<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended:  SEPTEMBER 30, 1998       Commission File Number:  0-11672
                  ---------------------                             -----------

                              HORIZON BANCORP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             WEST VIRGINIA                              55-0631939
----------------------------------------  -------------------------------------
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

           BOX D, BECKLEY, WV                           25802-2803
----------------------------------------  -------------------------------------
(Address of principal executive offices)                (Zip Code)

                                 (304) 255-7000
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.


                              Yes  X        No
                                 -----        -----


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


<TABLE>
<CAPTION>
 COMMON STOCK, $1.00 PAR VALUE                     9,149,775 SHARES
--------------------------------           -------------------------------
<S>                                        <C>
            Class                          Outstanding at October 30, 1998
</TABLE>


<PAGE>   2


                              HORIZON BANCORP, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
PART I  FINANCIAL INFORMATION

<S>           <C>
   Item 1.    Financial Statements (Unaudited)
              Condensed Consolidated Balance Sheets - September 30, 1998 and December 31, 1997

              Condensed Consolidated Statements of Income for The Nine Months Ended 
              September 30, 1998 and 1997

              Condensed Consolidated Statements of Shareholders' Equity for The Nine Months Ended 
              September 30, 1998 and 1997

              Condensed Consolidated Statements of Cash Flows for The Nine Months Ended 
              September 30, 1998 and 1997

              Notes to Condensed Consolidated Financial Statements

   Item 2.    Management's Discussion and Analysis of Financial Condition and 
              Results of Operations

PART 11  OTHER INFORMATION

   Item 1.    Legal Proceedings
   Item 4.    Submissions of Matters to Vote of Security Holders
   Item 6.    Exhibits and Reports on Form 8-K

SIGNATURES

EXHIBIT 11
              Computation of  Earnings Per Common Share
EXHIBIT 27
              Financial Data Schedule
</TABLE>


<PAGE>   3


                              HORIZON BANCORP, INC.

                                     PART 1

                              FINANCIAL INFORMATION



This Form 10-Q includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934. This forward-looking information is identified by phrases
such as the Company or Horizon (as the case may be) "expects" or "anticipates"
and words of similar effect. Actual results achieved by Horizon may differ
materially from those projected in the forward-looking information. Factors that
could cause such a difference include, among others: changes in interest rates
and economic and other market conditions generally and in Horizon's principle
markets, competition for origination and servicing of mortgage loans, changes in
regulations and government policies affecting banks and their subsidiaries,
including changes in monetary policies, inability of Horizon or third parties to
meet their Year 2000 timetables, and failure of Horizon or of third parties upon
which Horizon relies to be Year 2000 compliant. The forward-looking financial
information is provided to assist investors and Horizon stockholders in
understanding anticipated future financial operations of Horizon and are
included pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Horizon disclaims any intent or obligation to
update this forward-looking financial information.

<PAGE>   4



--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
--------------------------------------------------------------------------------
HORIZON BANCORP, INC.
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30     DECEMBER 31
                                                                      1998             1997
                                                                  ----------------------------
<S>                                                                <C>             <C>       
ASSETS
Cash and due from banks                                            $   25,293      $   31,262
Federal funds sold                                                     28,770          14,035
                                                                  ----------------------------
                               Cash and cash equivalents               54,063          45,297

Investment securities:
  Available-for-sale, at fair value                                   175,170         173,864
  Held-to-maturity, at cost (approximate fair value of $41,911
  at September 30, 1998, and $42,771 at December 31, 1997)             40,415          41,554

Loans:
  Total loans                                                         756,392         728,239
  Less:  Allowance for loan losses                                     (9,644)        (10,517)
                                                                  ----------------------------
                                               Net loans              746,748         717,722
Premises and equipment, net                                            16,495          17,123
Accrued interest receivable and other assets                           27,569          24,721
                                                                  ----------------------------
                                            Total assets           $1,060,460      $1,020,281
                                                                   ==========================

LIABILITIES AND SHAREHOLDERS' EQUITY
  Deposits:
  Non-interest bearing                                             $  117,565      $  113,415
  Interest bearing                                                    747,225         727,892
                                                                  ----------------------------
                                          Total deposits              864,790         841,307
Short-term borrowings                                                  60,910          42,642
Long-term borrowings                                                    2,334           7,102
Accrued interest payable and other liabilities                         14,541          15,208
                                                                  ----------------------------
                                       Total liabilities              942,575         906,259

Shareholders' equity:
  Common stock, $1 par value; 20,000 shares authorized;
   9,313 shares issued, including 177 shares in treasury at
  September 30, 1998 and 9,310 shares issued, including 106
  shares in treasury at December 31, 1997                               9,313           9,310
  Capital surplus                                                      19,818          19,784
  Retained earnings                                                    91,696          86,768
  Treasury stock, at cost                                              (5,052)         (2,938)
  Accumulated other comprehensive income                                2,110           1,098
                                                                  ----------------------------
                              Total shareholders' equity              117,885         114,022
                                                                  ----------------------------
               Total liabilites and shareholders' equity           $1,060,460      $1,020,281
                                                                   ==========================
</TABLE>





 See notes to consolidated financial statements.


<PAGE>   5



--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
--------------------------------------------------------------------------------
HORIZON BANCORP, INC.
(AMOUNTS IN THOUSANDS, EXEMPT SHARE DATA) 


<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED        NINE MONTHS ENDED
                                                           SEPTEMBER 30              SEPTEMBER 30
                                                         1998         1997        1998          1997
                                                      ---------     -------     --------      --------  
<S>                                                     <C>         <C>         <C>           <C>     
Interest income:
  Interest and fees on loans                            $17,612     $16,029     $ 51,548      $ 45,180
  Interest and dividends on investment securities:
    Taxable                                               2,117       2,613        6,921         8,254
    Tax-exempt                                              825         798        2,406         2,413
  Federal funds sold and other                              367          76        1,074           145
                                                        -------------------     ----------------------
                             Total interest income       20,921      19,516       61,949        55,992
Interest expense:
  Deposits                                                7,935       7,422       24,820        21,615
  Other borrowings                                          888         428        1,974           860
                                                        -------------------     ----------------------
                            Total interest expense        8,823       7,850       26,794        22,475
                                                        -------------------     ----------------------
                               Net interest income       12,098      11,666       35,155        33,517
Provision for loan losses                                 1,103         409        2,369         1,509
                                                        -------------------     ----------------------
  Net interest income after provision for loan losses    10,995      11,257       32,786        32,008

Other income:
  Service charges and fees                                1,142       1,033        3,291         2,897
  Investment securities gains (losses)                       --           4          (22)          (32)
  Other                                                     519         483        1,730         1,417
                                                        -------------------     ----------------------
                                Total other income        1,661       1,520        4,999         4,282
Other expenses:
  Salaries and employee benefits                          3,372       3,293        9,842         9,597
  Net occupancy expense                                     516         428        1,369         1,353
  Equipment expense                                         687         630        2,051         1,758
  Outside data processing                                   588         511        1,713         1,562
  Advertising                                                60          85          222           379
  Other                                                   3,158       2,395        7,149         5,772
                                                        -------------------     ----------------------
                              Total other expenses        8,381       7,342       22,346        20,421
                                                        -------------------     ----------------------
                        Income before income taxes        4,275       5,435       15,439        15,869
Applicable income taxes                                   1,460       1,908        5,300         5,588
                                                        -------------------     ----------------------
                                        Net income      $ 2,815     $ 3,527     $ 10,139      $ 10,281
                                                        ===================     ======================

Earnings per common share:
  Basic                                                 $  0.31     $  0.38     $   1.11      $   1.11
                                                        =======     =======     ========      ========
  Diluted                                               $  0.31     $  0.38     $   1.10      $   1.11
                                                        =======     =======     ========      ========
Average common shares outstanding:
  Basic                                                   9,136       9,246        9,149         9,270
                                                        =======     =======     ========      ========
  Diluted                                                 9,195       9,277        9,203         9,293
                                                        =======     =======     ========      ========
</TABLE>



See notes to consolidated financial statements.


<PAGE>   6


--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
--------------------------------------------------------------------------------

HORIZON BANCORP, INC.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)




<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                                                                                           OTHER
                                                       COMMON      CAPITAL     RETAINED      TREASURY  COMPREHENSIVE
                                                        STOCK      SURPLUS     EARNINGS        STOCK       INCOME      TOTAL
                                                       -------     -------     --------      --------  ------------- ---------
<S>                                                    <C>         <C>         <C>           <C>          <C>        <C>      
Balances at December 31, 1997                          $ 9,310     $19,784     $ 86,768      $(2,938)     $1,098     $ 114,022
Comprehensive income:
  Net income                                                --          --       10,139           --          --        10,139
  Other comprehensive income, net of tax:
    Unrealized gains on available-for-sale
    securities, net of reclassification adjustment          --          --           --           --       1,012         1,012
                                                                                                                     ---------
Comprehensive income                                                                                                    11,151
Cash dividends ($0.57 per share)                            --          --       (5,211)          --          --        (5,211)
Purchase of treasury shares                                 --          --           --       (2,114)         --        (2,114)
Exercise of stock options                                    3          34           --           --          --            37
                                                       -----------------------------------------------------------------------
Balances at September 30, 1998                         $ 9,313     $19,818     $ 91,696      $(5,052)     $2,110     $ 117,885
                                                       =======================================================================

DISCLOSURE OF RECLASSIFICATION AMOUNT:
Unrealized holding gains on available-for-sale
  securities arising during the period                                                                    $1,004
Less:  reclassification adjustment for losses
   realized in net income                                                                                     (8)
                                                                                                          ------
Net unrealized losses on available-for-sale
  securities, net of tax                                                                                  $1,012
                                                                                                          ======
</TABLE>




See notes to consolidated financial statements.


<PAGE>   7


--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

HORIZON BANCORP, INC.
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30
                                                                           1998          1997
                                                                         --------      --------
<S>                                                                      <C>           <C>     
OPERATING ACTIVITIES
Net income                                                               $ 10,139      $ 10,281
Adjustments to reconcile net income to net cash provided by
  operating activities:
    Depreciation and Amortization                                           2,027         1,460
    Provision for loan losses                                               2,369         1,509
    Loss on sale of investment securities                                      22            32
    Change in accrued interest receivable and other assets                 (3,399)       (2,596)
    Change in accrued interest payable and other liabilities               (1,388)        2,554
                                                                         ----------------------
                           Net cash provided by operating activities        9,770        13,240


INVESTING ACTIVITIES
Proceeds from sales of available-for-sale securities                        6,472        18,057
Proceeds from maturities of available-for-sale securities                  44,585        15,266
Purchases of available-for-sale securities                                (51,596)      (12,390)
Proceeds from maturities of held-to-maturity securities                     2,070         1,188
Purchases of held-to-maturity securities                                       --          (300)
Purchase of subsidiary, net of cash acquired                                   --       (13,419)
Net increase in loans                                                     (31,395)      (51,781)
Purchases of premises and equipment                                          (835)       (1,154)
                                                                         ----------------------
                               Net cash used in investing activities      (30,699)      (44,533)


FINANCING ACTIVITIES
Net increase in deposits                                                   23,483        (1,332)
Net decrease in long-term borrowings                                       (4,768)           --
Net increase in short-term borrowings                                      18,268        33,843
Cash dividends paid                                                        (5,211)       (4,730)
Purchase of treasury shares                                                (2,114)       (2,584)
Exercise of stock options                                                      37            12
                                                                         ----------------------
                           Net cash provided by financing activities       29,695        25,209
                Net increase (decrease) in cash and cash equivalents        8,766        (6,084)
Cash and cash equivalents at beginning of period                           45,297        38,958
                                                                         ----------------------
                          Cash and cash equivalents at end of period     $ 54,063      $ 32,874
                                                                         ======================
</TABLE>




See notes to consolidated financial statements.


<PAGE>   8


--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
HORIZON BANCORP, INC.
SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

--------------------------------------------------------------------------------
NOTE 1.  BASIS OF PRESENTATION
--------------------------------------------------------------------------------


The accompanying unaudited interim consolidated financial statements have been
prepared by Horizon Bancorp, Inc. ("Horizon"), in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included. The results of operations
for the nine month period ended September 30, 1998, are not necessarily
indicative of the results to be expected for the year ending December 31, 1998.

These financial statements should be read in conjunction with the financial
statements and notes included in the 1997 Annual Report and Form 10-K of Horizon
Bancorp, Inc.


--------------------------------------------------------------------------------
NOTE 2.  MERGERS AND ACQUISITIONS
--------------------------------------------------------------------------------


On August 7, 1998, Horizon Bancorp, Inc., a West Virginia corporation
("Horizon"), entered into an Agreement and Plan of Reorganization with City
Holding Company, a West Virginia corporation ("City Holding"), for a tax-free
merger of the two companies under which each outstanding share of common stock,
par value $1.00 per share, of Horizon ("Horizon Common Stock") would be
converted into the number of shares of common stock, par value $2.50 per share,
of City Holding ("City Holding Common Stock"). Under the agreement, the exchange
ratio is determined by dividing $45.00 per share of Horizon Common Stock (the
"Common Stock Price Per Share") by the average closing price of the City Holding
Common Stock as reported on the Nasdaq National Market for each of the 10
trading days ending on the 10th day prior to the day of the effective time of
the merger between Horizon and City Holding (the "Average Close Price"), which
quotient will be rounded to the nearest one-one thousandth (the "Exchange
Ratio"); provided that if the Average Close Price is $44.50 or greater, then the
Exchange Ratio shall be 1.011 and if the Average Close Price is $40.50 or less,
then the Exchange Ratio shall be 1.111.

<PAGE>   9


--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
NOTE 3. INVESTMENT SECURITIES
--------------------------------------------------------------------------------

Management determines the appropriate classification of securities at the time
of purchase. Debt securities are classified as held-to-maturity when Horizon has
the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost.

Debt securities not classified as held-to-maturity and marketable equity
securities are classified as available-for-sale. Available-for-sale securities
are stated at fair value, with the unrealized gains and losses, net of deferred
income taxes, reported in a separate component of shareholders' equity. Horizon
does not hold investment securities for trading purposes.

The amortized cost and estimated fair values of investment securities are as
follows:


<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30, 1998
                                                        -----------------------------------------------
                                                                      GROSS        GROSS      ESTIMATED
                                                        AMORTIZED   UNREALIZED   UNREALIZED      FAIR
                                                           COST       GAINS        LOSSES       VALUE
                                                        -----------------------------------------------
<S>                                                     <C>          <C>           <C>        <C>     
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury securities and obligations of U.S. 
  government agencies and corporations                  $130,208     $2,477        $ --       $132,685
Obligations of state and political subdivisions           27,877        951          --         28,828
Mortgage-backed securities                                 5,882         46          (6)         5,922
Other securities                                           7,609        210         (84)         7,735
                                                        -----------------------------------------------
                                             Totals     $171,576     $3,684        $(90)      $175,170
                                                        ===============================================
                                                                                                      
HELD-TO-MATURITY SECURITIES                                                                           
Obligations of state and political subdivisions         $ 40,415     $1,496        $ --       $ 41,911
                                                        ===============================================

                                                                      DECEMBER 31, 1997
                                                        -----------------------------------------------
                                                                      GROSS        GROSS      ESTIMATED
                                                        AMORTIZED   UNREALIZED   UNREALIZED      FAIR
                                                           COST       GAINS        LOSSES       VALUE
                                                        -----------------------------------------------
<S>                                                     <C>          <C>           <C>        <C>      
AVAILABLE-FOR-SALE SECURITIES                                                                          
U.S. Treasury securities and obligations of U.S.                                                       
  government agencies and corporations                  $131,426     $1,206       $ (80)      $132,552 
Obligations of state and political subdivisions           21,038        642          --         21,680 
Mortgage-backed securities                                 9,668         53         (49)         9,672 
Other securities                                           9,873        111         (24)         9,960 
                                                        -----------------------------------------------
                                             Totals     $172,005     $2,012       $(153)      $173,864 
                                                        ===============================================
HELD-TO-MATURITY SECURITIES                                                                            
Obligations of state and political subdivisions         $ 41,554     $1,222       $  (5)      $ 42,771 
                                                        ===============================================
</TABLE>


<PAGE>   10
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
NOTE 4.  ALLOWANCE FOR LOAN LOSSES
--------------------------------------------------------------------------------


A summary of changes in the allowance for loan losses follows:


<TABLE>
<CAPTION>
                                                              SEPTEMBER 30
                                                           1998          1997
                                                          --------------------
<S>                                                       <C>            <C>  
Balance at beginning of period                            10,517         9,607

Charge-offs                                               (4,248)       (2,316)
Recoveries                                                 1,006         1,748
                                                          --------------------
Net charge-offs                                           (3,242)         (568)

Provision for loan losses                                  2,369         1,509
                                                          --------------------
                            Balance at end of period       9,644        10,548
                                                          ====================

Allowance for loan losses as a % of total loans             1.28%         1.54%
Earnings coverage of net charge-offs                        3.13X        18.10X
</TABLE>



At September 30, 1998, the recorded investment in loans that are considered to
be impaired was not significant.

--------------------------------------------------------------------------------
NOTE 5.  NEW ACCOUNTING STANDARDS
--------------------------------------------------------------------------------

On January 1, 1998, Horizon adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 125, Accounting For Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities (Statement 125), relating to
repurchase agreements, securities lending and other similar transactions and
pledged collateral, which had been delayed until after December 31, 1997 by SFAS
No. 127, Deferral of the Effective Date of Certain Provisions of FASB Statement
No. 125, an amendment of FASB Statement No. 125 (Statement 127). Statement 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities based on a consistent
application of "finanical-components approach" that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered and derecognizes
financial liabilities when extinguished. Statement 125 provides standards for
consistently distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. The adoption of the additional provisions
of Statement 125 as amended by Statement 127 resulted in no material impact on
Horizon's financial position or results of operations.

On January 1, 1998, Horizon also adopted SFAS No. 130, Reporting Comprehensive
Income. This statement establishes standards for reporting the components of
comprehensive income and requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
included in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income includes net income as well as
certain items that are reported directly within a separate component of
shareholders' equity and bypass net income. The adoption of Statement 130 did
not have a material impact on 



<PAGE>   11

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

Horizon's financial position or results of operations. Comprehensive income for
the third quarter of 1998 and 1997 approximated $11,151 and $3,889.

In June 1997, the FASB issued Statement number 31, "Disclosures About Segments
of an Enterprise and Related Information", which is effective for fiscal years
beginning after December 15, 1997. This statement requires public companies to
disclose certain information about reportable operating segments in complete
sets of financial statements of the company and in interim condensed financial
statements. However, the provisions of this statement do not require the
disclosure of segment information in interim financial statements in the initial
year of application, therefore, no such disclosures are required herein. These
disclosure requirements will have no effect on Horizon's financial position or
results of operations.

In February 1998, the Financial Accounting Standards Board (FASB) issued
Statement 132, Employers' Disclosures About Pension and Other Postretirement
Benefits--an amendment of FASB Statements No. 87, 88, and 106. This Statement
revises employers' disclosures about pension and other postretirement benefit
plans, but does not change the measurement or recognition of those plans. It
standardizes the disclosure requirements to the extent practicable, requires
additional information on changes in the benefit obligations and fair values
disclosures that are no longer as useful as they were when Statements 87, 88 and
106 were issued. This Statement is effective for fiscal years beginning after
December 15, 1997. These disclosure requirements will have no material impact on
Horizon's financial position or results of operations.



<PAGE>   12


--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
INTRODUCTION

Horizon Bancorp, Inc., ("Horizon") is a multi-bank holding company headquartered
in Beckley, West Virginia. Horizon engages in commercial banking activities and
provides financial and trust services to individuals and commercial customers
primarily in Fayette, Greenbrier, Pocahontas, Raleigh, Summers, Cabell, Wayne,
and Lincoln Counties of West Virginia.

MERGERS AND ACQUISITIONS

On August 7, 1998, Horizon Bancorp, Inc., a West Virginia corporation
("Horizon"), entered into an Agreement and Plan of Reorganization with City
Holding Company, a West Virginia corporation ("City Holding"), for a tax-free
merger of the two companies under which each outstanding share of common stock,
par value $1.00 per share, of Horizon ("Horizon Common Stock") would be
converted into the number of shares of common stock, par value $2.50 per share,
of City Holding ("City Holding Common Stock"). Under the agreement, the exchange
ratio is determined by dividing $45.00 per share of Horizon Common Stock (the
"Common Stock Price Per Share") by the average closing price of the City Holding
Common Stock as reported on the Nasdaq National Market for each of the 10
trading days ending on the 10th day prior to the day of the effective time of
the merger between Horizon and City Holding (the "Average Close Price"), which
quotient will be rounded to the nearest one-one thousandth (the "Exchange
Ratio"); provided that if the Average Close Price is $44.50 or greater, then the
Exchange Ratio shall be 1.011 and if the Average Close Price is $40.50 or less,
then the Exchange Ratio shall be 1.111.

The following discussion and analysis is provided to assist readers of the
consolidated financial statements in understanding the operating performance of
Horizon. This discussion should be read in conjunction with the December 31,
1997 consolidated financial statements and the accompanying notes to the
financial statements included in the 1997 annual report.

Throughout the following discussion, dollars are expressed in thousands, except
per share data.

RESULTS OF OPERATIONS

Horizon reported consolidated net income for the first nine months of 1998 of
$10,139, or $1.10 per share (diluted). For the nine months ended September 30,
1997, net income was $10,281, or $1.11 per share (diluted). Net income for the
three months ended September 30, 1998 was $2,815 or $0.31 per share (diluted),
compared with $3,527 or $0.38 per share (diluted) for the third quarter of 1997.

Return on average assets (ROA) measures the effectiveness of the utilization of
assets to produce net income while return on average equity (ROE) measures
income earned compared with the amount of shareholders' investment. For the nine
months ended September 30, 1998, Horizon's ROA was 1.28%, compared to 1.44% for
the nine months ended September 30, 1997. For the nine months ended September
30, 1998, Horizon's ROE totaled 11.65%, compared to 12.33% for the nine months
ended September 30, 1997.

NET INTEREST INCOME

Net interest income is Horizon's largest source of earnings. Net interest income
is influenced by the volume and relative yield of earning assets and cost of
interest-bearing liabilities and the relative sensitivity of such assets and
liabilities to changes in interest rates. Net interest income is presented and
discussed on a fully tax-equivalent basis in the following discussion.

Net interest income, on a fully taxable equivalent basis, increased $1,648 or
4.73% from $34,831 in the first nine months of 1997 to $36,479 for the first
nine months of 1998. As interest income increased $5,967 or 10.41%
while interest expense increased $4,319 or 19.22%. The increase in interest
income resulted from an increase in volume and changes in the mix of earning
assets. Average loans, Horizon's highest yielding assets, increased $98,533 or
15.33% during the nine months ended September 30, 1998, from the same period of
1997. For the nine months ended September 30, 1998, average investment
securities declined $22,625 or 9.56% from the previous period of 1997. The
decline in investment securities was used to fund a portion of the loan growth.
In addition, average federal funds sold increased $23,027 or 654.18% during the
periods analyzed, primarily due to management's asset/liability policy of 
maximizing earnings while maintaining a certain level of liquidity to fund 
additional loan growth.

The following table summarizes the composition of average interest-earning
assets and average interest-bearing liabilities, along with the related income
or expense and the weighted average yield or cost of such funds.



<PAGE>   13
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


                              HORIZON BANCORP, INC.
                           NET INTEREST MARGIN REPORT
                               SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
                                                                                       NET INTEREST MARGIN
                                                               ------------------------------------------------------------------
                                                                       SEPTEMBER 30, 1998                SEPTEMBER 30, 1997
                                                               ------------------------------------------------------------------
                                                                 AVERAGE       INCOME/    YIELD/    AVERAGE      INCOME/   YIELD/
                                                                 BALANCES      EXPENSE     COST     BALANCES     EXPENSE    COST
                                                               ---------------------------------  -------------------------------
<S>                                                            <C>            <C>         <C>     <C>           <C>         <C> 
ASSETS
Interest-earning assets:
  Federal funds sold                                           $   26,547     $ 1,074       5.4%  $   3,520     $   145     5.5%
  Investment securities:                                               --
    Taxable                                                       148,779       6,921       6.2%    173,892       8,254     6.3%
    Tax exempt                                                     65,179       3,625       7.4%     62,691       3,680     7.8%
                                                               ------------------------------------------------------------------
                                Total investment securities       213,958      10,546       6.6%    236,583      11,934     6.7%
                                                               ------------------------------------------------------------------

Total loans                                                       751,525      51,653       9.2%    653,099      45,227     9.2%
                                                               ------------------------------------------------------------------
                    Total earning assets and interest income      992,030      63,273       8.5%    893,202      57,306     8.6%

Noninterest earning assets:
  Cash and due from banks                                          33,103                            28,569
  Premises and equipment                                           16,928                            16,628
  Other assets                                                     22,263                            22,717
  Less: Allowance for loan losses                                 (10,153)                          (10,260)
                                                               ----------                         --------- 
                                             Total assets      $1,054,171                         $ 950,856
                                                               ==========                         =========

LIABILITIES & SHAREHOLDERS' EQUITY 
Interest bearing liabilities:
  Demand deposits                                                $153,125     $ 3,297       2.9%  $ 134,732     $ 2,602     2.6%
  Savings deposits                                                163,637       3,782       3.1%    172,409       3,943     3.0%
  Time deposits                                                   427,007      17,741       5.5%    377,232      15,070     5.3%
                                                               ------------------------------------------------------------------
                            Total interest bearing deposits       743,769      24,820       4.4%    684,373      21,615     4.2%

Other borrowings                                                   54,543       1,974       4.8%     28,054         860     4.1%
                                                               ------------------------------------------------------------------
     Total interest bearing liabilities and interest expense      798,312      26,794       4.5%    712,427      22,475     4.2%
                                                               ------------------------------------------------------------------

Noninterest bearing liabilities:
  Demand deposits                                                 119,672                           114,227
  Other                                                            20,173                            13,023
                                                               ------------------------------------------------------------------
                                          Total liabilities       938,157                           839,677
                                                               ----------                         ---------
Shareholders' equity                                              116,014                           111,179
                                                               ----------                         ---------
                  Total liabilities and shareholders' equity   $1,054,171                         $ 950,856
                                                               ==========                         =========

Net interest income                                                           $36,479                           $34,831
                                                                              =======                           =======
Spread                                                                                      4.0%                            4.4%
                                                                                            ===                             === 
Net interest margin                                                                         4.9%                            5.2%
                                                                                            ===                             === 
</TABLE>



<PAGE>   14

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Horizon's net interest margin for the nine months ended September 30, 1998,
decreased 30 basis points from the net interest margin for the nine months ended
September 30, 1997. Average interest-bearing liabilities increased $85,885 or
12.06% from $712,427 at September 30, 1997, to $798,312 at September 30, 1998.
The increase is a result of a $18,393 or 13.65% increase in interest-bearing
demand deposits and an increase of $49,775 or 13.19% in average certificates of
deposit coupled with a decrease of $8,772 or 5.09% in regular savings. Average
short-term borrowings increased $18,369 or 65.48% due to managements efforts in
developing relationships with commercial customers using the repurchase
agreement or sweep product. Average long-term borrowings increased $8,120 or
100% from the same period in 1997 as a result of the acquisition of Beckley
Bancorp, Inc. during the third quarter of 1997.

ALLOWANCE FOR LOAN LOSSES

At September 30, 1998, the allowance for loan losses as a percentage of total
loans decreased to 1.28% from 1.45% at December 31, 1997. Net charge-offs were
$3,242 for the nine months ended September 30, 1998, compared to net charge-offs
of $568 for the same period in 1997. The increase in net charge-offs was due to
increased losses, primarily in the indirect lending portfolio, a significant
recovery on a commercial loan in 1997 with no similar amount of recovery in
1998, and growth in the loan portfolio. The provision for loan losses increased
$860 or 56.99% from $1,509 for the period ended September 30, 1997 to $2,369 for
the nine months ended September 30, 1998.

During the third quarter of 1998, Horizon experienced a significant
deterioration in certain segments of its indirect lending portfolio. In
response, the company withdrew from the respective markets and tightened
underwriting standards in remaining markets. As a result of these conditions,
the Company experienced an increase in losses on indirect lending. Accordingly,
the Company increased its provision for loan losses to $1,103 from $409 in 1997
after considering the portion of its allowance for loan losses allocated to
indirect lending. Management feels the provision is adequate to maintain the
allowance at the current level which is supported by Horizon's internal
monitoring system.

Total nonperforming loans were 1.49% of total loans at September 30, 1998, an
increase from the 1.01% at December 31, 1997. Nonperforming loans increased
$3,959 or 53.98% at September 30, 1998, from the $7,334 reported at December 31,
1997. The increase was due to three commercial loans totaling $1.4 million being
placed on nonaccrual status as well as a large number of indirect auto loans
being placed on nonaccrual status. Consumer nonaccrual loans outstanding at
September 30, 1998 was $1.7 million versus $1.1 million at December 31, 1997. As
previously stated, the Company has withdrawn from the indirect lending markets
where the asset quality deterioration occurred and tightened underwriting in
remaining markets. The three commercial credits are in varying stages of the
collection process with $0.5 million having government agency guarantees.
Restructured loans totaled $533 at September 30, 1998. Collateral on these loans
have been sold or leased with the payments assigned to the restructured loans.
Management believes that established reserves for problem loans are adequate to
cover potential loss exposure on these loans. At September 30, 1998,
nonperforming assets were 1.13% of total assets, an increase from the 0.78% at
December 31, 1997.

Other real estate totaled $686 at September 30, 1998, and represented an
increase of $70 or 11.36% from $616 at December 31, 1997. Management anticipates
no significant difficulty in disposing of other real estate and believes that no
significant losses exist in this nonearning asset category.



<PAGE>   15
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


<TABLE>
<CAPTION> 
                                                                ANALYSIS OF ASSET
                                                                     QUALITY
                                                      -------------------------------------
                                                      SEPTEMBER 30              DECEMBER 31
                                                          1998                      1997
                                                      -------------------------------------
<S>                                                      <C>                       <C>    
Nonaccruing loans                                        $ 6,236                   $ 4,043
Loan ninety days past due and accruing interest            4,524                     3,291
Restructured loans                                           533                        --
                                                         ---------------------------------
                        Total nonperforming loans         11,293                     7,334
Other real estate owned                                      686                       616
                                                         ---------------------------------
                       Total nonperforming assets        $11,979                   $ 7,950
                                                         =================================

Nonperforming loans to total loans                          1.49%                     1.01%
Nonperforming assets to total assets                        1.13%                     0.78%
Allowance for loan losses to nonperforming loans           85.40%                   143.40%
</TABLE>


NONINTEREST INCOME

Noninterest income is primarily of a fee nature and includes service charges on
deposits, trust department income and a variety of miscellaneous transactions.
Total noninterest income increased $717 or 16.74% for the nine months ended
September 30, 1998, as compared to the nine months ended September 30, 1997. The
increase is primarily due to an increase of $394 or 13.60% in service charges
and fees coupled with a $313 or 22.09% increase in other income. Increases in
service charges and fees are a result of the introduction of new products and an
improved collection percentage. Increases in other income are related to
increases in secondary market fees of $90 or 209.30%, gains on sale of loans of
$74 or 194.74%, and a $113 or 17.25% increase in trust income.

Noninterest income increased $141 or 9.28% from a total of $1,520 for the three
months ended September 30, 1997, to a total of $1,661 for the three months ended
September 30, 1998. The previous discussion of the increase in service charges
and fees and other income apply equally to the third quarter discussion.

NONINTEREST EXPENSE
Noninterest expense is frequently referred to as overhead, that is, the cost of
normal operations. Horizon's noninterest expense for the nine months ended
September 30, 1998, increased $1,925 or 9.43% over the nine months ended
September 30, 1997. The overall increase consists of increases in salaries and
employee benefits expense of $245, outside data processing costs of $151,
equipment expense of $293, and other expenses of $1,377. These increases were
offset by a decrease in advertising expense of $157.

Equipment expense increased $293 or 16.67% during 1998 primarily due to
additional depreciation expense associated with the equipment acquired in late
1997 and early 1998 as well as increased maintenance costs to operate the
backroom which was expanded during 1998 to handle the increased volume of
transactions. Outside data processing expense increased $151 or 9.67% due to
increased volume of transactions, additional charges for year 2000 testing, and
normal inflationary increases. Other expenses increased $1,377 or 23.86% due to
increased amortization



<PAGE>   16
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
expense of $383 from the acquisition of a savings and loan at September 30,
1997; increased collection expense of $270 due to more collection activity
related to the previously discussed deterioration of certain segments of the
company's indirect lending portfolio; consulting expense increased $77 for costs
associated with a profit enhancement program initiated in the fourth quarter of
1997; and increase in legal fees of $59 due to increased legal assistance on a
few commercial lending relationships. General operating and ATM operating fees
have increased $54 and $132, respectively, due to increased transactions and
number of operating locations.

Noninterest expenses for the three months ended September 30, 1998 increased
$1,039 or 14.15% from $7,342 for the three months ended September 30, 1997. The
previous discussion of the changes in other expense apply to the third quarter
discussion. In addition, occupancy expense increased $88 in the three months
ended September 30, 1998 when compared to the same period in 1997. This increase
was due to costs associated with the opening of two new branches.


IMPACT OF YEAR 2000

Management has initiated a Company-wide program to assess the need to modify or
replace all or portions of its information systems to enable the proper
processing of transactions relating to the Year 2000 and beyond. Most of
Horizon's core data and item processing systems, telecommunication systems,
auxiliary and critical support system services are contracted through major
nationally prominent vendors. Primary exposure for Horizon resides in its
dependence upon these third parties' ability to remediate their own Year 2000
issues. To date the Company's management is not aware of any such party with a 
Year 2000 issue that would materially impact the Company's results of 
operations, liquidity, or capital resources. However, the Company has no means 
of ensuring that such parties will be Year 2000 ready. The inability of such 
parties to complete their Year 2000 resolution process in a timely manner could 
materially impact the Company. The effect of non-compliance by such parties is 
not determinable.

Horizon has developed an overall contingency plan in the event all phases of the
Year 2000 project are not met including compliance of third party vendors. The
contingency plan includes the use of substitute third party vendors for data
processing (core applications) if necessary, utilization of manual delivery
procedures in the event of telecommunications failure, as well as other recovery
procedures. An additional element of Horizon's Year 200 plan relates to
non-information technology systems primarily facilities and equipment. Horizon's
Year 2000 committee is working closely with local electrical power and
telecommunication companies to monitor their Year 2000 preparedness. However,
Horizon has no means of insuring these non-information systems will be Year 2000
ready, and the impact of such inability is not determinable. 

The Federal Financial Institutions Examination Council (FFIEC) recommends that
all systems reprogramming efforts be completed by December 31, 1998 to allow for
sufficient testing and implementation. Management intends to meet this Schedule.
Plan components are being executed in accordance with guidelines that have been
mandated by the FFIEC. The Company's approach to Year 2000 compliance
encompasses five industry standard phases:

          1. Awareness Phase
          2. Assessment Phase
          3. Renovation Phase
          4. Validation Phase
          5. Implementation Phase

The Company has completed the Awareness and Assessment phases and is 90%
complete in the Renovation phase of the project. Currently, the Company is 
approximately 50% complete in the validation phase expecting to be 100% 
complete by June 30, 1999. Horizon has recently begun the implementation phase 
in all areas of hardware and software with consideration that all software is 
developed by third parties, completion of this phase is expected by June 30, 
1999.

Having begun the implementation phase and considering our contingency plan,
management believes that the risks affecting the Company associated with the
Year 2000 issue should be minimal. The majority of the critical applications
affecting the Company have been addressed, and management believes that solid
solutions have been implemented to address areas of concern. The sum of the
costs


<PAGE>   17

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
incurred to-date and the estimated costs remaining to be incurred is not
material to the consolidated financial statements.

INCOME TAXES

Income tax expense expressed as a percentage of income before income taxes was
34.33% for the nine months ended September 30, 1998, compared to 35.21% for the
nine months ended September 30, 1997.

BALANCE SHEET ANALYSIS

At September 30, 1998, total assets increased $40,179 or 3.94% from the December
31, 1997 total of $1,020,281. Investment securities totaled $215,585 at
September 30, 1998, and have increased $167 or 0.08% from the December 31, 1997
total of $215,418. Total loans increased $28,153 or 3.87% for the nine months
ended September 30, 1998. The increase in loans was due primarily to more
favorable economic conditions in the market area and management's willingness to
increase its market share through lending activities during the first half of
1998. Over the third quarter of 1998 loan volumes have remained relatively
stable as management has tightened underwriting standards in certain segments of
the lending areas.

Total deposits at September 30, 1998 were $864,790 and have increased $23,483 or
2.79% from the December 31, 1997 total of $841,307. Non-interest bearing
deposits increased $4,150 or 3.66% while interest bearing deposits increased
$19,333 or 2.66%. At September 30, 1998, short and long-term borrowings
approximated $60,910 and $2,334 compared to $42,642 and $7,102, respectively at
December 31, 1997.

Shareholders' equity increased $3,863 or 3.39% from the total at December 31,
1997. The increase was primarily due to the retention of earnings of $4,928 and
an increase in unrealized gain on available-for-sale securities of $1,012, net
of an increase in treasury shares purchased of $2,114, from $2,938 at December
31, 1997 to $5,052 at September 30, 1998.

LIQUIDITY AND INTEREST RATE SENSITIVITY

Horizon's liquidity position is believed to be adequate for the availability of
funds for loan growth and deposit withdrawals and to provide for other
transaction requirements. Liquidity is provided primarily by investments in cash
and cash equivalents and maturities of investments and loans. Horizon's
liquidity position is monitored regularly, and management is not aware of any
trends, commitments or events that are likely to negatively impact liquidity.

Interest rate risk is measured through a static gap analysis and monitored
closely by management. Due to Horizon's stable core deposit base, management has
been able to effectively manage interest rate risk without the use of derivative
products.

CAPITAL RESOURCES AND DIVIDENDS

Average shareholders' equity when expressed as a percentage of average total
assets equaled 11.01% on September 30, 1998, a decrease from the 11.56% reported
at December 31, 1997.



<PAGE>   18
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
The primary capital ratio, which includes equity plus the allowance for loan
losses, was 11.92% on September 30, 1998, and has decreased slightly from the
12.08% reported on December 31, 1997. The Federal regulatory agencies have
adopted risk-based capital guidelines, and Horizon continues to be well above
the minimum guidelines for all risk-based ratios.

In the first quarter 1998, Horizon entered into two credit agreements with
unrelated parties to provide long-term financing. These agreements provide
revolving lines of credit of $12,000 to Horizon. As of September 30, 1998, there
were no outstanding balances.

Horizon does not anticipate any material capital expenditures in 1998. Earnings
from subsidiary bank operations are expected to remain adequate to fund payment
of stockholders' dividends and normal internal growth. In management's opinion,
subsidiary banks have the capability to upstream sufficient dividends to meet
normal cash requirements of Horizon.


Pertinent capital ratios were:
<TABLE>
<CAPTION>

                                                                                                          MINIMUM
                                               SEPTEMBER 30                  DECEMBER 31                 REGULATORY
                                                  1998                          1997                    REQUIREMENTS
                                           ----------------------------------------------------------------------------

<S>                                           <C>                           <C>                         <C>    
Shareholders' Equity/Total Assets                11.12%                        11.18%                         --
Primary Capital Ratio                            11.92%                        12.08%                         --
Risk-Adjusted Capital
  Total Capital to Risk Weighted Assets          12.42%                        16.40%                      8.00%
  Tier 1 to Risk Weighted Assets                 13.67%                        15.20%                      4.00%
  Tier 1 to Average Assets                       10.37%                        11.10%                      3.00%
</TABLE>


Management is not aware of any trends, events, or uncertainties, either
favorable or unfavorable, which are likely to have a material effect on
Horizon's liquidity, capital resources or results of operations. There are no
current recommendations by regulatory authorities that, if implemented, would
have a material effect on Horizon.


<PAGE>   19

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                              HORIZON BANCORP, INC.

                                     PART II

                                OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

There are no legal proceedings, other than ordinary litigation incidental to the
business, to which Horizon Bancorp or any of its subsidiaries are a party to or
of which any of their property is subject. Management believes that the
liability, if any, resulting from current litigation will not be material to the
reported financial statements.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.   Exhibits
     11.    Statement of Computation of Earnings per Share
     27.    Financial Data Schedule

B.   Reports on Form 8-K
     None


<PAGE>   20
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                                       HORIZON BANCORP, INC.
                                                       ------------------------
                                                       (Registrant)



Date:  November 16, 1998                               /s/ Frank S. Harkins, Jr.
                                                       -------------------------
                                                       Frank S. Harkins, Jr.
                                                       Chairman of the Board


Date:  November 16, 1998                               /s/ C. Duane Blankenship
                                                       -------------------------
                                                       C. Duane Blankenship
                                                       Chief Financial Officer