UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2001
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Commission file number 0-10792
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Horizon Bancorp
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(Exact name of registrant as specified in its charter)
Indiana 35-1562417
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
515 Franklin Square, Michigan City 46360
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 219-879-0211
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value, 1,985,700 shares outstanding as of February 28, 2002
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Indicate by checkmark 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 by checkmark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K [X].
The aggregate market value of the registrant's common stock held by
nonaffiliates of the registrant, based on the average bid price of such stock as
of February 28, 2002 was $24,538,930.
Documents Incorporated by Reference
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Part of Form 10-K into which
Document portion of document is incorporated
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Portions of the Registrant's 2001 Annual Report to shareholders I, II, VI
Portions of the Registrant's Proxy Statement to be filed for its May 9, III
2002 annual meeting of shareholders
Except as provided in Part I, Part II, Part III and Part IV no part of the
Registrant's 2001 Annual Report to Shareholders or Proxy Statement shall be
deemed incorporated herein by this reference or to be filed with the Securities
and Exchange Commission for any purposes.
2
PART I
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ITEM 1. BUSINESS
a) GENERAL DEVELOPMENT OF BUSINESS
Horizon Bancorp, a registered bank holding company organized under the laws
of the State of Indiana on April 26, 1983, ("Registrant"), became the
parent corporation and sole shareholder of The First Merchants National
Bank of Michigan City pursuant to a plan of reorganization effective
October 31, 1983. Prior to October 31, 1983, the Registrant conducted no
business and had only nominal assets necessary to complete the plan of
reorganization.
On October 1, 1986 the Registrant issued 1,198,020 shares of its common
stock in exchange for all of the common stock of Citizens Michiana
Financial Corporation in connection with mergers of such companies and
their subsidiaries. Subsequent to the merger, the Registrant remained a
one-bank holding company with a wholly-owned subsidiary, Horizon Bank, N.A.
("Bank") and Bank's wholly-owned subsidiaries, Horizon Trust & Investment
Management, N.A. ("Horizon Trust") and Horizon Insurance Services, Inc.
("Horizon Insurance") and nonbank subsidiaries, HBC Insurance Group
("Insurance Company") and The Loan Store, Inc., ("Loan Store").
b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant's main business is commercial banking and has no other
segments.
c) NARRATIVE DESCRIPTION OF BUSINESS
The Registrant's business is that incident to its 100% ownership of Bank
and the Insurance Company. The main source of funds for the Registrant is
dividends from Bank. Bank was chartered as a national bank association in
1873 and has operated continuously since that time. Bank, whose deposits
are insured by the Federal Deposit Insurance Corporation to the extent
provided by law, is a full-service commercial bank offering a broad range
of commercial and retail banking services, corporate and individual trust
and agency services, commercial and personal property and casualty
insurance services and other services incident to banking. Bank maintains
four facilities located within La Porte County, Indiana, three facilities
located in Porter County, Indiana and a loan production office in Lake
County, Indiana. At December 31, 2001, Bank had total assets of
$587,945,000 and total deposits of $419,599,000. Aside from the stock of
Bank and Insurance Company, the Registrant's only other significant assets
are cash and cash equivalents totaling approximately $210,000, and
dividends receivable of approximately $300,000 at December 31, 2001.
The business of the Registrant, Bank, Horizon Trust, Horizon Insurance,
Insurance Company and Loan Store is not seasonal to any material degree.
No material part of the Registrant's business is dependent upon a single or
small group of customers, the loss of any one or more of who would have a
materially adverse effect on the business of the Registrant. Revenues from
loans accounted for 72% in 2001,76% in 2000, and 69% in 1999 of the total
consolidated revenue. Revenues from investment securities accounted for 9%
in 2001, 10% in 2000, and 14% in 1999 of total consolidated revenue.
The Registrant has no employees and there are approximately 209 full and
part-time persons employed by Bank, Horizon Trust and Horizon Insurance as
of December 31, 2001.
A high degree of competition exists in all major areas where the Registrant
engages in business. Bank's primary market consists of La Porte and Porter
County, Indiana, and Berrien County, Michigan. Bank competes with
commercial banks located in the home county and contiguous counties in
Indiana and Michigan, as well as with savings and loan associations,
consumer finance companies, and credit unions located therein. To a more
moderate extent, Bank competes with Chicago money center banks, mortgage
banking companies, insurance companies, brokerage houses, other
institutions engaged in money market financial services, and certain
government agencies.
Based on deposits as of June 30, 2001, the Bank was the largest of the 11
bank and thrift institutions with offices in La Porte County with 32.7%of
the deposits and the seventh sargest of the 12 institutions with offices in
Porter County with 4.2% of deposits (source: FDIC Summary of Deposits
Market Share Reports available at www3.fdic.gov/sod).
3
The Insurance Company offers credit life and accident and health insurance.
The Loan Store, Inc. sold the majority of its assets in August 1999 and is
an inactive subsidiary. The net income generated from the Insurance Company
is not significant to the overall operations of the Registrant.
SUPERVISION AND REGULATION
The Registrant is registered as a bank holding company and is subject to
the supervision of, and regulation by, the Board of Governors of the
Federal Reserve System ("Federal Reserve") under the Bank Holding Company
Act of 1956, as amended ("BHC Act"). The Federal Reserve has issued
regulations under the BHC Act requiring a bank holding company to serve as
a source of financial and managerial strength to its subsidiary banks. It
is the policy of the Federal Reserve that, pursuant to this requirement, a
bank holding company should stand ready to use its resources to provide
adequate capital funds to its subsidiary banks during periods of financial
stress or adversity.
The BHC Act requires the prior approval of the Federal Reserve to acquire
more than a 5% voting interest of any bank or bank holding company.
Additionally, the BHC Act restricts the Registrant's nonbanking activities
to those which are determined by the Federal Reserve to be closely related
to banking and a proper incident thereto.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), a bank holding company is required to guarantee the compliance
of any insured depository institution subsidiary that may become
"undercapitalized" (as defined in FDICIA) with the terms of any capital
restoration plan filed by such subsidiary with its appropriate federal bank
regulatory agency.
Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines. The Federal Deposit Insurance Corporation
("FDIC") and the Office of the Comptroller of the Currency ("OCC") have
adopted risk-based capital ratio guidelines to which depository
institutions under their respective supervision are subject. The guidelines
establish a systematic analytical framework that makes regulatory capital
requirements more sensitive to differences in risk profiles among banking
organizations. Risk-based capital ratios are determined by allocating
assets and specified off-balance sheet commitments to four risk weighted
categories, with higher levels of capital being required for the categories
perceived as representing greater risk. Registrant's affiliate bank
exceeded the risk-based capital requirements of the FDIC and OCC as of
December 31, 2001. For the Registrant's regulatory capital ratios and
regulatory requirements as of December 31, 2001, see the information under
the Management Discussion and Analysis of Financial Condition section of
the Annual Report to Shareholders for the year ended December 31, 2001,
located in Exhibit 13, attached hereto and incorporated by reference.
The Registrant's affiliate bank is (i) subject to the provisions of the
National Bank Act; (ii) supervised, regulated, and examined by the OCC; and
(iii) subject to the rules and regulations of the OCC, Federal Reserve, and
the FDIC.
A substantial portion of the Registrant's cash revenue is derived from
dividends paid to it by its affiliate bank.
Both federal and state law extensively regulates various aspects of the
banking business, such as reserve requirements, truth-in-lending and
truth-in-savings disclosures, equal credit opportunity, fair credit
reporting, trading in securities, and other aspects of banking operations.
Branching by the Registrant's affiliate bank is subject to the jurisdiction
and requires notice to or the prior approval of the OCC.
The Registrant and its affiliate bank are subject to the Federal Reserve
Act, which restricts financial transactions between banks and affiliated
companies. The statute limits credit transactions between banks, affiliated
companies and its executive officers and its affiliates. The statute
prescribes terms and conditions for bank affiliate transactions deemed to
be consistent with safe and sound banking practices, and restricts the
types of collateral security permitted in connection with a bank's
extension of credit to an affiliate.
4
FDICIA accomplished a number of sweeping changes in the regulation of
depository institutions, including the Registrant's affiliate bank. FDICIA
requires, among other things, federal bank regulatory authorities to take
"prompt corrective action" with respect to banks which do not meet minimum
capital requirements. FDICIA further directs that each federal banking
agency prescribe standards for depository institutions and depository
institution holding companies relating to internal controls, information
systems, internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, management compensation, a maximum
ratio of classified assets to capital, minimum earnings sufficient to
absorb losses, a minimum ratio of market value to book value of publicly
traded shares, and such other standards as the agency deems appropriate.
The deposits of the Registrant's affiliate bank are insured up to $100,000
per insured account by the Bank Insurance Fund ("BIF"), which is
administered by the FDIC. Accordingly, the Registrant's affiliated bank
pays deposit insurance premiums to both BIF and SAIF.
The Riegle-Neal Community Development and Regulatory Improvement Act of
1994 ("Act") contains seven titles pertaining to community development and
home ownership protection, small business capital formation, paperwork
reduction and regulatory improvement, money laundering, and flood
insurance. The applicable federal supervisory agencies continue to
promulgate regulations implementing the Act which apply to Registrant's
affiliate bank.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
allows for interstate banking and interstate branching without regard to
whether such activity is permissible under state law. Bank holding
companies may now acquire banks anywhere in the United States subject to
certain state restrictions.
On November 12, 1999, the President signed into law comprehensive
legislation that modernizes the financial services industry for the first
time in decades. The Gramm-Leach-Bliley Act ("GLBA") permits bank holding
companies to conduct essentially unlimited securities and insurance
activities, in addition to other activities determined by the Federal
Reserve to be related to financial services. As a result of the GLBA, the
Registrant may underwrite and sell securities and insurance. It may
acquire, or be acquired by, brokerage firms and insurance underwriters. The
Registrant does not anticipate significant changes in its products or
services as a result of the GLBA.
In addition to the matters discussed above, the Registrant's affiliate bank
is subject to additional regulation of its activities, including a variety
of consumer protection regulations affecting its lending, deposit, and
collection activities and regulations affecting secondary mortgage market
activities. The earnings of financial institutions are also affected by
general economic conditions and prevailing interest rates, both domestic
and foreign, and by the monetary and fiscal policies of the United States
government and its various agencies, particularly the Federal Reserve.
Additional legislative and administrative actions affecting the banking
industry may be considered by the United States Congress, state
legislatures, and various regulatory agencies, including those referred to
above. It cannot be predicted with certainty whether such legislative or
administrative action will be enacted or the extent to which the banking
industry in general or the Registrant and its affiliate bank in particular
would be affected.
5
BANK HOLDING COMPANY STATISTICAL DISCLOSURES
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I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
Information required by this section of Securities Act Industry Guide 3 is
presented in Management 's Discussion and Analysis Section of the
Corporation's 2001 Annual Report to Shareholders.
II. INVESTMENT PORTFOLIO
a. The following is a schedule of the amortized cost and fair value of
investment securities available for sale at December 31, 2001, 2000,
and 1999:
(in thousands) 2001 2000 1999
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AVAILABLE FOR SALE FAIR FAIR FAIR
COST VALUE COST VALUE COST VALUE
U.S. Treasury and U.S. Government agencies and
corporations $20,255 $20,318 $26,171 $26,002 $30,428 $29,580
State and Municipal 15,411 15,310 5,564 5,696 4,230 4,100
Mortgage-backed securities 13,812 14,117 18,850 18,934 23,565 23,225
Collateralized mortgage obligations 17,150 17,593 20,458 20,502 11,322 10,689
Other securities 315 241 315 286
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Total investment securities $66,628 $67,338 $71,358 $71,375 $69,860 $67,880
====================================================================
b. The following is a schedule of maturities of each category of debt
securities and the related weighted average yield of such securities as of
December 31, 2001:
After one year After five years
One year or less through five years through ten years After ten years
(Thousands) Amount Yield Amount Yield Amount Yield Amount Yield
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AVAILABLE FOR SALE
U.S. Treasury and U.S. Government
agency securities (1) $ 5,027 4.46% $ 5,911 3.53% $ 5,866 4.25% $ 3,450 6.06%
Obligations of states and political
subdivisions 1,037 5.91% 1,722 7.39% 2,781 6.54% 9,872 4.90%
Mortgage-backed securities (2) 2,408 5.82% 6,101 6.67% 5,303 6.48%
Collateralized mortgage obligations 8,000 6.00% 9,150 6.62%
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Total $ 6,064 4.71% $10,041 4.74% $22,748 5.79% $27,775 5.91%
======= ======= ======= =======
(1) Amortized cost is based on contractual maturity or call date where a call
option exists
(2) Maturity based upon maturity date
The weighted average interest rates are based on coupon rates for securities
purchased at par value and on effective interest rates considering amortization
or accretion if the securities were purchased at a premium or discount. Yields
are not presented on a tax-equivalent basis.
Excluding those holdings of the investment portfolio in U.S. Treasury securities
and other agencies and corporations of the U.S. Government, there were no
investments in securities of any one issuer that exceeded 10% of the
consolidated stockholders' equity of the Registrant at December 31, 2001.
6
III. LOAN PORTFOLIO
a. Types of Loans - Total loans on the balance sheet are comprised of the
following classifications at December 31 for the years indicated.
(Thousands) 2001 2000 1999 1998 1997
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Commercial, financial, agricultural and
commercial tax-exempt loans $100,912 $ 88,421 $ 89,361 $ 76,682 $ 73,177
Mortgage warehouse loans 205,511 102,884 85,542
Real estate mortgage loans 80,571 125,431 154,717 152,390 120,345
Installment loans 79,807 76,842 64,737 61,274 64,593
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Total loans $466,801 $393,578 $394,357 $290,346 $258,115
===================================================================
b. Maturities and Sensitivities of Loans to Changes in Interest Rates -
The following is a schedule of maturities and sensitivities of loans
to changes in interest rates, excluding real estate mortgage, mortgage
warehousing and installment loans, as of December 31, 2001:
ONE YEAR OR ONE THROUGH AFTER FIVE
Maturing or repricing (thousands) LESS FIVE YEARS YEARS TOTAL
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Commercial, financial, agricultural and
commercial tax-exempt loans $60,127 $26,959 $13,826 $100,912
The following is a schedule of fixed-rate and variable-rate
commercial, financial, agricultural and commercial tax-exempt loans
due after one year. (Variable-rate loans are those loans with floating
or adjustable interest rates.)
(Thousands) FIXED RATE VARIABLE RATE
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Total commercial, financial, agricultural, and
commercial tax-exempt loans due after one year $22,279 $18,506
c. Risk Elements
1. Nonaccrual, Past Due and Restructured Loans - The following
schedule summarizes nonaccrual, past due, and restructured loans.
December 31 (thousands) 2001 2000 1999 1998 1997
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a. Loans accounted for on a nonaccrual basis
$1,772 $2,487 $1,173 $ 64 $ 319
b. Accruing loans which are contractually
past due 90 days or more as to interest and
principal payments 128 699 401 830 862
c. Loans not included in (a) or (b) which
are "Troubled Debt Restructuring's" as
defined by SFAS No. 15
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Totals $1,900 $3,186 $1,574 $894 $1,181
======================================================
The decrease in nonaccrual loans in 2001 is primarily due to a
decrease in nonaccrual mortgage loans of $637 thousand. The increase
in nonaccrual loans in 2000 is primarily due to the increase in
nonaccrual mortgage loans of $842 thousand and increase in nonaccrual
commercial loans of $321 thousand. The increase in nonaccrual loans in
1999 is primarily due to the addition of 4 mortgage loans totaling
$375 thousand, 8 consumer loans totaling $252 thousand and 7
commercial loans totaling $546 thousand.
7
III. LOAN PORTFOLIO (CONTINUED)
(Thousands)
Gross interest income that would have been recorded on
nonaccrual loans out standing as of December 31, 2001 in
the period if the loans had been current, in accordance
with their original terms and had been outstanding
throughout the period or since origination if held for
part of the period. $129
Interest income actually recorded on nonaccrual loans
outstanding as of December 31, 2001 and included in net
income for the period. 0
Interest income not recognized during the period on
nonaccrual loans outstanding as of December 31, 2001. $129
Discussion of Nonaccrual Policy
From time to time, the Bank obtains information, which may lead
management to believe that the collection of interest may be
doubtful on a particular loan. In recognition of such, it is
management's policy to convert the loan from an "earning asset" to a
nonaccruing loan. Further, it is management's policy to place a
commercial loan on a nonaccrual status when delinquent in excess of
90 days, unless the Loan Committee approves otherwise. The officer
responsible for the loan, the senior lending officer and the senior
collections officer must review all loans placed on nonaccrual
status. The senior collections officer monitors the loan portfolio
for any potential problem loans.
2. Potential Problem Loans
Impaired loans for which the discounted cash flows or collateral
value exceeded the carrying value of the loan totaled $1,028,000 and
$609,000 at December 31, 2001 and 2000, respectively. The allowance
for impaired loans, included in the Bank's allowance for loan losses
totaled $242,000 and $40,000 at those respective dates. The average
balance of impaired loans during 2001 and 2000 was $1,168,000 and
$609,000, respectively. No interest income was recorded or received
during either year on impaired loans. There were no loans classified
as impaired during 1999.
3. Foreign outstandings
None
4. Loan Concentrations
As of December 31, 2001, there are no significant concentrations of
loans exceeding 10% of total loans other than those disclosed in
Item III above.
5. Other Interest-Bearing Assets
There are no other interest-bearing assets as of December 31, 2001,
which would be required to be disclosed under Item III C.1 or 2 if
such assets were loans.
9
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. The following is an analysis of the activity in the allowance for
loan losses account:
(Thousands) 2001 2000 1999 1998 1997
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LOANS
Loans outstanding at the end of the period (1) 466,801 393,578 394,357 290,346 258,115
Average loans outstanding during the period (1) 426,821 400,524 306,142 268,209 269,348
(1) Net of unearned income and deferred loan fees
ALLOWANCE FOR LOAN LOSSES 2001 2000 1999 1998 1997
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Balance at beginning of the period $ 4,803 $ 3,273 $ 2,787 $ 2,702 $ 2,435
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Loans charged-off:
Commercial and agricultural loans (149) (71) (50) (39) (56)
Real estate mortgage loans (515) (3) (42) (2) (1)
Installment loans (917) (740) (1,135) (1,275) (1,384)
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Total loans charged-off (1,581) (814) (1,227) (1,316) (1,441)
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Recoveries of loans previously charged-off:
Commercial and agricultural loans 115 66 82 3 50
Real estate mortgage loans 301 15 3
Installment loans 267 253 281 395 333
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Total loan recoveries 683 334 363 401 383
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Net loans (charged-off)/recovered (898) (480) (864) (915) (1,058)
Provision charged to operating expense 1,505 2,010 1,100 1,000 1,325
Provision charged to discontinued operations 250
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Balance at the end of the period $ 5,410 $ 4,803 $ 3,273 $ 2,787 $ 2,702
=========================================================
Ratio of net (charge-offs)/recoveries to average
loans outstanding for the period (0.21)% (0.12)% (0.28)% (0.34)% (0.39)%
=========================================================
The provision for loan losses decreased in 2001 due to favorable
experience in the mortgage warehouse business. The provision for loan
losses in 2000 increased as a result of entering the mortgage
warehousing business that includes sub-prime mortgages. Management
expects charge-offs in all other portfolios to remain at the current
levels.
B. The following schedule is a breakdown of the allowance for loan
losses allocated by type of loan and the percentage of loans in
each category to total loans.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES AT DECEMBER 31 (THOUSANDS)
2001 2000 1999 1998 1997
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% OF % OF % OF % OF % OF
LOANS LOANS LOANS LOANS LOANS
ALLOWANCE TO ALLOWANCE TO ALLOWANCE TO ALLOWANCE TO ALLOWANCE TO
AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
LOANS LOANS LOANS LOANS LOANS
--------------------------------------------------------------------------------------------------
Commercial, financial
and agricultural
$1,678 22% $1,422 22% $ 819 23% $ 725 27% $ 765 28%
Real estate mortgage
641 17% 159 32% 149 39% 61 52% 82 47%
Mortgage warehousing
1,357 44% 1,628 26% 812 22%
Installment 1,702 17% 1,270 20% 1,345 16% 1,800 21% 1,290 25%
Unallocated 32 324 148 201 565
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Total $5,410 100% $4,803 100% $3,273 100% $2,787 100% $2,702 100%
==================================================================================================
10
In 1998, $277 thousand of the increase in the allowance allocated to
installment loans is related to loans originated at the Loan Store. The
majority of the assets of The Loan Store were sold in August 1999. The
remaining increase in the allocation associated with installment loans is
related to the methodology adopted in 1996 in which the higher of the Bank
or the industry average charge-off rate is utilized. The industry average
historical rate was higher than Bank's historical charge-off rate in 1998
resulting in an additional allocation to the installment loan portfolio of
$160 thousand.
In 1999, Horizon began a mortgage warehousing program. This program is
described in the "Management Discussion and Analysis" and Note 1 of the
Registrant's Annual Report to Shareholders, Exhibit 13. In 2001, Horizon
continued to grow the mortgage warehousing portfolio, however, the
allowance for loan losses associated with this line of business was
decreased due to favorable loss experience.
V. DEPOSITS
Information required by this section is incorporated by reference to the
information appearing under the caption "Summary of Selected Financial
Data" of the Registrant's Annual Report to Shareholders, Exhibit 13.
VI. RETURN ON EQUITY AND ASSETS
Information required by this section is incorporated by reference to the
information appearing under the caption Summary of Selected Financial Data"
of the Registrant's Annual Report to Shareholders, Exhibit 13.
VII. SHORT-TERM BORROWINGS
The following is a schedule of statistical information relative to
securities sold under agreements to repurchase which are secured by U.S.
Treasury and U.S. Government agency securities and mature within one year.
There were no other categories of short-term borrowings for which the
average balance outstanding during the period was 30 percent or more of
shareholders' equity at the end of the period. There were no securities
sold under agreements to repurchase outstanding during 1999.
December 31 (thousands) 2001 2000
-----------------------------
Outstanding at year end $19,304 $16,698
Approximate weighted average interest rate at year-end 1.50% 5.85%
Highest amount outstanding as of any month-end during the year $19,304 $16,698
Approximate average outstanding during the year $16,475 $ 2,590
Approximate weighted average interest during the year 4.15% 5.83%
RISK FACTORS
A cautionary note about forward-looking statements. In its oral and written
communication, the Registrant from time to time includes forward-looking
statements, within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward looking statements can include statements about estimated
cost savings, plans and objectives for future operations, and expectations about
performance as well as economic and market conditions and trends. They often can
be identified by the use of words like "expect," "may," "could," "intend,"
"project," "estimate," "believe," or "anticipate." The Registrant may include
forward-looking statements in filings with the Securities and Exchange
Commission, such as this Form 10-K, in other written materials, and in oral
statements made by senior management to analysts, investors, representatives of
the media, and others. It is intended that these forward-looking statements
speak only as of the date they are made, and the Registrant undertakes no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the forward looking statement is made or
to reflect the occurrence of unanticipated
11
events. By their nature, forward-looking statements are based on assumptions and
are subject to risks, uncertainties, and other factors. Actual results may
differ materially from those contained in the forward looking statement. The
discussion in
12
the 2001 Annual Report to Shareholders under the caption "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
incorporated in Item 6 of this Form 10-K, lists some of the factors which could
cause the Registrant's actual results to vary materially from those in any
forward-looking statements. Your attention is directed to this discussion which
can be found in Exhibit 13 to this Form 10-K. Other uncertainties which could
affect the Registrant's future performance include the effects of competition,
technological changes and regulatory developments; changes in fiscal, monetary
and tax policies; market, economic, operational, liquidity, credit and interest
rate risks associated with the Registrant's business; inflation; competition in
the financial services industry; changes in general economic conditions, either
nationally or regionally, resulting in, among other things, credit quality
deterioration; and changes in the securities markets. Investors should consider
these risks, uncertainties, and other factors in addition to those mentioned by
the Registrant in its other filings from time to time when considering any
forward-looking statement.
ITEM 2. PROPERTIES
- -------------------
The main office of the Registrant and Bank is located at 515 Franklin
Square, Michigan City, Indiana. The building located adjacent to the
main office of the Registrant and Bank, at 502 Franklin Square, houses
the credit administration, operations and information technology
departments of Bank. In addition to these principal facilities, the
Bank has seven sales offices located at:
515 Franklin Square, Michigan City, Indiana
3631 South Franklin Street, Michigan City, Indiana
117 E. First St., Wanatah, Indiana
1410 Lincolnway, LaPorte, Indiana
754 Indian Boundary Road, Chesterton, Indiana
4208 N. Calumet, Valparaiso, Indiana
2650 Willowcreek Road, Portage, Indiana
2450 West Lincoln Highway, Merrillville, Indiana
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
No material pending legal proceedings, other than ordinary routine
litigation incidental to the business to which the Registrant or any of
its subsidiaries is a party or of which any of their property is
subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matters were submitted to a vote of the Registrant's stockholders
during the fourth quarter of the 2001 fiscal year.
SPECIAL ITEM: EXECUTIVE OFFICERS OF REGISTRANT
- ----------------------------------------------
Robert C. Dabagia 63 Chairman of Horizon and the Bank since 1998; President
and Chief Administrative Officer, Horizon and Bank
from 1986 to retirement on December 31, 1996.
Craig M. Dwight 45 President and Chief Executive Officer of Horizon and
the Bank since July 1, 2001; President and Chief
Administrative Officer of Horizon and as the President
of the Bank since 1998; Vice President and Senior
Lender, Bank since 1997: Vice President and Senior
Commercial Lender, Bank since 1990
Thomas H. Edwards 49 Executive Vice President and Senior Lender, Horizon
and Bank since 1999, Executive of Loan Management
Services, Crowe, Chizek and Company, LLP since 1993.
Lawrence J. Mazur 53 President, Horizon Trust & Investment Management, N.A.
since December 1998; President, Financial Planning and
Management Corporation since 1994.
13
James H. Foglesong 56 Chief Financial Officer, Horizon and Bank since
January 2001; Executive Vice President and Chief
Financial Officer, Security Financial Bancorp since
1995.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
The information required under this item is incorporated by reference to
the information appearing under the caption "Horizon's Common Stock and
Related Stockholder Matters" of the Registrant's Annual Report to
Shareholders, Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The information required under this item is incorporated by reference to
the information appearing under the caption "Summary of Selected
Financial Data" of the Registrant's Annual Report to Shareholders,
Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Management's discussion and analysis of financial condition and results
of operations appears in the 2001 Annual report to Shareholders,
Exhibit 13 and is incorporated herein by reference.
14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
The information required under this item is incorporated by reference
to the information appearing in the Management's Discussion and
Analysis included as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The consolidated financial statements and supplementary data required
under this item are incorporated herein by reference to the Annual
Report to Shareholders, Exhibit 13. The Registrant is not required to
furnish the supplementary financial information specified by Item 302
of Regulation S-K.
Consolidated Balance Sheets, December 31, 2001 and 2000
Consolidated Statements of Income for the years ended December 31,
2001, 2000, and 1999 Consolidated Statements of Changes in
Stockholders' Equity for the years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Cash Flows for the years ended December
31, 2001, 2000, and 1999 Notes to the Consolidated Financial
Statements Report of Independent Public Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
PART III
--------
This information is omitted from this report pursuant to General Instruction G.
(3) of Form 10-K as the Registrant intends to file with the Commission its
definitive Proxy Statement pursuant to Regulation 14-A of the Securities
Exchange Act of 1934, as amended, not later than 120 days after December 31,
2001.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information required by this item is incorporated by reference from the
Proxy statement section captioned "Board of Directors".
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The information required by this item is incorporated by reference from the
Proxy statement section captioned "Executive Compensation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information required by this item is incorporated by reference from the
Proxy statement section captioned "Common Stock Ownership by Directors and
Executive Officers".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information required by this item is incorporated by reference from the
Proxy statement section captioned "Certain Business Relationships and
Transactions".
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a) 1. Financial Statements
The following consolidated financial statements of the Registrant
appear in the 2001 Annual Report to Shareholders on the pages
referenced and are specifically incorporated by reference under Item 8
of this Form 10-K:
15
Annual Report
Page Number
-----------
Consolidated Balance Sheets 24
Consolidated Statements of Income 25
Consolidated Statements of Changes in Stockholders' Equity 26
Consolidated Statements of Cash Flows 27
Notes to the Consolidated Financial Statements 28 - 44
Report of Independent Public Accountants 45
16
2. Financial Statement Schedules
-----------------------------
Financial statement schedules are omitted for the reason that they
are not required or are not applicable, or the required information
is included in the financial statements.
3. Exhibits
--------
Reference is made to the Exhibit Index that is found on page 16 of
this Form 10-K.
(b) Reports on Form 8-K
-------------------
None
(c) Exhibits
--------
Reference is made to the Exhibit Index that is found on page 16 of this
Form 10-K.
(d) Financial Statement Schedules
-----------------------------
Financial statement schedules are omitted for the reason that they are not
required or are not applicable, or the required information is included in
the financial statements.
17
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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
---------------
registrant
Date: March 19, 2002
- ----- /s/ Craig M. Dwight
-------------------
Craig M. Dwight
President & Chief Executive Officer (Principal
executive Officer)
Date: March 19, 2002
- ----- /s/ James H. Foglesong
----------------------
James H. Foglesong
Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
18
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date Signature and Title
March 19, 2002 /s/ Robert C. Dabagla
- -------------- ------------------------------
Robert C. Dabagla, Chairman of
the Board & Director
March 19, 2002 /s/ Craig M. Dwight
- -------------- ------------------------------
Craig M. Dwight, President &
Chief Executive Officer and
Director
March 19, 2002 /s/ Susan D. Aaron
- -------------- ------------------------------
Susan D. Aaron, Director
March 19, 2002 /s/ Dale W. Alspaugh
- -------------- ------------------------------
Dale W. Alspaugh, Director
March 19, 2002 /s/ Charley E. Gillispie
- -------------- ------------------------------
Charley E. Gillispie, Director
March 19, 2002 /s/ Robert E. McBride
- -------------- ------------------------------
Robert E. McBride, Director
March 19, 2002 /s/ Peter L. Pairitz
- -------------- ------------------------------
Peter L. Pairitz, Director
March 19, 2002 /s/ Larry N. Middleton
- -------------- ------------------------------
Larry N. Middleton, Director
March 19, 2002 /s/ Bruce E. Rampage
- -------------- ------------------------------
Bruce E. Rampage, Director
March 19, 2002 /s/ Gene L. Rice
- -------------- ------------------------------
Gene L. Rice, Director
March 19, 2002 /s/ Robert E. Swinehart
- -------------- ------------------------------
Robert E. Swinehart, Director
March 19, 2002 /s/ Spero W. Valavanis
- -------------- ------------------------------
Spero W. Valavanis, Director
19
EXHIBIT INDEX
-------------
The following exhibits are included in this Form 10-K or are incorporated by
reference as noted in the following table:
Exhibit
Number Description Incorporated by Reference/Attached
- ------ ----------- ----------------------------------
3.1 Articles of Incorporation of Horizon Bancorp, Incorporated by Reference to Exhibit 3.1 to the Registrant's
as amended Form 10-Q for the Quarter Ended September 30, 2001
3.2 By-Laws of Horizon Bancorp, as amended Incorporated by reference to Exhibit 3.2 to the Registrant's
Form 10-Q for the Quarter Ended September 30, 2001
10.1* 1987 Stock Option and Stock Appreciation Rights Attached
Plan of Horizon Bancorp, as amended
10.2* Nonqualified Stock Option and Stock Appreciation Rights Attached
Agreement between Horizon Bancorp and Craig M. Dwight
10.3* Supplemental Employee Retirement Plan, as amended Attached
10.4* 1997 Key Employees Stock Option and Stock Appreciation Attached
Rights Plan
10.5* Directors Deferred Compensation Plan Incorporated by Reference to Exhibit 10.8 to Registrant's
Form 10-K for the Year Ended December 31, 1999
10.6* Employment Agreement between Horizon Bank, N.A., Incorporated by Reference to Exhibit 10.9 to Registrant's
and Lawrence J. Mazur Form 10-K for the Year Ended December 31, 1999
10.7* Form of Change of Control Agreement Incorporated by Reference to Exhibit 10.10 to the Registrant's
Form 10-K for the Year Ended December 31, 1999
10.8* Form of Amendment to Change in Control Agreement and Attached
Schedule Identifying Material Details of Individual
Agreements
13 Excerpts from Registrant's Annual Report to Shareholders Attached
for the Year Ended December 31, 2001 (not deemed filed
except for portions thereof which are specifically
incorporated by reference into this Form 10-K)
21 Subsidiaries of the Registrant Attached
*Indicates exhibits that describe or evidence management contracts or
compensatory plans or arrangements required to be filed as exhibits to this Form
10-K
20