and warehouse loans and to reduce short-term borrowings and Federal Home Loan Bank advance debt. Horizon continues to monitor funding sources to reduce the cost of funds and maintain adequate liquidity. There have been no other material changes in the financial condition of Horizon from December 31, 1999 to September 30, 2000. RESULTS OF OPERATIONS MATERIAL CHANGES IN RESULTS OF OPERATIONS - SEPTEMBER 30, 2000 COMPARED TO SEPTEMBER 30, 1999 During the nine months ended September 30, 2000, net income totaled $3.052 million or $4.43 per share compared to a loss of $626 thousand or ($1.18) per share for the same period in 1999. Net interest income was $14.013 million for the nine months ended September 30, 2000 compared to $10.986 million for the same period 1999. The increase is primarily attributable to the addition of the mortgage warehousing program which began in October 1999. The provision for loan losses totaled $1.508 million for the nine months ended September 30, 2000 compared to $503 thousand for the same period in 1999. The increase in the provision is primarily related to loan growth and the addition of mortgage warehouse lending. The allowance for loan losses to total loans is 1.11% at September 30, 2000 compared to .83% at December 31, 1999. Total non-interest income for the nine months ended September 30, 2000 increased $876 thousand or 20% from the same period in 1999. The three primary components of the change were an increase in fiduciary fees of $512 thousand, the increase in the gain recorded on the sale of mortgage loans of $287 thousand and the addition of wire transfer transaction fees related to the mortgage warehousing program of $350 thousand. Non-interest expense decreased $1.463 million or (10%) for the nine months ended September 30, 2000 compared to the same period in 1999. In 1999, a $1.959 million ESOP termination expense was recorded. 13 HORIZON BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 RESULTS OF OPERATIONS (CONTINUED) At its April, 1999 meeting, the Board of Directors of Horizon Bancorp approved discontinuing the operations of The Loan Store, Inc., a wholly-owned subsidiary of Horizon Bancorp. On August 13, 1999 substantially all of the assets of The Loan Store, Inc. were sold. On March 31, 2000, loans totaling approximately $250 thousand were repurchased from the purchaser as outlined in the purchase agreement. No further recourse exists as a result of this transaction. As of September 30, 2000, the remaining loans of The Loan Store, Inc. were $172 thousand. On July 20, 1999, the Board of Directors of Horizon Bancorp authorized the termination of the Horizon Bancorp Employee Stock Ownership Plan ("ESOP") as of December 31, 1999. The debt owed by the ESOP was repaid with the proceeds from the sale of a portion of the unallocated shares to Horizon Bancorp. All remaining shares were allocated to participants. The expense related to the termination of the ESOP was recorded in the 3rd quarter of 1999 and resulted in an expense of $2.073 million for the year ended December 31, 1999. The expense recorded was based upon the price of Horizon Bancorp stock. An independent valuation firm performed a valuation of Horizon Stock and determined the market price of the stock was $44.00 per share as of December 31, 1999. The retirement plans of Horizon Bancorp own approximately 22% of the outstanding shares. There have been no other material changes in the results of operations of Horizon for nine months ending September 30, 2000 and 1999. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company currently does not engage in any derivative or hedging activity. Refer to the Company's 1999 10-K for analysis of the interest rate sensitivity. The Company believes there have been no significant changes in the interest rate sensitivity since it was reported in Form 10-K. FORWARD-LOOKING STATEMENTS Certain statements in this section constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements of the Company to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. 14 HORIZON BANCORP AND SUBSIDIARIES PART II - OTHER INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 ITEM 1. LEGAL PROCEEDINGS See Management's Discussion and Analysis ITEM 2. CHANGES IN SECURITIES Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable ITEM 5. OTHER INFORMATION Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Financial Data Schedule b. No reports on Form 8-K were filed during the nine months ended September 30, 2000. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HORIZON BANCORP 10/24/2000 /s/ Robert C. Dabagia --------------------------- --------------------- Date: BY: Robert C. Dabagia Chairman and Chief Executive Officer 10/24/2000 /s/ Diana E. Taylor --------------------------- ------------------- Date: BY: Diana E. Taylor Senior Vice President and Chief Financial Officer