-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SUIRpf//YZorv8Y+qOjaLtUkS6uipCy55IHZTPldneCzFTKMFCNiSvJmYr85RyN+ ZYBQGAlf73jCp7CZHBUUYA== 0000950152-99-004548.txt : 19990518 0000950152-99-004548.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950152-99-004548 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORIZON BANCORP /IN/ CENTRAL INDEX KEY: 0000706129 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351562417 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10792 FILM NUMBER: 99625353 BUSINESS ADDRESS: STREET 1: 515 FRANKLIN SQ CITY: MICHIGAN CITY STATE: IN ZIP: 46360 BUSINESS PHONE: 2198790211 MAIL ADDRESS: STREET 1: 515 FRANKLIN SQ CITY: MICHIGAN CITY STATE: IN ZIP: 46360 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS MICHIANA FINANCIAL CORP DATE OF NAME CHANGE: 19861021 10-Q 1 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 March 31, 1999 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 or (I.R. S. Employer organization) Identification 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: 665,686 at April 30, 1999 ------- -------------- 2 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollar Amounts in Thousands)
MARCH 31, December 31, 1999 1998 - -------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 10,966 $ 12,771 Federal funds sold 18,500 Interest-bearing demand deposits 1,739 598 ---------------------- Cash and cash equivalents 12,705 31,869 Interest-bearing deposits 226 225 Investment securities Available for sale 73,817 54,612 Held to maturity (fair value of $10,421 and $12,090) 10,068 11,746 ---------------------- Total investment securities 83,885 66,358 Loans held for sale Loans, net of allowance for loan losses of $2,750 and $2,787 293,739 287,559 Premises and equipment 18,630 18,393 Federal Reserve and Federal Home Loan Bank stock 3,973 3,973 Interest receivable 2,386 2,249 Other assets 4,506 5,528 ---------------------- Total assets $ 420,050 $ 416,154 ====================== LIABILITIES Deposits Noninterest bearing $ 45,496 $ 58,658 Interest bearing 280,782 263,743 ---------------------- Total deposits 326,278 322,401 Short-term borrowings 4,725 4,000 Federal Home Loan Bank advances 54,000 54,000 Interest payable 912 817 Other liabilities 3,102 3,050 ---------------------- Total liabilities 389,017 384,268 ---------------------- COMMITMENTS AND CONTINGENCIES EQUITY RECEIVED FROM CONTRIBUTIONS AND DIVIDENDS TO THE ESOP 4,518 4,418 ---------------------- STOCKHOLDERS' EQUITY Common stock, $1 stated value Authorized -- 5,000,000 shares Issued -- 1,034,428 shares, less ESOP shares of 292,710 and 292,960 742 741 Additional paid-in capital 8,713 8,834 Retained earnings 24,555 24,201 Accumulated other comprehensive income 105 336 Less treasury stock, at cost, 202,196 and 183,048 shares (7,600) (6,644) ---------------------- Total stockholders' equity 26,515 27,468 ---------------------- Total liabilities and stockholders' equity $ 420,050 $ 416,154 ======================
3 HORIZON BANCORP AND SUBSIDIARIES Consolidated Statement of Income (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------ THREE MONTHS ENDED MARCH 31 1999 1998 - ------------------------------------------------------------------------ INTEREST INCOME Loans receivable $6,180 $5,931 Investment securities Taxable 1,219 933 Tax exempt 101 110 --------------- Total interest income 7,500 6,974 --------------- INTEREST EXPENSE Deposits 2,975 2,475 Federal funds purchased and short-term borrowings 3 45 Federal Home Loan Bank advances 791 589 --------------- Total interest expense 3,769 3,109 --------------- NET INTEREST INCOME 3,731 3,865 Provision for loan losses 240 325 --------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,491 3,540 --------------- OTHER INCOME Service charges on deposit accounts 489 596 Fiduciary activities 481 530 Commission income from insurance agency 235 Income from reinsurance company 54 34 Other income 112 134 --------------- Total other income 1,371 1,294 --------------- OTHER EXPENSES Salaries and employee benefits 2,240 2,114 Net occupancy expenses 429 292 Data processing and equipment expenses 526 559 Other expenses 1,019 1,118 --------------- Total other expenses 4,214 4,102 --------------- INCOME BEFORE INCOME TAX 648 732 Income tax expense 203 181 --------------- NET INCOME $ 445 $ 551 =============== BASIC AND DILUTED EARNINGS PER SHARE $ 0.66 $ 0.79 ===============
4 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Table Dollar Amounts in Thousands)
FOR THE THREE MONTHS ENDED 1999 1998 ---- ---- Beginning of period $ 27,468 $ 28,709 Net income 455 551 Cash dividends ($0.45 per share for the three month ended March 31, 1999 and 1998) (290) (312) Purchase of treasury stock (956) (251) Net repurchases and distributions with ESOP 69 (79) Change in unrealized holding gain/(loss) on investment securities (231) (49) -------------------- End of period $ 26,515 $ 28,569 ====================
5 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Dollar Amounts in Thousands)
YEAR ENDED DECEMBER 31 1999 1998 - ------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 455 $ 551 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 240 325 Additional paid-in capital from release of ESOP shares 49 (49) Depreciation and amortization 317 281 Deferred income tax 23 32 Investment securities amortization, net 52 52 Loss on sale of investment securities 5 (Gain) loss on disposal of fixed assets 2 Deferred loan fees (21) (30) Unearned income 146 (68) Net change in Interest receivable (172) 166 Interest payable 95 116 Other assets 1,271 94 Other liabilities 52 (1,623) ------------------- Net cash provided by operating activities 2,512 (151) ------------------- INVESTING ACTIVITIES Net change in interest-bearing deposits (1) Purchases of securities available for sale (24,158) (9,074) Proceeds from maturities, calls, and principal repayments of securities available for sale 3,624 3,673 Proceeds from sales of securities available for sale 920 Purchases of securities held to maturity (885) Proceeds from maturities, calls, and principal repayments of securities held to maturity 1,678 733 Net change in loans (6,637) (236) Proceeds from sales of loans 2,207 Recoveries on loans previously charged-off 92 137 Purchases of premises and equipment (554) (377) ------------------- Net cash provided (used) by investing activities (25,032) (3,822) -------------------
6 HORIZON BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Dollar Amounts in Thousands)
FINANCING ACTIVITIES Net change in Deposits $ 3,877 $(13,608) Short-term borrowings 725 (13,000) Federal Home Loan Bank advances 4,000 Dividends paid (290) (312) Purchase of treasury stock (956) (251) -------------------- Net cash provided (used) by financing activities 3,356 4,045 -------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (19,164) 72 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 31,869 20,358 ==================== CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,708 $ 20,430 ==================== ADDITIONAL CASH FLOWS INFORMATION Interest paid $ 3,674 $ 2,591 Income tax paid 0 0
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 period ended March 31, 1999 and March 31, 1998 are not necessarily indicative of the operating results for the full year of 1999 or 1998. 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 March 31, 1999 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 principals that might otherwise be necessary in the circumstances and should be read in conjunction with the 1998 Horizon Bancorp consolidated financial statements and related notes thereto included in its Annual Report for the year ended December 31, 1998. NOTE 2 - INVESTMENT SECURITIES
1999 ----------------------------------------------------------------------- AMORTIZED GROSS UNREALIZED GROSS UNREALIZED FAIR MARCH 31 COST GAINS LOSSES VALUE - ---------------------------------------------------------------------------------------------------------------------------- Available for sale U.S. Treasury and federal agencies $ 35,953 $ 54 $142 $35,865 GNMA mortgage-backed securities 3,943 76 7 4,012 FHLMC mortgage-backed securities 8,271 158 3 8,426 FNMA mortgage-backed securities 17,088 194 1 17,281 GNMA collateralized mortgage obligation 8,070 214 7,856 Marketable equity securities 316 61 377 ----------------------------------------------------------------------- Total available for sale 73,641 543 367 73,817 ----------------------------------------------------------------------- Held to maturity Federal agencies 1,390 49 1,440 State and municipal 8,678 303 8,981 ----------------------------------------------------------------------- Total held to maturity 10,068 352 10,421 ----------------------------------------------------------------------- Total investment securities $83,709 $895 $367 $84,238 =======================================================================
8 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table Dollar Amounts in Thousands
1998 ----------------------------------------------------------------------- GROSS GROSS AMORTIZED UNREALIZED UNREALIZED VALUE DECEMBER 31 COST GAINS LOSSES FAIR - ---------------------------------------------------------------------------------------------------------------------------- Available for sale U.S. Treasury and federal agencies $12,568 $ 93 $ 16 $12,645 GNMA mortgage-backed securities 12,321 72 79 12,314 FHLMC mortgage-backed securities 9,117 220 4 9,333 FNMA mortgage-backed securities 19,729 217 3 19,943 Marketable equity securities 316 61 377 ----------------------------------------------------------------------- Total available for sale 54,051 663 102 54,612 ----------------------------------------------------------------------- Held to maturity Federal agencies 1,630 62 1,692 State and municipal 10,116 287 5 10,398 ----------------------------------------------------------------------- Total held to maturity 11,746 349 5 12,090 ----------------------------------------------------------------------- Total investment securities $65,797 $1,012 $107 $66,702 =======================================================================
The amortized cost and fair value of securities held to maturity and available for sale at March 31, 1999, 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.
HELD TO MATURITY AVAILABLE FOR SALE ----------------------------------------------------------------------- AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE - ---------------------------------------------------------------------------------------------------------------------------- Within one year $ 572 $ 581 $ 5,000 $ 5,000 One to five years 2,580 2,630 17,935 17,983 Five to ten years 5,531 5,795 11,018 10,935 After ten years 1,385 1,414 2,000 1,947 ----------------------------------------------------------------------- 10,068 10,421 35,953 35,865 Mortgage-backed securities 29,302 29,719 Collateralized mortgage obligations 8,070 7,856 Marketable equity securities 316 377 ----------------------------------------------------------------------- Totals $10,068 $10,421 $73,641 $73,817 =======================================================================
9 HORIZON BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table Dollar Amounts in Thousands) NOTE 3 - LOANS
MARCH 31, 1999 December 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------- Commercial loans $ 79,152 $ 76,682 Real estate loans 156,725 152,390 Installment loans 60,612 61,274 ------------------------------------ Total loans $ 296,489 $290,346 ==================================== NOTE 4 - ALLOWANCE FOR LOAN LOSSES MARCH 31, 1999 December 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------- Allowance for loan losses Balances, beginning of period $2,787 $2,702 Provision for losses 240 1,000 Recoveries on loans 92 401 Loans charged off (369) (1,316) ------------------------------------ Balances, end of period $2,750 $2,787 ==================================== NOTE 5 - NON PERFORMING ASSETS MARCH 31, 1999 December 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------- Nonperforming loans $ 919 $ 894 OREO before allowance for OREO losses 174 133 ------------------------------------ Total loans $1,093 $1,027 ==================================== NOTE 6 - OTHER COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during the year $(373) $(80) Less: reclassification adjustment for gains (losses) realized in net income (5) ------------------------------------ Net unrealized gains (losses) (378) (80) Tax (expense) benefit 147 31 ------------------------------------ Other comprehensive income $ (231) $(49) ====================================
10 HORIZON BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations For the three months ended March 31, 1999 Item 2 - Introduction The purpose of this discussion is to focus on Horizon's financial condition, changes in 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 three months ended March 31, 1999 cash flows were generated from earnings of $445 thousand and a $4 million increase in deposits. Cash flows were used for a $17.5 million increase in investment securities and a $6 million increase in total loans. The net cash position decreased $19 million, primarily in cash and due from banks. In addition to liquidity provided from the normal operating, funding and investing activities of Horizon, at March 31, 1999, Bank has available approximately $72.8 million in unused credit lines with various money center banks. There have been no other material changes in the liquidity of Horizon from December 31, 1998 to March 31, 1999. Capital Resourses - ----------------- The capital resources of Horizon and Bank remain strong and exceed regulatory capital ratios for "well capitalized" banks at March 31, 1999. Stockholders' equity totaled $31.033 million ($4.518 million from ESOP) as of March 31, 1999 compared to $31.886 million ($4.418 million from ESOP) as of December 31, 1998. The change in stockholders' equity during the three months ended March 31, 1999 is the result of the decrease in the market value of investment securities available for sale accounted for as an addition/reduction of stockholders' equity, the repurchase of Horizon Bancorp stock and net income, net of dividends paid. At March 31, 1999, the ratio of stockholders' equity to assets was 7.39% compared to 7.66% at December 31, 1998. Horizon has selectively purchased shares that became available in the market from time to time. During the three months ended March 31, 1999, management purchased 19,146 shares at a cost of $956 thousand. The increase in equity received from contributions and dividends to the ESOP and the corresponding decrease in additional paid in capital is related to the accrual of the market value appreciation associated with shares which are anticipated to be allocated to participants accounts in 1999. There have been no other material changes in Horizon's capital resources from December 31, 1998 to March 31, 1999. 11 HORIZON BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations For the three months ended March 31, 1999 Material Changes in Financial Condition - March 31, 1999 compared to December - ----------------------------------------------------------------------------- 31, 1998 - -------- 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. There have been no other material changes in the financial condition of Horizon from December 31, 1998 to March 31, 1999. Results of Operations - --------------------- Material changes in results of operations - March 31, 1999 compared to March 31, - -------------------------------------------------------------------------------- 1998 - ---- During the three months ended March 31, 1999 earnings totaled $445 thousand or $0.66 per share compared to $551 thousand or $0.79 per share for the same period in 1998. Net interest income was $3.731 million for the three months ended March 31, 1999 compared to $3.865 million for the same period 1998. The decline in net interest income is related primarily to the declining rates earned in the loan and investment portfolios and the change in the mix of the deposit portfolio resulting in more higher interest bearing products. Total noninterest income for the three months ended March 31, 1999 increased $77thousand or 6.0% from the same period in 1998. The largest component of the change was the addition of commission income from the insurance agency that was purchased as of April 1, 1998. Noninterest expense increased $112 thousand or 2.7% to $4.214 million for the three months ended March 31, 1999 compared to the same period in 1998. The largest component of the change is the increase in net occupancy expenses related to the additional rents incurred on leased premises and additional depreciation of computer equipment in preparation for the millennium change. There have been no other material changes in the results of operations of Horizon from March 31, 1998 to March 31, 1999. 12 YEAR 2000 --------- Horizon began it's Year 2000 ("Y2K") planning and evaluation process in 1997 and developed a plan to address Y2K compliance. A project team was formed and began meeting in September 1997. The systems within the Company have been reviewed and each system assigned a rating of mission critical or non-mission critical. Eight critical vendors were identified that provide hardware and software in order to operate the core data processing systems utilized by the Company. The core data processing systems of the Bank and The Loan Store, and the machines on which they reside, were brought Y2K compliant and tested during the third quarter of 1998. The Y2K compliant version of the core data processing system of the Bank's wholly owned subsidiary IMS Investment Management, N.A. were installed and tested during the 4th quarter of 1998. The Y2K compliant version of the core data processing system of Phoenix Insurance was received during the 3rd quarter of 1998 and was tested during the 4th quarter of 1998. The Bank also utilizes four outside vendor to interface information into the core data processing systems. Three of these vendors have certified that they are Y2K compliant and one vendor was unable to become compliant on a timely basis. The Bank converted to another vendor for this service as of January 1, 1999. The Bank's large loan customers have been contacted regarding their readiness for the Year 2000 to determine if the Company has significant risk or exposure due to potential problems of customers related to the Year 2000. Information is being gathered on the majority of these customer and evaluated on an ongoing basis. These customer's will be monitored on a consistent basis through the Year 2000. The costs associated with Y2K are anticipated to be approximately $280,000. This does not include upgrades to systems that would have been replaced in the normal upgrade processes. Approximately 90% of these costs have been incurred to date. The major risks of Horizon's Y2K issues are its ability to provide consistent daily processing of customer information and the soundness of Horizon's loan portfolio. Horizon is managing this risk by performing extensive analysis and testing to identify potential problem areas for its systems and throughout its customer base. In order to obtain assistance in this analysis, Horizon hired a consultant to perform an assessment report regarding Horizon's Y2K preparedness and testing strategies. Horizon's contingency plans consist primarily of manual processing of the core data in the event that the core data processing system is not operable during the effected time frames. 13 PART II - OTHER INFORMATION --------------------------- For the three months ended March 31, 1999 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. Form 8-K dated October 20, 1998 was filed with reference to the termination of the President and Chief Administrative Officer. 14 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 5/14/99 /s/ Robert C. Dabagia - -------------- -------------------------------------------- Date: BY: Robert C. Dabagia Chairman and Chief Executive Officer 5/14/99 /s/ Diana E. Taylor - -------------- -------------------------------------------- Date: BY: Diana E. Taylor Senior Vice President and Chief Financial Officer EX-27 2 EXHIBIT 27
9 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 12,705 226 0 0 73,817 10,068 10,421 296,489 2,750 420,050 326,278 4,725 4,014 54,000 0 0 742 30,291 420,050 6,180 1,320 0 7,500 2,975 794 3,731 240 0 4,214 648 445 0 0 445 .66 .66 4.09 672 247 0 0 2,787 369 92 2,750 2,750 0 662
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