Horizon Financial Reports Improving Results for Fourth Quarter

Apr 25, 2001, 01:00 ET from Horizon Financial Corp.

    BELLINGHAM, Wash., April 25 /PRNewswire/ --
 Horizon Financial Corp. (Nasdaq: HRZB) today reported its best quarterly
 financial performance this fiscal year as net income for the fourth quarter
 ended March 31, 2001, totaled $2.1 million, or $.24 per fully diluted share.
 In the fourth quarter a year ago, net income was $2.3 million, or $.23 per
 fully diluted share.  For the twelve months of fiscal 2001, Horizon earned
 $8.3 million, or $.90 per fully diluted share compared to $8.7 million, or
 $.88 per fully diluted share.  All per share results reflect the 15% stock
 dividend declared on April 25, 2001 and payable on June 4, 2001.
     "Over the past twelve months, we have made great progress on reducing our
 interest rate risk," said V. Lawrence Evans, President and CEO.  "We have been
 restructuring our balance sheet by selling fixed-rate mortgage loans with
 servicing released, which traditionally we held to maturity or sold and
 retained the servicing.  As we remove these lower yielding loans from our
 portfolio and build our commercial and consumer lending business, we believe
 we can improve our net interest income, especially in the current interest
 rate environment."
     Net interest income remained relatively unchanged for both the quarter and
 the year at $5.9 million and $23.3 million respectively.  As a result of
 higher rates paid on deposits and borrowings, interest expense for the fourth
 quarter rose to $8.2 million compared to $7.0 million in the like quarter a
 year ago.  For the year, interest expense rose to $32.2 million from
 $26.3 million in fiscal 2000.  "Because we plan to continue selling loans from
 our portfolio, we believe we can reduce our reliance on higher cost CDs to
 fund future loan growth.  This approach should allow us to effectively control
 interest costs," added Evans.
     Non-interest income for the quarter was $878,000 compared to $949,000 in
 the like quarter a year ago.  For the twelve month period, non-interest income
 rose 3% to $3.0 million from $2.9 million in fiscal 2000.  Strong gains from
 the sale of securities, as well as increased service charges and fees,
 contributed to the improvement.  The net interest margin was 3.49% for the
 quarter, a 19 basis points improvement over the third quarter number, and down
 8 basis points from the fourth quarter a year ago.
     During the quarter, Horizon acquired another 66,900 shares, at an average
 price of $11.82 per share, under the stock repurchase plan authorized by the
 Board of Directors in October 2000.  Under the new plan, Horizon may acquire
 up to 10% of its outstanding stock, or approximately 780,000 shares.  At
 March 31, 2001, book value per share, as restated, was $11.05, up from
 $10.08 a year earlier.  Shareholders' equity increased to $97.9 million, from
 $95.9 million at March 31, 2000.  Total assets grew 2% to $729.7 million, up
 from $713.9 million a year ago.
     At the end of March, commercial and consumer loans totaled $236.4 million,
 or 39% of net loans, compared to $165.3 million, or 28% of loans, one year
 earlier.  Total net loans grew 2% to $597.4 million compared to $589.6 million
 a year earlier, and total deposits increased 6% to $595.9 million, compared to
 $564.3 million at March 31, 2000. Loan loss reserves increased 5% to
 $5.0 million in order to reflect the greater percentage of commercial and
 consumer loans in the portfolio.  Non-performing loans were $789,000 at
 March 31, 2001, representing just 0.12% of gross loans.  One year earlier,
 non-performing loans were $912,000, or 0.15% of loans.
     The efficiency ratio for the fourth quarter improved over the third
 quarter number to 51.2%, but was up slightly compared to 49.5% in the fourth
 quarter a year ago.  "Our goal, through sound management of our growth and
 costs, is to keep our efficiency ratio near 50% throughout fiscal 2002," added
 Evans.
     Horizon's return on average equity (ROE) was 8.58% for the fiscal year,
 and 8.80% for the fourth quarter.  ROE was 9.02% in fiscal 2000, and 9.27% in
 the fourth quarter of that fiscal year.  The bank's return on average assets
 was 1.14% for the twelve-month period, and 1.17% for the quarter, compared
 with 1.26% and 1.28% last year, respectively.
     Horizon Financial Corp. is a $730 million, state-chartered bank holding
 company headquartered in Bellingham, Washington.  The corporation's primary
 subsidiary, Horizon Bank, operates 15 full-service offices throughout Whatcom,
 Skagit and Snohomish Counties.
 
     Safe Harbor Statement:  Except for the historical information in this news
 release, the matters described herein are forward-looking statements within
 the meaning of the Private Securities Litigation Reform Act of 1995 and are
 subject to risks and uncertainties that could cause actual results to differ
 materially.  Such risks and uncertainties include those related to corporate
 strategy shifts, interest rate risk, the local and national economic
 environment, the company's ability to control costs, the fiscal and monetary
 policies of the US government, credit risk management and other risks and
 uncertainties discussed from time to time in Horizon Financial's SEC filings.
 Horizon disclaims any obligation to publicly announce future events or
 developments which affect the forward-looking statements herein.
 
 
     CONSOLIDATED STATEMENTS OF INCOME
     (dollars in thousands,      Quarter Ended Mar. 31,   Year Ended Mar. 31,
     except per share data)           2001       2000       2001        2000
 
     Interest income:
      Interest on loans             $12,635    $11,492     $49,362    $43,882
      Interest and dividends
       on investment and
       mortgage backed securities     1,546      1,509       6,475      6,065
     Total interest income           14,181     13,001      55,837     49,947
 
     Interest expense:
      Interest on deposits            7,553      6,437      29,221     24,611
      Interest on borrowings            603        522       3,018      1,646
     Total interest expense           8,156      6,959      32,239     26,257
     Net interest income              6,025      6,042      23,598     23,690
 
     Provision for loan losses          135        307         320        437
     Net interest income after
      provision for loan losses       5,890      5,735      23,278     23,253
 
     Non-interest income:
      Service fees                      571        512       2,076      1,895
      Net gain/(loss)
       on sales of loans                (67)       (26)       (251)       (97)
      Net gain/(loss) on sales
       of investment securities         203         (6)        379        185
      Other                             171        469         747        868
     Total non-interest income          878        949       2,951      2,851
 
     Non-interest expense:
      Compensation
       and employee benefits          1,833      1,727       7,303      6,761
      Building occupancy                576        600       2,300      2,201
      Other expenses                    704        763       2,659      2,761
      Data processing                   242        219         915        914
      Advertising                       178        149         579        606
     Total non-interest expense       3,533      3,458      13,756     13,243
 
     Income before
      provision for income taxes      3,235      3,226      12,473     12,861
     Provision for income taxes       1,090        975       4,202      4,180
     Net Income                      $2,145     $2,251      $8,271     $8,681
 
     Earnings per share:
      Basic earnings per share        $0.24      $0.23      $0.90       $0.89
      Fully-diluted
       earnings per share             $0.24      $0.23      $0.90       $0.88
 
     NOTE:  Share and per share data reflect the 15% stock dividend declared on
 April 25, 2001, payable on June 4, 2001.
 
 
     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
     (dollars in thousands)                          March 31,      March 31,
                                                        2001           2000
     Assets:
      Cash and due from banks                         $11,948        $16,043
      Interest-bearing deposits                        12,560          3,961
      Investment securities - Available for Sale       21,252         14,203
      Investment securities - Held to Maturity            369            869
      Mortgage-backed securities
       - Available for Sale                            47,627         50,796
      Mortgage-backed securities
       - Held to Maturity                               6,530          8,249
      Federal Home Loan Bank stock                      5,832          5,254
      Loans receivable                                597,382        589,584
      Loans held for sale                               2,382              0
      Accrued interest and dividends receivable         4,624          4,392
      Property and equipment, net                      15,214         16,192
      Goodwill, net                                       574            631
      Income tax receivable                                 0            316
      Real estate owned                                     0            324
      Other assets                                      3,442          3,100
     Total assets                                    $729,736       $713,914
 
     Liabilities:
      Deposits                                        595,914        564,327
      Securities sold under agreements
       to repurchase                                    5,938         17,853
      Other borrowed funds                             17,000         22,000
      Accounts payable and other liabilities            6,992          9,982
      Advances by borrowers for taxes and insurance     1,610          1,084
      Deferred compensation                             1,470          1,368
      Income tax payable                                  182
      Net deferred income tax liabilities               2,721          1,365
     Total liabilities                               $631,827       $617,979
 
     Stockholders' equity:
      Serial preferred stock, $1.00 par value;
       10,000,000 shares authorized,
       none issued or outstanding                          --             --
      Common stock, $1.00 par value; 30,000,000
       shares authorized; 8,861,238 and 8,642,571
       shares issued and outstanding                    8,861          8,643
      Paid-in capital                                  62,380         57,372
      Retained earnings                                23,046         33,325
      Accumulated other comprehensive income            3,982            719
      Debt related to ESOP                               (360)          (433)
      Treasury stock, 0 and
       366,000 shares, at cost (A)                         --        (3,691)
     Total stockholders' equity                       $97,909        $95,935
     Total liabilities and stockholders' equity      $729,736       $713,914
 
     (A) At March 31, 2001, the company retired 960,600 shares of treasury
 stock.
 
 
     WEIGHTED AVERAGE INTEREST RATES
                                       Quarter Ended      Year Ended March 31,
                                         March 31,              March 31,
                                       2001       2000       2001       2000
     Yield on loans                   8.46%      7.94%       8.31%      7.92%
     Yield on investments             6.77%      6.73%       6.83%      6.56%
      Yield on
       interest-earning assets        8.22%      7.78%       8.10%      7.73%
 
     Cost of deposits                 5.25%      4.72%       5.10%      4.53%
     Cost of borrowings               6.78%      5.68%       6.73%      5.64%
      Cost in
       interest-bearing liabilities   5.34%      4.78%       5.21%      4.59%
 
     Net interest spread              2.88%      3.00%       2.89%      3.14%
     Net interest margin              3.49%      3.57%       3.42%      3.65%
 
     RATIOS
     Return on average equity         8.80%      9.27%       8.58%      9.02%
     Return on average assets         1.17%      1.28%       1.14%      1.26%
     Efficiency Ratio                51.18%     49.47%
     Book Value per share (B)        $11.05     $10.08
 
     (B) Prior year data has been restated to reflect 15% stock dividend
 
     AVERAGE QUARTERLY BALANCE (in 000s)            March 31,      March 31,
                                                       2001           2000
     Loans                                           $597,423       $578,541
     Investments                                       92,614         82,480
     Total interest-earning assets                    690,037        661,021
 
     Deposits                                         583,553        553,295
     Borrowings                                        35,605         36,702
     Total interest-bearing liabilities               619,158        589,997
 
     Total assets                                    $729,736       $713,914
     Stockholders' equity                             $97,909        $95,935
 
     LOANS RECEIVABLE (in 000s)                      March 31,      March 31,
     First Mortgage Loans                              2001           2000
      1-4 Family                                     $619,395       $606,703
      1-4 Family construction                          26,716         25,912
      Participations sold                            (246,583)      (176,538)
       Subtotal                                       399,528        456,077
     Commercial construction/land dev                  30,364         18,717
     Residential Commercial RE                         24,187         21,999
     Non Residential Commercial RE                    139,232         88,323
     Commercial loans                                  20,221         14,472
     Home equity secured                               19,834         16,953
     Other consumer loans                               2,531          4,829
       Subtotal                                       635,897        621,370
     Less:
     Deferred fees                                     (6,745)        (7,397)
     Loan Loss Reserve                                 (4,977)        (4,757)
     Loans in Process                                 (26,793)       (19,632)
       Total Net Loans receivable                     597,382        589,584
 
     CONTACT:  V. Lawrence Evans, President & CEO, or Rich Jacobson, Executive
 VP & CFO, of Horizon Financial Corp., 360-733-3050
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X48283833
 
 

SOURCE Horizon Financial Corp.
    BELLINGHAM, Wash., April 25 /PRNewswire/ --
 Horizon Financial Corp. (Nasdaq: HRZB) today reported its best quarterly
 financial performance this fiscal year as net income for the fourth quarter
 ended March 31, 2001, totaled $2.1 million, or $.24 per fully diluted share.
 In the fourth quarter a year ago, net income was $2.3 million, or $.23 per
 fully diluted share.  For the twelve months of fiscal 2001, Horizon earned
 $8.3 million, or $.90 per fully diluted share compared to $8.7 million, or
 $.88 per fully diluted share.  All per share results reflect the 15% stock
 dividend declared on April 25, 2001 and payable on June 4, 2001.
     "Over the past twelve months, we have made great progress on reducing our
 interest rate risk," said V. Lawrence Evans, President and CEO.  "We have been
 restructuring our balance sheet by selling fixed-rate mortgage loans with
 servicing released, which traditionally we held to maturity or sold and
 retained the servicing.  As we remove these lower yielding loans from our
 portfolio and build our commercial and consumer lending business, we believe
 we can improve our net interest income, especially in the current interest
 rate environment."
     Net interest income remained relatively unchanged for both the quarter and
 the year at $5.9 million and $23.3 million respectively.  As a result of
 higher rates paid on deposits and borrowings, interest expense for the fourth
 quarter rose to $8.2 million compared to $7.0 million in the like quarter a
 year ago.  For the year, interest expense rose to $32.2 million from
 $26.3 million in fiscal 2000.  "Because we plan to continue selling loans from
 our portfolio, we believe we can reduce our reliance on higher cost CDs to
 fund future loan growth.  This approach should allow us to effectively control
 interest costs," added Evans.
     Non-interest income for the quarter was $878,000 compared to $949,000 in
 the like quarter a year ago.  For the twelve month period, non-interest income
 rose 3% to $3.0 million from $2.9 million in fiscal 2000.  Strong gains from
 the sale of securities, as well as increased service charges and fees,
 contributed to the improvement.  The net interest margin was 3.49% for the
 quarter, a 19 basis points improvement over the third quarter number, and down
 8 basis points from the fourth quarter a year ago.
     During the quarter, Horizon acquired another 66,900 shares, at an average
 price of $11.82 per share, under the stock repurchase plan authorized by the
 Board of Directors in October 2000.  Under the new plan, Horizon may acquire
 up to 10% of its outstanding stock, or approximately 780,000 shares.  At
 March 31, 2001, book value per share, as restated, was $11.05, up from
 $10.08 a year earlier.  Shareholders' equity increased to $97.9 million, from
 $95.9 million at March 31, 2000.  Total assets grew 2% to $729.7 million, up
 from $713.9 million a year ago.
     At the end of March, commercial and consumer loans totaled $236.4 million,
 or 39% of net loans, compared to $165.3 million, or 28% of loans, one year
 earlier.  Total net loans grew 2% to $597.4 million compared to $589.6 million
 a year earlier, and total deposits increased 6% to $595.9 million, compared to
 $564.3 million at March 31, 2000. Loan loss reserves increased 5% to
 $5.0 million in order to reflect the greater percentage of commercial and
 consumer loans in the portfolio.  Non-performing loans were $789,000 at
 March 31, 2001, representing just 0.12% of gross loans.  One year earlier,
 non-performing loans were $912,000, or 0.15% of loans.
     The efficiency ratio for the fourth quarter improved over the third
 quarter number to 51.2%, but was up slightly compared to 49.5% in the fourth
 quarter a year ago.  "Our goal, through sound management of our growth and
 costs, is to keep our efficiency ratio near 50% throughout fiscal 2002," added
 Evans.
     Horizon's return on average equity (ROE) was 8.58% for the fiscal year,
 and 8.80% for the fourth quarter.  ROE was 9.02% in fiscal 2000, and 9.27% in
 the fourth quarter of that fiscal year.  The bank's return on average assets
 was 1.14% for the twelve-month period, and 1.17% for the quarter, compared
 with 1.26% and 1.28% last year, respectively.
     Horizon Financial Corp. is a $730 million, state-chartered bank holding
 company headquartered in Bellingham, Washington.  The corporation's primary
 subsidiary, Horizon Bank, operates 15 full-service offices throughout Whatcom,
 Skagit and Snohomish Counties.
 
     Safe Harbor Statement:  Except for the historical information in this news
 release, the matters described herein are forward-looking statements within
 the meaning of the Private Securities Litigation Reform Act of 1995 and are
 subject to risks and uncertainties that could cause actual results to differ
 materially.  Such risks and uncertainties include those related to corporate
 strategy shifts, interest rate risk, the local and national economic
 environment, the company's ability to control costs, the fiscal and monetary
 policies of the US government, credit risk management and other risks and
 uncertainties discussed from time to time in Horizon Financial's SEC filings.
 Horizon disclaims any obligation to publicly announce future events or
 developments which affect the forward-looking statements herein.
 
 
     CONSOLIDATED STATEMENTS OF INCOME
     (dollars in thousands,      Quarter Ended Mar. 31,   Year Ended Mar. 31,
     except per share data)           2001       2000       2001        2000
 
     Interest income:
      Interest on loans             $12,635    $11,492     $49,362    $43,882
      Interest and dividends
       on investment and
       mortgage backed securities     1,546      1,509       6,475      6,065
     Total interest income           14,181     13,001      55,837     49,947
 
     Interest expense:
      Interest on deposits            7,553      6,437      29,221     24,611
      Interest on borrowings            603        522       3,018      1,646
     Total interest expense           8,156      6,959      32,239     26,257
     Net interest income              6,025      6,042      23,598     23,690
 
     Provision for loan losses          135        307         320        437
     Net interest income after
      provision for loan losses       5,890      5,735      23,278     23,253
 
     Non-interest income:
      Service fees                      571        512       2,076      1,895
      Net gain/(loss)
       on sales of loans                (67)       (26)       (251)       (97)
      Net gain/(loss) on sales
       of investment securities         203         (6)        379        185
      Other                             171        469         747        868
     Total non-interest income          878        949       2,951      2,851
 
     Non-interest expense:
      Compensation
       and employee benefits          1,833      1,727       7,303      6,761
      Building occupancy                576        600       2,300      2,201
      Other expenses                    704        763       2,659      2,761
      Data processing                   242        219         915        914
      Advertising                       178        149         579        606
     Total non-interest expense       3,533      3,458      13,756     13,243
 
     Income before
      provision for income taxes      3,235      3,226      12,473     12,861
     Provision for income taxes       1,090        975       4,202      4,180
     Net Income                      $2,145     $2,251      $8,271     $8,681
 
     Earnings per share:
      Basic earnings per share        $0.24      $0.23      $0.90       $0.89
      Fully-diluted
       earnings per share             $0.24      $0.23      $0.90       $0.88
 
     NOTE:  Share and per share data reflect the 15% stock dividend declared on
 April 25, 2001, payable on June 4, 2001.
 
 
     CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
     (dollars in thousands)                          March 31,      March 31,
                                                        2001           2000
     Assets:
      Cash and due from banks                         $11,948        $16,043
      Interest-bearing deposits                        12,560          3,961
      Investment securities - Available for Sale       21,252         14,203
      Investment securities - Held to Maturity            369            869
      Mortgage-backed securities
       - Available for Sale                            47,627         50,796
      Mortgage-backed securities
       - Held to Maturity                               6,530          8,249
      Federal Home Loan Bank stock                      5,832          5,254
      Loans receivable                                597,382        589,584
      Loans held for sale                               2,382              0
      Accrued interest and dividends receivable         4,624          4,392
      Property and equipment, net                      15,214         16,192
      Goodwill, net                                       574            631
      Income tax receivable                                 0            316
      Real estate owned                                     0            324
      Other assets                                      3,442          3,100
     Total assets                                    $729,736       $713,914
 
     Liabilities:
      Deposits                                        595,914        564,327
      Securities sold under agreements
       to repurchase                                    5,938         17,853
      Other borrowed funds                             17,000         22,000
      Accounts payable and other liabilities            6,992          9,982
      Advances by borrowers for taxes and insurance     1,610          1,084
      Deferred compensation                             1,470          1,368
      Income tax payable                                  182
      Net deferred income tax liabilities               2,721          1,365
     Total liabilities                               $631,827       $617,979
 
     Stockholders' equity:
      Serial preferred stock, $1.00 par value;
       10,000,000 shares authorized,
       none issued or outstanding                          --             --
      Common stock, $1.00 par value; 30,000,000
       shares authorized; 8,861,238 and 8,642,571
       shares issued and outstanding                    8,861          8,643
      Paid-in capital                                  62,380         57,372
      Retained earnings                                23,046         33,325
      Accumulated other comprehensive income            3,982            719
      Debt related to ESOP                               (360)          (433)
      Treasury stock, 0 and
       366,000 shares, at cost (A)                         --        (3,691)
     Total stockholders' equity                       $97,909        $95,935
     Total liabilities and stockholders' equity      $729,736       $713,914
 
     (A) At March 31, 2001, the company retired 960,600 shares of treasury
 stock.
 
 
     WEIGHTED AVERAGE INTEREST RATES
                                       Quarter Ended      Year Ended March 31,
                                         March 31,              March 31,
                                       2001       2000       2001       2000
     Yield on loans                   8.46%      7.94%       8.31%      7.92%
     Yield on investments             6.77%      6.73%       6.83%      6.56%
      Yield on
       interest-earning assets        8.22%      7.78%       8.10%      7.73%
 
     Cost of deposits                 5.25%      4.72%       5.10%      4.53%
     Cost of borrowings               6.78%      5.68%       6.73%      5.64%
      Cost in
       interest-bearing liabilities   5.34%      4.78%       5.21%      4.59%
 
     Net interest spread              2.88%      3.00%       2.89%      3.14%
     Net interest margin              3.49%      3.57%       3.42%      3.65%
 
     RATIOS
     Return on average equity         8.80%      9.27%       8.58%      9.02%
     Return on average assets         1.17%      1.28%       1.14%      1.26%
     Efficiency Ratio                51.18%     49.47%
     Book Value per share (B)        $11.05     $10.08
 
     (B) Prior year data has been restated to reflect 15% stock dividend
 
     AVERAGE QUARTERLY BALANCE (in 000s)            March 31,      March 31,
                                                       2001           2000
     Loans                                           $597,423       $578,541
     Investments                                       92,614         82,480
     Total interest-earning assets                    690,037        661,021
 
     Deposits                                         583,553        553,295
     Borrowings                                        35,605         36,702
     Total interest-bearing liabilities               619,158        589,997
 
     Total assets                                    $729,736       $713,914
     Stockholders' equity                             $97,909        $95,935
 
     LOANS RECEIVABLE (in 000s)                      March 31,      March 31,
     First Mortgage Loans                              2001           2000
      1-4 Family                                     $619,395       $606,703
      1-4 Family construction                          26,716         25,912
      Participations sold                            (246,583)      (176,538)
       Subtotal                                       399,528        456,077
     Commercial construction/land dev                  30,364         18,717
     Residential Commercial RE                         24,187         21,999
     Non Residential Commercial RE                    139,232         88,323
     Commercial loans                                  20,221         14,472
     Home equity secured                               19,834         16,953
     Other consumer loans                               2,531          4,829
       Subtotal                                       635,897        621,370
     Less:
     Deferred fees                                     (6,745)        (7,397)
     Loan Loss Reserve                                 (4,977)        (4,757)
     Loans in Process                                 (26,793)       (19,632)
       Total Net Loans receivable                     597,382        589,584
 
     CONTACT:  V. Lawrence Evans, President & CEO, or Rich Jacobson, Executive
 VP & CFO, of Horizon Financial Corp., 360-733-3050
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X48283833
 
 SOURCE  Horizon Financial Corp.