1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from
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 (I.R.S. Employer
incorporation or organization Identification No.)
515 Franklin St., Michigan City, Indiana 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, 677,804 shares outstanding at January 31, 1999
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(Title of class)
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 bid price of such stock on January
31, 1999 was $27,215,000.
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Documents Incorporated by Reference
-----------------------------------
Part of Form 10-K into which
Document portion of document is incorporated
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Portions of the Registrant's 1998 I, II, VI
annual report to shareholders
Portions of the Registrant's III
proxy statement to be filed for
its May 27, 1999 annual meeting
of shareholders
Except as provided in Part I, Part II and Part III, no part of the Registrant's
1998 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.
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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 399,340 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 remains a one-bank holding company with a
wholly-owned subsidiary, Horizon Bank, N.A. (Bank) and Bank's wholly-owned
subsidiaries, IMS Investment Management, N.A. (IMS) and Phoenix Insurance
Services, Inc. (Phoenix) and non-bank subsidiaries, HBC Insurance Group
(Insurance Company) and The Loan Store, Inc., (Loan Store).
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant, Bank and its subsidiaries are engaged in the commercial and
retail banking business, investment management services, commercial and personal
property and casualty insurance services, retail lending and insurance credit
life sales. Refer to Item 1(e) and Item 6 for information pertaining to
Registrant's banking business.
(c) NARRATIVE DESCRIPTION OF BUSINESS
The Registrant's business is that incident to its 100% ownership of Bank, Loan
Store 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 LaPorte
County, Indiana and four facilities located in Porter County, Indiana. At
December 31, 1998, Bank had total assets of $408,443,000 and total deposits of
$322,401,000. Aside from the stock of Bank, Insurance Company and Loan Store,
the Registrant's only other significant assets are cash and cash equivalents
totaling approximately $2,007,000, investment securities totaling approximately
$377,000 and taxes receivable of approximately $287,000 at December 31, 1998.
The business of the Registrant, Bank, IMS, Phoenix, 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 whom would have a
materially adverse effect on the business of the Registrant. Revenues from loans
accounted for 71% in 1998, 72% in 1997, and 68% in 1996 of the total
consolidated revenue. Revenues from investment securities accounted for 13% in
1998, 14% in 1997 and 15% in 1996 of total consolidated revenue.
The Registrant has no employees and there are approximately 198 full and
part-time persons employed by Bank, IMS and Loan Store as of December 31, 1998.
A high degree of competition exists in all major areas where the Registrant
engages in business. Bank's primary market consists of LaPorte County, Indiana,
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.
The Insurance Company offers credit life and accident and health insurance. The
Loan Store, Inc. is engaged in the business of retail lending and operates three
facilities in Northwest Indiana. The net income generated from the Insurance
Company and the Loan Store are not significant to the overall operations of the
Registrant.
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REGULATION
The earnings and growth of the banking industry and the Registrant are affected
not only by the general economic conditions, but also by the credit policies of
monetary authorities, particularly the Federal Reserve System. An important
function of the Federal Reserve System is to regulate the national supply of
bank credit in order to contest recessionary trends and curb inflationary
pressures. Among the instruments of monetary policy used by the Federal Reserve
System to implement these objectives are open market operations in U.S.
Government securities, changes in the discount rate on member bank borrowings,
and changes in reserve requirements against member bank deposits. These means
are used in varying combinations to influence overall growth of bank loans,
investments and deposits and may also affect interest rates charged on loans or
paid on deposits. The monetary policies of the Federal Reserve System have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future. Because of changing conditions
in the national and international economy and the money markets, and as a result
of actions by monetary and fiscal authorities, including the Federal Reserve
System, interest rates, credit availability and deposit levels may change due to
circumstances beyond the control of the Registrant or Bank.
The Registrant, as a bank holding company, is subject to regulation under the
Bank Holding Company Act of 1956, as amended (Act), and is registered with the
Board of Governors of the Federal Reserve System (Board of Governors). Under the
Act, the Registrant is required to obtain prior approval of the Board of
Governors before acquiring direct ownership or control of more than 5% of the
voting shares of any bank. With certain exceptions, the Act precludes the
Registrant from acquiring direct or indirect ownership or control of more than
5% of the voting shares of any company which is not a bank and from engaging in
any business other than that of banking, managing and controlling banks, or
furnishing services to its subsidiary. The Registrant may engage in, and may own
shares of companies engaged in, certain activities found by the Board of
Governors to be so closely related to banking as to be a proper incident
thereto.
The Registrant is required to file annual reports of its operations with the
Board of Governors and such additional information as they may require pursuant
to the Act, and the Registrant and Bank are subject to examination by the Board
of Governors. Further, the Registrant and Bank are prohibited from engaging in
certain tie-in arrangements with respect to any extension of credit or provision
of property or services.
The Board of Governors also possesses the authority through cease and desist
powers to regulate parent holding company and nonbank subsidiaries where action
of a parent holding company or its nonbank subsidiaries constitutes a serious
threat to the safety, soundness or stability of a subsidiary bank. Federal bank
regulatory agencies also have the power to regulate debt obligations issued by
bank holding companies. Included in these powers is the authority to impose
interest ceilings and reserve requirements on such debt obligations.
The acquisition of banking subsidiaries by bank holding companies is subject to
the jurisdiction of, and requires the prior approval of, the Federal Reserve
and, for institutions resident in Indiana, the Indiana Department of Financial
Institutions. Bank holding companies located in Indiana are permitted to acquire
banking subsidiaries throughout the state, subject to limitations based upon the
percentage of total state deposits of the holding company's subsidiary banks.
Further, Indiana law permits interstate bank holding company acquisitions on a
reciprocal basis, subject to certain limitations. Beginning July 1, 1992,
Indiana law permits the Registrant to acquire banks, and be acquired by bank
holding companies, located in any state in the country which permits reciprocal
entry by Indiana bank holding companies.
The Registrant, Bank, IMS, Phoenix, Insurance Company and Loan Store are
"affiliates" within the meaning of the Federal Reserve Act. The Federal Reserve
Act and the Federal Deposit Insurance Act limit the amount of the Bank's loans
or extensions of credit to affiliates, its investments in the stock or other
securities thereof, and its taking of such stock or securities as collateral for
loans to any borrower.
Bank, as a national bank, is regulated and regularly examined by the Office of
the Comptroller of the Currency (OCC). In addition to certain statutory
limitations on the payment of dividends, approval of the OCC is required for any
dividend to the Registrant by Bank if the total of all dividends, including any
proposed dividend, declared by Bank in any calendar year exceeds the total of
its net profits (as defined by the OCC) for that year combined with its retained
net profits for the preceding two years, less any required transfers to surplus.
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The Federal Reserve Board implemented risk-based capital requirements for banks
and bank holding companies in December, 1988. The risk-based capital
requirements have little effect on the Registrant because existing capital is in
excess of the requirements. (See additional discussion in Management's
Discussion and Analysis in Registrant's Annual Report to Shareholders, Exhibit
13.)
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALE
None
(e) STATISTICAL DISCLOSURES
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 1998 Annual Report to Shareholders.
II. INVESTMENT PORTFOLIO
(A) The following is a schedule of the book value of investment securities
available for sale and held to maturity at December 31, 1998, 1997 and 1996:
(in thousands) 1998 1997 1996
AVAILABLE FOR SALE
U.S. Treasury and U.S. Government agencies and corporations $12,568 $3,965 $4,965
Mortgage-backed securities 41,167 39,985 49,683
Other securities 4,289 4,020 4,248
Unrealized gain/(loss) 561 668 145
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Total investment securities available for sale $58,585 $48,638 $59,041
========================================================
HELD TO MATURITY
U.S. Treasury and U.S. Government agencies and corporations $1,630 $2,040 $2,793
Obligations of states and political subdivisions 10,116 9,407 10,017
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Total investment securities held to maturity $11,746 $11,447 $12,810
========================================================
Total investment securities available for sale and held
to maturity $70,331 $60,085 $71,851
========================================================
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II. INVESTMENT PORTFOLIO (Continued)
(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, 1998:
One year or less After one year After five years After ten years
through five years through 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 $7,171 6.13% $5,474 6.18%
securities(1)
Other securities 4,350 6.90%
Mortgage-backed securities (2) 434 5.64% 6,589 5.97% 4,506 6.69% 30,061 6.34%
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Total $11,955 6.39% $12,063 6.07% $4,506 6.69% $30,061 6.34%
HELD TO MATURITY
U.S. Government agency securities $1,630 7.67%
Obligations of states and political 1,670 4.77% 2,325 5.30% 6,121 4.96%
subdivisions
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Total $3,300 6.20% $2,325 5.30% $6,121 4.96% $0 0.00%
Total investment securities available for $15,255 6.35% $14,388 5.94% $10,627 5.69% $30,061 6.34%
sale and held to maturity
(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.
(C) 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 which
exceeded 10% of the consolidated stockholders' equity of the Registrant
at December 31, 1998.
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) 1998 1997 1996 1995 1994
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Commercial, financial, agricultural and $76,682 $73,177 $75,460 $66,125 $67,177
commercial tax-exempt loans
Real estate mortgage loans 152,390 120,345 133,739 119,739 105,512
Installment loans 61,274 64,593 62,277 55,798 50,933
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Total loans $290,346 $258,115 $271,476 $241,662 $223,622
================================================================================
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III. LOAN PORTFOLIO (Continued)
(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 and
installment loans, as of December 31, 1998:
Maturing or repricing (thousands) One year or One through After five Total
less five years years
-----------------------------------------------------------------
Commercial, financial, agricultural $33,203 $36,528 $6,951 $76,682
and commercial tax-exempt loans
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
--------------------------------
Total commercial, financial, $29,171 $14,308
agricultural, and commercial
tax-exempt loans due after one year
(C) Risk Elements
1. Nonaccrual, Past Due and Restructured Loans - The following schedule
summarizes nonaccrual, past due and restructured loans.
December 31 (thousands) 1998 1997 1996 1995 1994
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(a) Loans accounted for on a nonaccrual $64 $319 $316 $668 $2,794
basis
(b) Accruing loans which are 830 862 682 533 474
contractually past due 90 days or more
as to interest and principal payments
(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 $894 $1,181 $998 $1,201 $3,268
============================================================================
The decrease in nonaccrual loans in 1995 is primarily due to three
loans which were returned to an accruing basis. These loans had
sustained required payment performance over the last six months or
longer.
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III. LOAN PORTFOLIO (Continued)
(Thousands)
Gross interest income that would have been $64
recorded on nonaccrual loans outstanding
as of December 31, 1998 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.
Interest income actually recorded on 0
nonaccrual loans outstanding as of
December 31, 1998 and included in net
income for the period.
Interest income not recognized during the $64
period on nonaccrual loans outstanding as
of December 31, 1998.
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. All loans placed on nonaccrual status
must be reviewed by the officer responsible for the loan, the senior
lending officer and the loan review officer. The loan review officer
monitors the loan portfolio for any potential problem loans.
2. Potential Problem Loans
Loans where there are serious doubts as to the ability of the borrower
to comply with present loan repayment terms, and not included in
Section 1 above, amount to $341,000 at December 31, 1998. Loan
customers included in this category are having financial difficulties
at the present time and may need adjustments in their repayment terms.
Payments are anticipated or collateral or guarantees are available to
reduce any possible loss. These loans and potential loss exposure have
been considered in management's analysis of the adequacy of the
allowance for loan losses. Consideration was given to loans classified
for regulatory purposes as loss, doubtful, substandard or special
mention that have not been disclosed in Section 1 above. Management
believes that these loans do not represent or result from trends or
uncertainties which management reasonably expects will materially
impact future operating results, liquidity or capital resources, or
management believes that these loans do not represent material credits
about which management is aware of any information which causes
management to have serious doubts as to the ability of such borrowers
to comply with the loan repayment terms.
3. Foreign outstandings
None
4. Loan Concentrations
As of December 31, 1998 there are no significant concentrations of
loans exceeding 10% of total loans other than those disclosed in Item
III above.
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III. LOAN PORTFOLIO (Continued)
(D) Other Interest-Bearing Assets
Other than $133,000 held as other real estate owned, net of allowance,
there are no other interest-bearing assets as of December 31, 1998
which would be required to be disclosed under Item III C.1 or 2 if such
assets were loans.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
(A) The following is an analysis of the activity in the allowance for loan
losses account:
(Thousands) 1998 1997 1996 1995 1994
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LOANS
Loans outstanding at the end of the period (1) 290,346 258,115 271,476 241,662 223,622
Average loans outstanding during the period (1) 268,209 269,348 256,580 226,198 218,053
(1) Net of unearned income and deferred loan fees
ALLOWANCE FOR LOAN LOSSES 1998 1997 1996 1995 1994
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Balance at beginning of the period $2,702 $2,435 $2,777 $2,555 $2,310
Loans charged-off:
Commercial and agricultural loans (39) (56) (11) (45)
Real estate mortgage loans (2) (1) (14) (17)
Installment loans (1,275) (1,384) (532) (231) (221)
------- ------- ----- ----- -----
Total loans charged-off (1,316) (1,441) (557) (293) (221)
Recoveries of loans previously charged-off:
Commercial and agricultural loans 3 50 27 358 143
Real estate mortgage loans 3 8
Installment loans 395 333 122 149 158
--- --- --- --- ---
Total loan recoveries 401 383 149 515 301
Net loans (charged-off)/recovered (915) (1,058) (408) 222 80
Provision charged to operating expense 1,000 1,325 66 165
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Balance at the end of the period $2,787 $2,702 $2,435 $2,777 $2,555
===============================================================================
Ratio of net (charge-offs)/recoveries to average (0.34)% (0.39)% (0.16)% 0.10% 0.04%
loans outstanding for the period
The increase in the provision for loan losses in 1997 was the result of
increased charge-offs identified in the installment loan portfolio,
specifically direct consumer loans and credit cards. The volume of
charge-offs in these portfolios was beginning to reduce in late 1998.
Management expects charge-offs in all other portfolios to remain at the
1997 levels.
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IV. SUMMARY OF LOAN LOSS EXPERIENCE (Continued)
(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)
1998 1997 1996 1995 1994
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Allowance % of Total Allowance % of Total Allowance % of Total Allowance % of Total Allowance % of Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
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Commercial, $725 0.2% $765 0.3% $576 0.2% $733 0.3% $1,434 0.6%
financial and
agricultural
Real estate 61 0.0% 82 0.0% 102 0.0% 139 0.1% 111 0.0%
mortgage
Installment 1,800 0.6% 1,290 0.5% 1,075 0.4% 655 0.3% 407 0.2%
Unallocated 201 565 682 1,250 603
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Total $2,787 1.0% $2,702 1.0% $2,435 0.9% $2,777 1.1% $2,555 0.9%
===================================================================================================================
The increase in the reserve allocation for installment loans from 1995
to 1996 is primarily the result of the change in methodology for the
historical portion of the allowance calculation. In 1996, the Bank
began using the industry average charge-off rate instead of the Bank's
historical charge-off rate which was used in previous years. This
change in methodology resulted in a $325 increase in the portion of the
allowance allocated to installment loans in 1996.
In 1998, $277 thousand of the increase in the allowance allocated to
installment loans is related to loans originated at the Loan Store. The
underwriting standards of the subsidiary have been evaluated and
strengthened in 1998. Management expects the current allocation of the
allowance to continue through 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 Banks historical charge-off rate in
1998 resulting in an additional allocation to the installment loan
portfolio of $160 thousand.
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.
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VII. SHORT-TERM BORROWINGS
The following is a schedule of statistical information relative to
securities sold under agreements to repurchase which were secured by
U.S. Treasury and U.S. Government agency securities and mature within
one year. This product was discontinued on January 1, 1997. 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.
(Thousands) 1998 1997 1996
-----------------------------------------------
Outstanding at year end $0 $0 $11,562
Approximate weighted average interest 0.00% 0.00% 5.14%
rate at year-end
Highest amount outstanding as of any $0 $0 $14,822
month-end during the year
Approximate average outstanding during $0 $0 $10,961
the year
Approximate weighted average interest 0.00% 0.00% 5.07%
rate during the year
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 micro-computer departments of Bank.
In addition to these principal facilities, the Bank has eight sales
offices located at:
5477 Johnson Road, 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
3125 N. Calumet, Valparaiso, Indiana
6504 U.S. Highway 6, Portage, Indiana
265 U.S. Highway 30, Valparaiso, Indiana
The Loan Store has sales offices at the following locations:
8343 Indianapolis Blvd., Highland, Indiana
510 W. McKinley, Mishawaka, Indiana
5176 South Franklin, Michigan City, Indiana
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
The information required under this Item is incorporated by reference
to the information appearing under the caption "Note 18 - Commitments,
Off-Balance Sheet Risk and Contingencies" of the registrants Annual Report to
Shareholders, Exhibit 13.
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 1998 fiscal year.
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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 "Market for 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 1998 Annual report to Shareholders,
Exhibit 13 and is incorporated herein by reference.
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, 1998 and 1997
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996 Consolidated Statements of Changes in
Stockholders' Equity for the years ended December 31,1998,
1997 and 1996
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to the Consolidated Financial Statements
Report of Independent Public Accountants
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
The disclosures required under this item are incorporated by reference
to the Registrant's Forms 8-K, Exhibit 16.
PART III
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Information relating to the following items will be included in the
Registrant's definitive proxy statement for the annual meeting of
shareholders to be held May 27, 1999 ("1999 Proxy Statement"). The 1999
Proxy Statement will be filed with the Commission within one hundred
twenty days of the close of the Registrant's last fiscal year and is in
part incorporated into this Form 10-K Annual Report by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
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PART IV
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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 1998 annual report to shareholders on the pages
referenced and are specifically incorporated by reference under Item 8
of this Form 10-K:
Annual Report
Page Number
-----------
Consolidated Balance Sheets 16
Consolidated Statements of Income 17
Consolidated Statements of Changes in Stockholders' Equity 18
Consolidated Statements of Cash Flows 19 - 20
Notes to the Consolidated Financial Statements 21 - 44
Report of Independent Public Accountants 45
(a) 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.
(a) 3. Exhibits
--------
Reference is made to the Exhibit Index which is found on page 16 of
this Form 10-K.
(b) Reports on Form 8-K
-------------------
The following Forms 8-K were filed during 1998:
June 16, 1998 - Change in Independent Accountants
October 20, 1998 - Termination of President and Chief Administrative
Officer
(c) Reference is made to the Exhibit Index which is found on page 16 of
his 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.
13
14
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 3/17/99 /s/ Robert C. Dabagia
------------- -------------------------------------------
Robert C. Dabagia
Chairman & Chief Executive Officer
Date 3/17/99 /s/ Diana E. Taylor
------------- -------------------------------------------
Diana E. Taylor
Chief Financial Officer/Secretary/Treasurer
14
15
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
---- -------------------
3/17/99 /s/ Dale W. Alspaugh
- ------- ---------------------------------
Dale W. Alspaugh, Director
3/17/99 /s/ Russell L. Arndt
- ------- ---------------------------------
Russell L. Arndt, Director
3/17/99 /s/ George R. Averitt
- ------- ---------------------------------
George R. Averitt, Director
3/17/99 /s/ Robert C. Dabagia
- ------- ---------------------------------
Robert C. Dabagia, Director
Chairman & Chief Executive Officer
3/17/99 /s/ Craig M. Dwight
- ------- ---------------------------------
Craig M. Dwight, Director
President
3/17/99 /s/ Myles J. Kerrigan
- ------- ---------------------------------
Myles J. Kerrigan, Director
3/17/99 /s/ Robert E. McBride
- ------- ---------------------------------
Robert E. McBride, Director
3/17/99 /s/ Larry N. Middleton
- ------- ---------------------------------
Larry N. Middleton, Director
3/17/99 /s/ Gene L. Rice
- ------- ---------------------------------
Gene L. Rice, Director
3/17/99 /s/ Susan D. Sterger
- ------- ---------------------------------
Susan D. Sterger, Director
3/17/99 /s/ Robert E. Swinehart
- ------- ---------------------------------
Robert E. Swinehart, Director
15
16
EXHIBIT INDEX
-------------
The following exhibits are included in this Form 10-K or are incorporated by
reference as noted in the following table:
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBERS
- ------ ----------- ------------
3.1 ARTICLES OF INCORPORATION OF HORIZON BANCORP INCORPORATED BY REFERENCE
TO 12/31/89 FORM 10-K
3.2 BY-LAWS OF HORIZON BANCORP INCORPORATED BY REFERENCE
TO 12/31/91 FORM 10-K
10.1 MATERIAL CONTRACTS-AGREEMENT REGARDING INCORPORATED BY REFERENCE
EMPLOYMENT CONTRACTS TO 12/31/87 FORM 10-K
10.2 MATERIAL CONTRACTS-1987 STOCK OPTION AND INCORPORATED BY REFERENCE
STOCK APPRECIATION RIGHTS PLAN OF HORIZON TO 12/31/86 FORM 10-K
BANCORP
10.3 MATERIAL CONTRACTS-NONQUALIFIED STOCK OPTION INCORPORATED BY REFERENCE
AND STOCK APPRECIATION RIGHTS AGREEMENT TO 12/31/86 FORM 10-K
10.4 MATERIAL CONTRACTS-AMENDED NONQUALIFIED INCORPORATED BY REFERENCE
DIRECTORS DEFERRED COMPENSATION PLAN TO 12/31/89 FORM 10-K
10.5 MATERIAL CONTRACTS-SUPPLEMENTAL EMPLOYEE INCORPORATED BY REFERENCE
RETIREMENT PLAN TO 12/31/96 FORM 10-K
10.6 MATERIAL CONTRACTS-FIRST AMENDMENT TO INCORPORATED BY REFERENCE
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN TO 12/31/96 FORM 10-K
10.7 MATERIAL CONTRACTS-SECOND AMENDMENT TO INCORPORATED BY REFERENCE
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN TO 12/31/96 FORM 10-K
10.8 MATERIAL CONTRACTS - AGREEMENT REGARDING INCORPORATED BY REFERENCE
EMPLOYMENT CONTRACTS TO 12/31/96 FORM 10-K
11 STATEMENT REGARDING COMPUTATION OF PER SHARE ANNUAL REPORT ATTACHED
EARNINGS-REFER TO ANNUAL REPORT
FOOTNOTE 1 (EXHIBIT 13)
13 REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1998 ATTACHED
(NOT DEEMED FILED EXCEPT FOR PORTIONS
THEREOF WHICH ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO THIS FORM 10-K)
21 SUBSIDIARIES OF THE REGISTRANT INCORPORATED HEREIN
16