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 ----------------- Commission file number 0-10792 ------- Horizon Bancorp --------------- (Exact name of registrant as specified in its charter) <TABLE> <S> <C> Indiana 35-1562417 ------- ---------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 515 Franklin Square, Michigan City 46360 ---------------------------------- ----- (Address of principal executive offices) (Zip Code) </TABLE> Registrant's telephone number, including area code: 219-879-0211 ------------ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None ---- 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 - -------------------------------------------------------------------------------- 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 ----------------------------------- <TABLE> <CAPTION> Part of Form 10-K into which Document portion of document is incorporated - -------- ----------------------------------- <S> <C> 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 </TABLE> 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 ------ 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 - -------------------------------------------- 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: <TABLE> <CAPTION> (in thousands) 2001 2000 1999 -------------------------------------------------------------------- AVAILABLE FOR SALE FAIR FAIR FAIR COST VALUE COST VALUE COST VALUE <S> <C> <C> <C> <C> <C> <C> 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 -------------------------------------------------------------------- Total investment securities $66,628 $67,338 $71,358 $71,375 $69,860 $67,880 ==================================================================== </TABLE> 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: <TABLE> <CAPTION> 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 --------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> 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% ------- ------- ------- ------- Total $ 6,064 4.71% $10,041 4.74% $22,748 5.79% $27,775 5.91% ======= ======= ======= ======= </TABLE> (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. <TABLE> <CAPTION> (Thousands) 2001 2000 1999 1998 1997 ------------------------------------------------------------------ <S> <C> <C> <C> <C> <C> 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 ------------------------------------------------------------------- Total loans $466,801 $393,578 $394,357 $290,346 $258,115 =================================================================== </TABLE> 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: <TABLE> <CAPTION> ONE YEAR OR ONE THROUGH AFTER FIVE Maturing or repricing (thousands) LESS FIVE YEARS YEARS TOTAL ---------------------------------------------------------------- <S> <C> <C> <C> <C> Commercial, financial, agricultural and commercial tax-exempt loans $60,127 $26,959 $13,826 $100,912 </TABLE> 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.) <TABLE> <CAPTION> (Thousands) FIXED RATE VARIABLE RATE ----------------------------------------- <S> <C> <C> Total commercial, financial, agricultural, and commercial tax-exempt loans due after one year $22,279 $18,506 </TABLE> c. Risk Elements 1. Nonaccrual, Past Due and Restructured Loans - The following schedule summarizes nonaccrual, past due, and restructured loans. <TABLE> <CAPTION> December 31 (thousands) 2001 2000 1999 1998 1997 ------------------------------------------------------ <S> <C> <C> <C> <C> <C> 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 ------------------------------------------------------ Totals $1,900 $3,186 $1,574 $894 $1,181 ====================================================== </TABLE> 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: <TABLE> <CAPTION> (Thousands) 2001 2000 1999 1998 1997 --------------------------------------------------------- <S> <C> <C> <C> <C> <C> 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 <CAPTION> ALLOWANCE FOR LOAN LOSSES 2001 2000 1999 1998 1997 --------------------------------------------------------- <S> <C> <C> <C> <C> <C> Balance at beginning of the period $ 4,803 $ 3,273 $ 2,787 $ 2,702 $ 2,435 --------------------------------------------------------- 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) --------------------------------------------------------- Total loans charged-off (1,581) (814) (1,227) (1,316) (1,441) --------------------------------------------------------- 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 --------------------------------------------------------- Total loan recoveries 683 334 363 401 383 --------------------------------------------------------- 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 --------------------------------------------------------- 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)% ========================================================= </TABLE> 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) <TABLE> <CAPTION> 2001 2000 1999 1998 1997 -------------------------------------------------------------------------------------------------- % 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 -------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> 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 -------------------------------------------------------------------------------------------------- Total $5,410 100% $4,803 100% $3,273 100% $2,787 100% $2,702 100% ================================================================================================== </TABLE> 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. <TABLE> <CAPTION> December 31 (thousands) 2001 2000 ----------------------------- <S> <C> <C> 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% </TABLE> 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. <TABLE> <CAPTION> SPECIAL ITEM: EXECUTIVE OFFICERS OF REGISTRANT - ---------------------------------------------- <S> <C> <C> 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. </TABLE> 13
<TABLE> <S> <C> <C> 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. </TABLE> 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: <TABLE> <CAPTION> Exhibit Number Description Incorporated by Reference/Attached - ------ ----------- ---------------------------------- <S> <C> <C> 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 </TABLE> *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