---

U.S. Securities and Exchange Commission
Washington, D.C.  20549

Form 10-QSB

|x                                                                   | Quarterly Report Pursuant To Section 13 or 15 (d) of the   Securities Exchange Act of 1934 
|------------------------------------------------------------------- | -------------------------------------------------------------------------------------------
|                                                                    |                                                                                            
|For   the Quarter Ended June 30, 2006                              
|                                                                   
|Or                                                                 
|                                                                   
|o                                                                   | Transition Report Pursuant To Section 13 or 15 (d) of the   Securities Exchange Act of 1934
|                                                                    |                                                                                            
|Commission file number  333-71773                                  
|                                                                   
|Horizon   Bancorporation, Inc,.                                    
|(Exact   name of small business issuer as specified in its charter)

|Florida                                                            |  | 65-0840545                         
|------------------------------------------------------------------ |  | -----------------------------------
|(State   or Other Jurisdiction of   Incorporation or Organization) |  | (IRS Employer   Identification No.)
|                                                                   |  |                                    
|900 53rd   Avenue East   Bradenton, Florida 34203                 
|(Address   of Principal Executive Offices)                        
|                                                                  
|941-753-2265                                                      
|(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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

|Yes
x | No
o
|----- | ----

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

|Yes
o | No
x
|----- | ----

Indicate the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:

|Common Stock Outstanding as of August 14, 2006  
|------------------------------------------------
|                                                
|Common stock, $0.01 Par value   1,808,012 Shares
|                                                
|                                                



Index

|                                                                                                   | Page 
|-------------------------------------------------------------------------------------------------- | -----
|                                                                                                   |      
|Part I. Financial Information                                                                      |      
|                                                                                                   |      
|Item   1. Financial Statements (unaudited)                                                         |      
|                                                                                                   |      
|Consolidated   Balance Sheets as of June 30, 2006 and December 31, 2005                            | 3    
|                                                                                                   |      
|Consolidated   Statements of Income for the Three and Six Months Ended June 30, 2006 and   2005    | 4    
|                                                                                                   |      
|Consolidated   Statements of Cash Flows for the Six Months Ended June 30, 2006 & 2005              | 5    
|                                                                                                   |      
|Consolidated Statements of Changes in Shareholders   Equity as of June 30, 2006 & 2005            | 6    
|                                                                                                   |      
|Notes   to Consolidated Financial Statements                                                       | 7-11 
|                                                                                                   |      
|Item   2.  Managements Discussion and   Analysis of Financial Condition and Results of Operations | 11-14
|                                                                                                   |      
|Item   3.  Controls and Procedures                                                                 | 14   
|                                                                                                   |      
|Part II. Other Information                                                                         |      
|                                                                                                   |      
|Item   1.  Legal Proceedings                                                                       | 15   
|                                                                                                   |      
|Item   2.  Unregistered Sales of Equity   Securities and Use of Proceeds                           | 15   
|                                                                                                   |      
|Item   3.  Defaults Upon Senior Securities                                                         | 15   
|                                                                                                   |      
|Item   4.  Submission of Matters to a Vote of   Shareholders                                       | 15   
|                                                                                                   |      
|Item   5.  Other Information                                                                       | 15   
|                                                                                                   |      
|Item   6.  Exhibits                                                                                | 16   

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PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

HORIZON BANCORPORATION, INC.Consolidated Balance Sheets

|                                                                                                                                                                       |  | June 30, 
        2006 |             | December 31, 
        2005 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----------- | -------------------------- | -
|                                                                                                                                                                       |  |                        |             |                            |  
|                                                                                                                                                                       |  | (Unaudited)            |             |                            |  
|ASSETS                                                                                                                                                                 |  |                        |             |                            |  
|Cash and cash equivalents                                                                                                                                              |  |                        |             |                            |  
|Cash and due from banks                                                                                                                                                |  | $                      | 3,412,011   |                            | $
|Federal funds sold                                                                                                                                                     |  |                        | 164,000     |                            |  
|                                                                                                                                                                       |  |                        |             |                            |  
|Total cash and cash equivalents                                                                                                                                        |  |                        | 3,576,011   |                            |  
|Securities:                                                                                                                                                            |  |                        |             |                            |  
|Held to maturity, at amortized cost                                                                                                                                    |  |                        | 5,540,320   |                            |  
|Available-for-sale at fair value                                                                                                                                       |  |                        | 14,646,969  |                            |  
|Loans, net                                                                                                                                                             |  |                        | 132,106,539 |                            |  
|Premises and equipment, net                                                                                                                                            |  |                        | 2,171,193   |                            |  
|Other assets                                                                                                                                                           |  |                        | 1,259,693   |                            |  
|                                                                                                                                                                       |  |                        |             |                            |  
|                                                                                                                                                                       |  | $                      | 159,300,725 |                            | $
|                                                                                                                                                                       |  |                        |             |                            |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                   |  |                        |             |                            |  
|Liabilities                                                                                                                                                            |  |                        |             |                            |  
|Deposits                                                                                                                                                               |  |                        |             |                            |  
|Noninterest-bearing                                                                                                                                                    |  | $                      | 11,916,637  |                            | $
|Interest-bearing                                                                                                                                                       |  |                        | 122,891,044 |                            |  
|                                                                                                                                                                       |  |                        |             |                            |  
|Total deposits                                                                                                                                                         |  |                        | 134,807,681 |                            |  
|Federal Home Loan Bank borrowings                                                                                                                                      |  |                        | 13,000,000  |                            |  
|Other liabilities                                                                                                                                                      |  |                        | 52,173      |                            |  
|                                                                                                                                                                       |  |                        |             |                            |  
|Total liabilities                                                                                                                                                      |  |                        | 147,859,854 |                            |  
|Shareholders equity                                                                                                                                                   |  |                        |             |                            |  
|Preferred stock, $.01 par value 1,000,000 shares authorized; none outstanding                                                                                          |  |                        |            |                            |  
|Common stock, $.01 par value 25,000,000 shares authorized; 1,808,012 Issued and outstanding at June 30, 2006 and 1,797,619 issued and outstanding at December 31, 2005 |  |                        | 18,080      |                            |  
|Additional paid in capital                                                                                                                                             |  |                        | 10,224,601  |                            |  
|Retained earnings                                                                                                                                                      |  |                        | 1,575,281   |                            |  
|Accumulated other comprehensive income (loss), net of tax                                                                                                              |  |                        | (377,091    | )                          |  
|                                                                                                                                                                       |  |                        |             |                            |  
|Total shareholders equity                                                                                                                                             |  |                        | 11,440,871  |                            |  
|                                                                                                                                                                       |  |                        |             |                            |  
|                                                                                                                                                                       |  | $                      | 159,300,725 |                            | $
|                                                                                                                                                                       |  |                        |             |                            |  

See accompanying notes to the financial statements. 3

---



HORIZON BANCORPORATION, INC,.Consolidated Statements of Income and Comprehensive Income (Unaudited)

|                                                    |  | Three   Months Ended June 30, |           | Six Months   Ended June 30, |  
|--------------------------------------------------- |  | ----------------------------- | --------- | --------------------------- | -
|                                                    |  |                               |           |                             |  
|                                                    |  | 2006                          |           | 2005                        |  
|                                                    |  |                               |           |                             |  
|Interest income                                     |  |                               |           |                             |  
|Loans,   including fees                             |  | $                             | 2,502,048 |                             | $
|Investment   securities                             |  |                               | 304,321   |                             |  
|Federal   funds sold and overnight accounts         |  |                               | 7,264     |                             |  
|                                                    |  |                               |           |                             |  
|Total   interest income                             |  |                               | 2,813,633 |                             |  
|Interest expense                                    |  |                               |           |                             |  
|Deposits                                            |  |                               | 1,199,299 |                             |  
|Other   borrowings                                  |  |                               | 132,922   |                             |  
|                                                    |  |                               |           |                             |  
|Total   interest expense                            |  |                               | 1,332,221 |                             |  
|                                                    |  |                               |           |                             |  
|Net interest income                                 |  |                               | 1,481,412 |                             |  
|Provision for loan losses                           |  |                               | 30,000    |                             |  
|                                                    |  |                               |           |                             |  
|Net interest income after provision for loan losses |  |                               | 1,451,412 |                             |  
|Noninterest income                                  |  |                               |           |                             |  
|Gain   on sales of loans                            |  |                               | -0-       |                             |  
|Service   charges on deposit accounts               |  |                               | 23,511    |                             |  
|Gain   on sale of other assets, net                 |  |                               | -0-       |                             |  
|Other   income                                      |  |                               | 20,516    |                             |  
|                                                    |  |                               |           |                             |  
|Total   noninterest income                          |  |                               | 44,027    |                             |  
|Noninterest expense                                 |  |                               |           |                             |  
|Compensation   and employee benefits                |  |                               | 445,971   |                             |  
|Building   & equipment expense                      |  |                               | 163,669   |                             |  
|Professional   fees                                 |  |                               | 89,069    |                             |  
|Data   processing & software expense                |  |                               | 91,170    |                             |  
|Other   noninterest expense                         |  |                               | 130,541   |                             |  
|                                                    |  |                               |           |                             |  
|Total   noninterest expense                         |  |                               | 920,420   |                             |  
|                                                    |  |                               |           |                             |  
|Income before income taxes                          |  |                               | 575,019   |                             |  
|Income tax expense                                  |  |                               | 206,356   |                             |  
|                                                    |  |                               |           |                             |  
|Net Income                                          |  | $                             | 368,663   |                             | $
|                                                    |  |                               |           |                             |  
|Basic earnings per share                            |  | $                             | 0.20      |                             | $
|Diluted earnings per share                          |  |                               | 0.19      |                             |  

See accompanying notes to the financial statements. 4

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HORIZON BANCORPORATION, INC,.Consolidated Statements of Cash Flows (Unaudited)

|                                                                                     |  | For the   six months    ended   June 30, 2006 |             | For the   six months   ended   June 30, 2005 |  
|------------------------------------------------------------------------------------ |  | --------------------------------------------- | ----------- | -------------------------------------------- | -
|                                                                                     |  |                                               |             |                                              |  
|Cash flows from operating activities                                                 |  |                                               |             |                                              |  
|Net   cash provided by operating activities                                          |  | $                                             | 936,348     |                                              | $
|                                                                                     |  |                                               |             |                                              |  
|Cash flows from investing activities                                                 |  |                                               |             |                                              |  
|Loan   originations, net                                                             |  |                                               | (9,973,363  | )                                            |  
|Property   and equipment expenditures                                                |  |                                               | (123,585    | )                                            |  
|Purchase   of securities available for sale                                          |  |                                               |             |                                              |  
|Purchase   of securities held to maturity                                            |  |                                               | (2,700,519  | )                                            |  
|Proceeds   from maturities and principal repayments of securities available for sale |  |                                               | 1,450,064   |                                              |  
|Purchase   Federal Home Loan Bank Stock                                              |  |                                               | (215,650    | )                                            |  
|                                                                                     |  |                                               |             |                                              |  
|Net   cash used by investing activities                                              |  |                                               | (11,563,053 | )                                            |  
|Cash flows from financing activities                                                 |  |                                               |             |                                              |  
|Increase   in deposits                                                               |  |                                               | 1,954,246   |                                              |  
|Increase   in Federal Home Loan Bank borrowings                                      |  |                                               | 5,000,000   |                                              |  
|Decrease   in note payable                                                           |  |                                               | -0-         |                                              |  
|Increase   in Fed Funds Purchased                                                    |  |                                               |   0       |                                              |  
|Proceeds   from exercise of stock options/warrants                                   |  |                                               | 74,162      |                                              |  
|                                                                                     |  |                                               |             |                                              |  
|Net   cash provided by financing activities                                          |  |                                               | 7,028,408   |                                              |  
|                                                                                     |  |                                               |             |                                              |  
|Net change in cash and cash   equivalents                                            |  |                                               | (3,598,297  | )                                            |  
|Cash and cash equivalents   at beginning of period                                   |  |                                               | 7,174,308   |                                              |  
|                                                                                     |  |                                               |             |                                              |  
|Cash and cash equivalents at end of period                                           |  | $                                             | 3,576,011   |                                              | $
|                                                                                     |  |                                               |             |                                              |  

See accompanying notes to the financial statements. 5

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HORIZON BANCORPORATION, INC,.Consolidated Statements of Changes in Shareholders Equity (Unaudited) for the six-month periods ended June 30, 2005 and 2006

|                                                                        |  | Common Stock |           | Paid in Capital |   | Retained Earnings |  | Accumulated Other Comprehensive Income |            | Total |  
|----------------------------------------------------------------------- |  | ------------ | --------- | --------------- | - | ----------------- |  | -------------------------------------- | ---------- | ----- | -
|                                                                        |  |              |           |                 |   |                   | 
|                                                                        |  | Shares       |           | Par Value       |   |                   |  |                                        |           
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Balance, December 31, 2004                                              |  |              | 1,505,857 |                 | $ | 15,058            |  | $                                      | 8,122,988  |       | $
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Comprehensive Income:                                                   |  |              |           |                 |   |                   |  |                                        |            |       |  
|Net income, six-month period ended June 30, 2005                        |  |              |          |                 |   |                  |  |                                        |           |       |  
|Net unrealized loss on securities, six-month period ended June 30, 2005 |  |              |          |                 |   |                  |  |                                        |           |       |  
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Total comprehensive income                                              |  |              |          |                 |   |                  |  |                                        |           |       |  
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Exercise of warrants & stock options                                    |  |              | 206,027   |                 | $ | 2,061             |  | $                                      | 1,413,396  |       |  
|Balance, June 30, 2005                                                  |  |              | 1,711,884 |                 | $ | 17,119            |  | $                                      | 9,536,384  |       | $
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Balance, December 31, 2005                                              |  |              | 1,797,619 |                 | $ | 17,976            |  | $                                      | 10,150,543 |       | $
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Comprehensive Income:                                                   |  |              |           |                 |   |                   |  |                                        |            |       |  
|Net income, six-month period ended June 30, 2006                        |  |              |          |                 |   |                  |  |                                        |           |       |  
|Net unrealized loss on securities, six-month period ended June 30, 2006 |  |              |          |                 |   |                  |  |                                        |           |       |  
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Total comprehensive income                                              |  |              |          |                 |   |                  |  |                                        |           |       |  
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  
|Exercise of warrants & stock options                                    |  |              | 10,393    |                 | $ | 104               |  | $                                      | 74,058     |       |  
|Balance, June 30, 2006                                                  |  |              | 1,808,012 |                 | $ | 18,080            |  | $                                      | 10,224,601 |       | $
|                                                                        |  |              |           |                 |   |                   |  |                                        |            |       |  

6

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NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-QSB and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles.  However, all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for fair presentation of the consolidated financial statements have been included.  The results of operations for the period ended June 30, 2006, are not necessarily indicative of the results which may be expected for the entire fiscal year or for any other period.  For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2005 included in Horizon Bancorporations Form 10-KSB.

Certain prior year amounts have been reclassified to conform to the 2006 presentation.

NOTE 2  SUMMARY OF ORGANIZATION

Horizon Bancorporation, Inc., Bradenton, Florida (the Company), is a one-bank holding company with respect to Horizon Bank, Bradenton, Florida (the Bank). The Company commenced banking operations on October 25, 1999 when the Bank commenced operations. The Bank is primarily engaged in the business of obtaining deposits and providing commercial, consumer and real estate loans to the general public. The Banks depositors are each insured up to $100,000 by the Federal Deposit Insurance Corporation (the FDIC) subject to certain limitations imposed by the FDIC.

The Company is authorized to issue up to 25.0 million shares of its $.01 par value per share common stock. Each share is entitled to one vote and shareholders have no preemptive or conversion rights. As of June 30, 2006, and December 31, 2005, there were 1,808,012 and 1,797,619 shares of the Companys common stock issued and outstanding. Additionally, the Company has authorized the issuance of up to 1.0 million shares of its $.01 par value per share preferred stock. The Companys Board of Directors may, without further action by the shareholders, direct the issuance of preferred stock for any proper corporate purpose with preferences, voting powers, conversion rights, qualifications, special or relative rights and privileges which could adversely affect the voting power or other rights of shareholders of common stock. As of June 30, 2006 and December 31, 2005, there were no shares of the Companys preferred stock issued or outstanding.

NOTE 3  LOANS RECEIVABLE

Loans receivable consist of the following:

|                                   |  | June 30,   2006 |             | December   31,   2005 |  
|---------------------------------- |  | --------------- | ----------- | --------------------- | -
|                                   |  |                 |             |                       |  
|Real estate  commercial           |  | $               | 64,330,489  |                       | $
|Real estate  construction         |  |                 | 8,901,462   |                       |  
|Real estate  residential          |  |                 | 40,514,595  |                       |  
|Commercial                         |  |                 | 12,889,576  |                       |  
|Consumer                           |  |                 | 6,765,103   |                       |  
|                                   |  |                 |             |                       |  
|Loans, gross                       |  |                 | 133,401,225 |                       |  
|Deduct allowance for loan   losses |  |                 | (1,294,686  | )                     |  
|                                   |  |                 |             |                       |  
|Loans,   net                       |  | $               | 132,106,539 |                       | $
|                                   |  |                 |             |                       |  

7

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HORIZON BANCORPORATION, INC,.Notes to the Consolidated Financial Statements (Unaudited)

NOTE 3  LOANS RECEIVABLE (Continued)

Activity in the allowance for loan losses for the quarter ended June 30, are as follows:

|                                 |  | 2006 |           | 2005 |  
|-------------------------------- |  | ---- | --------- | ---- | -
|                                 |  |      |           |      |  
|Balance at beginning of   period |  | $    | 1,264,686 |      | $
|Provision for loan losses        |  |      | 30,000    |      |  
|Loans charged-off                |  |      |           |      |  
|Recoveries                       |  |      |           |      |  
|                                 |  |      |           |      |  
|Balance at end of period         |  | $    | 1,294,686 |      | $
|                                 |  |      |           |      |  

Activity in the allowance for loan losses for the six months ended June 30, are as follows:

|                                 |  | 2006 |           | 2005 |  
|-------------------------------- |  | ---- | --------- | ---- | -
|                                 |  |      |           |      |  
|Balance at beginning of   period |  | $    | 1,273,524 |      | $
|Provision for loan losses        |  |      | 60,000    |      |  
|Loans charged-off                |  |      | (38,838   | )    |  
|Recoveries                       |  |      |           |      |  
|                                 |  |      |           |      |  
|Balance at end of period         |  | $    | 1,294,686 |      | $
|                                 |  |      |           |      |  

NOTE 4  SECURITIES HELD-TO-MATURITY

Information pertaining to securities with gross unrealized losses at June 30, 2006, aggregated by investment category and further segregated by length of time (less than or over twelve months) that the securities have been in a continuous loss position follows:

|                              |  | Less Than Twelve Months |              | Over Twelve Months |   | Total              |  
|----------------------------- |  | ----------------------- | ------------ | ------------------ | - | ------------------ | -
|                              |  |                         |              |                    |   |                    |  
|                              |  |                         | Fair   Value |                    |   | Unrealized
   Loss |  
|                              |  |                         |              |                    |   |                    |  
|State,   County and Municipal |  | $                       | 5,540,320    |                    | $ | (201,777)          |  
|                              |  |                         |              |                    |   |                    |  
|Total                         |  | $                       | 5,540,320    |                    | $ | (201,777           | )
|                              |  |                         |              |                    |   |                    |  

At June 30, 2006, unrealized losses on held-to-maturity securities amounted to $201,777 representing 3.64% of the portfolio.  All of the unrealized losses relate to counties and municipalities in the United States of America and all issues were rated triple A by Moodys and Standard and Poors.  The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline.  Management does not believe any of the securities are impaired due to reasons of credit quality.  Accordingly, as of June 30, 2006, management believes the impairments detailed in the table above are temporary and no impairment loss has been realized in the Companys consolidated income statement.

8

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NOTE 5  SECURITIES AVAILABLE FOR SALE

Information pertaining to securities with gross unrealized losses at June 30, 2006, aggregated by investment category and further segregated by the length of time (less than or over twelve months) that the securities have been in a continuous loss position follows:

|                                      |  | Less Than   Twelve Months |           | Over   Twelve Months |   | Total         |  
|------------------------------------- |  | ------------------------- | --------- | -------------------- | - | ------------- | -
|                                      |  |                           |           |                      |   |               |  
|                                      |  | Fair   Value              |           | Unrealized      Loss |   | Fair    Value |  
|                                      |  |                           |           |                      |   |               |  
|Collateralized   Mortgage obligations |  | $                         | 2,087,375 |                      | $ | (156,636      | )
|Mortgage   backed securities          |  |                           | 998,816   |                      |   | (33,810       | )
|U.S.   Agency securities              |  |                           | 1,069,929 |                      |   | (40,071       | )
|Other   securities                    |  |                           |          |                      |   |              |  
|                                      |  |                           |           |                      |   |               |  
|Total                                 |  | $                         | 4,156,120 |                      | $ | (230,517      | )
|                                      |  |                           |           |                      |   |               |  

At June 30, 2006, unrealized losses in the securities portfolio amounted to $576,261 representing 3.78% of the total portfolio.  All of the unrealized losses relate to U.S. Agency securities and U.S. government corporations.  These unrealized losses were caused by fluctuations in market interest rates, rather than concerns over the credit quality of the issuers.  The Company believes that the U.S. Agencies and government corporations will continue to honor their interest payments on time as well as the full debt at maturity.  Because the unrealized losses are due to fluctuations in the interest rate, and no credit-worthiness factors exist, the Company believes that the investments are not considered other-than-temporarily impaired.

NOTE 6 - EARNINGS PER SHARE

The following summarizes the computation of basic and diluted earnings per share.

|                                                                |  | Three   Months Ended    June 30, 2006 |           | Three   Months Ended    June 30, 2005 |  
|--------------------------------------------------------------- |  | ------------------------------------- | --------- | ------------------------------------- | -
|                                                                |  |                                       |           |                                       |  
|Basic earnings per share                                        |  |                                       |           |                                       |  
|Net   income applicable to common stock                         |  | $                                     | 368,663   |                                       | $
|Weighted   average shares outstanding                           |  |                                       | 1,805,788 |                                       |  
|                                                                |  |                                       |           |                                       |  
|Basic earnings per share                                        |  | $                                     | 0.20      |                                       | $
|                                                                |  |                                       |           |                                       |  
|Diluted earnings per share                                      |  |                                       |           |                                       |  
|Net   income applicable to common stock                         |  | $                                     | 368,663   |                                       | $
|Weighted average shares   outstanding                           |  |                                       | 1,805,788 |                                       |  
|Dilutive effect of assumed   exercise of stock options/warrants |  |                                       | 116,376   |                                       |  
|                                                                |  |                                       |           |                                       |  
|Diluted average shares   outstanding                            |  |                                       | 1,922,164 |                                       |  
|                                                                |  |                                       |           |                                       |  
|Diluted earnings per share                                      |  | $                                     | 0.19      |                                       | $
|                                                                |  |                                       |           |                                       |  

9

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NOTE 6 - EARNINGS PER SHARE (Continued)

|                                                                |  | Six Months   Ended    June 30, 2006 |           | Six Months   Ended    June 30, 2005 |  
|--------------------------------------------------------------- |  | ----------------------------------- | --------- | ----------------------------------- | -
|                                                                |  |                                     |           |                                     |  
|Basic earnings per share                                        |  |                                     |           |                                     |  
|Net   income applicable to common stock                         |  | $                                   | 771,386   |                                     | $
|Weighted   average shares outstanding                           |  |                                     | 1,803,505 |                                     |  
|                                                                |  |                                     |           |                                     |  
|Basic earnings per share                                        |  | $                                   | 0.43      |                                     | $
|                                                                |  |                                     |           |                                     |  
|Diluted earnings per share                                      |  |                                     |           |                                     |  
|Net   income applicable to common stock                         |  | $                                   | 771,386   |                                     | $
|Weighted average shares   outstanding                           |  |                                     | 1,803,505 |                                     |  
|Dilutive effect of assumed   exercise of stock options/warrants |  |                                     | 108,324   |                                     |  
|                                                                |  |                                     |           |                                     |  
|Diluted average shares   outstanding                            |  |                                     | 1,911,829 |                                     |  
|                                                                |  |                                     |           |                                     |  
|Diluted earnings per share                                      |  | $                                   | 0.40      |                                     | $
|                                                                |  |                                     |           |                                     |  

NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements.  SFAS No. 154, Accounting Changes and Error Corrections, a Replacement of APB Opinion No. 20 and FASB Statement No. 3.  SFAS 154 establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle.  Previously, most changes in accounting principle were recognized by including the cumulative effect of changing to the new accounting principle in net income of the period of the change.  Under SFAS 154, retrospective application requires (i) the cumulative effect of the change to the new accounting principle on periods prior to those presented to be reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented, (ii) an
offsetting adjustment, if any, to be made to the opening balance of retained earnings (or other appropriate components of equity) for that period, and (iii) financial statements for each individual prior period presented to be adjusted to reflect the direct period-specific effects of applying the new accounting principle.  Special retroactive application rules apply in situations where it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  Indirect effects of a change in accounting principle are required to be reported in the period in which the accounting change is made.  SFAS 154 carries forward the guidance in APB Opinion 20 Accounting Changes, requiring justification of a change in accounting principle on the basis of preferability.  SFAS 154 also carries forward without change the guidance contained in APB Opinion 20, for reporting the correction of an error in previously issued financial statements and for a
change in an accounting estimate.  SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.  The Company does not expect SFAS 154 will significantly impact its financial statements upon its adoption on January 1, 2006.

SFAS No. 123, Share-Based Payment (Revised 2004).  SFAS 123R establishes standards for the accounting for transactions in which an entity (i) exchanges its equity instruments for goods or services, or (ii) incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of the equity instruments.  SFAS 123R eliminates the ability to account for stock-based compensation using APB 25 and requires that such transactions be recognized as compensation cost in the income statement based on their fair values on the measurement date, which is generally the date of the grant.  SFAS 123R was to be effective for the Company on July 1, 2005; however, the required implementation date was delayed until January 1, 2006.  The Company will transition to fair-value based accounting
for stock-based compensation using a modified version of prospective application (modified prospective application).  Under modified prospective application, as it is applicable to the Company, SFAS 123R applies to new awards and to awards modified, repurchased, or cancelled after January 1, 2006.  Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered (generally referring to non-vested awards) that are outstanding as of January 1, 2006 must be recognized as the remaining requisite service is rendered during the period of and/or the periods after the adoption of SFAS 123R.  The attribution of compensation cost for those earlier awards will be based on the same method and on the same grant-date fair values previously determined for the pro forma disclosures required for companies that did not adopt the fair value accounting method for stock-based employee compensation.

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FASB Staff Position (FSP) No. 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.  FSP 115-1 provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss.  An investment is considered impaired if the fair value of the investment is less than its cost.  If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss should be recognized equal to the difference between the investments cost and its fair value. FSP 115-1 nullifies certain provisions of Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, while
retaining the disclosure requirements of EITF 03-1 which were adopted in 2003.  FSP 115-1 is effective for reporting periods beginning after December 15, 2005.  The Company does not expect FSP 115-1 will significantly impact its financial statements upon its adoption on January 1, 2006.

Item 2:   Managements Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

This Form 10-QSB may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on managements current expectations and are subject to risks and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Among these risks are regional and national economic conditions, competitive and regulatory factors, legislative changes, mortgage-interest rates, cost and availability of borrowed funds, our ability to sell mortgages in the secondary market, and housing sales and values. These risks and uncertainties are contained in the Companys filings with the SEC, available via EDGAR. The Company assumes no obligation to update forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such forward-looking statements.

OVERVIEW

The Company currently serves as the holding company of the Bank.  The Banks business activities involve attracting deposits from the general public and using these funds to originate consumer, commercial, and real estate loans, from its two offices in Bradenton, Florida.  A third branch in Palmetto opened in October of 2005.

The Companys earnings are primarily dependent upon three sources: net interest income, which is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities; fee income from customers; and gains realized on sales of loans.  These revenues are in turn significantly affected by factors such as changes in prevailing interest rates and in the yield curve (that is, the difference between prevailing short-term and long-term interest rates).

EARNINGS PERFORMANCE

The Company reported net income of $368,000 for the quarter ended June 30, 2006 compared to net income of $305,000 for the quarter ended June 30, 2005.  Basic and diluted earnings per share were $0.20 and $0.19, respectively, per share for the three months ended June 30, 2006 and $0.19 and $0.18, respectively, per share for the three months ended June 30, 2005.

For the six months ended June 30, 2006, the Company reported net income of $771,000 compared to net income of $617,000 for the same period in 2005.  Basic and diluted earnings per share were $0.43 and $0.40, respectively, per share for the six months ended June 30, 2006, compared to earnings of $0.40 and $0.38,respectively, per share for the six months ended June 30, 2005.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income was $1.3 million and $754 thousand for the three months ended June 30, 2006 and 2005, respectively.  For the six months ended June 30, 2006 and 2005 net interest income was $2.5 million and $1.4 million respectively.  Net interest income increased primarily as a result of increases in the yield on interest-earning assets and average interest-earning assets.  This was due to the payoff of lower interest rate loans being replaced with higher yielding loans and investment securities.  This was offset by an increase in the cost of funds due to higher cost interest-earning deposits and higher cost other borrowings

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Average Balance Sheet

The following tables summarize the average yields earned on interest-earning assets and the average rates paid on interest-bearing liabilities for Horizon Bank.

|                                              |  | Three   months ended June 30, |        
|--------------------------------------------- |  | ----------------------------- | -------
|                                              |  |                               |        
|                                              |  | 2006                          |        
|                                              |  |                               |        
|                                              |  | Average    Volume             |        
|                                              |  |                               |        
|ASSETS                                        |  |                               |        
|Interest-earning assets:                      |  |                               |        
|Federal   funds sold                          |  | $                             | 586    
|Securities                                    |  |                               | 20,802 
|Loans   receivable                            |  |                               | 130,343
|                                              |  |                               |        
|Total   interest-earning assets               |  |                               | 151,731
|Non-earning   assets                          |  |                               | 5,634  
|                                              |  |                               |        
|Total   assets                                |  | $                             | 157,365
|LIABILITIES AND   STOCKHOLDERS EQUITY        |  |                               |        
|Interest-bearing   liabilities:               |  |                               |        
|Transactional   accounts                      |  | $                             | 39,187 
|Savings   deposits                            |  |                               | 4,525  
|Time   deposits                               |  |                               | 78,317 
|Other   borrowings                            |  |                               | 11,858 
|                                              |  |                               |        
|Total   interest-bearing liabilities          |  |                               | 133,887
|                                              |  |                               |        
|Noninterest-bearing   liabilities             |  |                               | 12,141 
|Stockholders equity                          |  |                               | 11,337 
|                                              |  |                               |        
|Total   liabilities and stockholders equity  |  | $                             | 157,365
|                                              |  |                               |        
|Interest rate spread                          |  |                               |        
|                                              |  |                               |        
|Net interest income and net   interest Margin |  |                               |        
|                                              |  |                               |        

|                                              |  | Six months   ended June 30, |        
|--------------------------------------------- |  | --------------------------- | -------
|                                              |  |                             |        
|                                              |  | 2006                        |        
|                                              |  |                             |        
|                                              |  | Average    Volume           |        
|                                              |  |                             |        
|ASSETS                                        |  |                             |        
|Interest-earning assets:                      |  |                             |        
|Federal   funds sold                          |  | $                           | 1,024  
|Securities                                    |  |                             | 20,314 
|Loans   receivable                            |  |                             | 128,308
|                                              |  |                             |        
|Total   interest-earning assets               |  |                             | 149,646
|Non-earning   assets                          |  |                             | 5,582  
|                                              |  |                             |        
|Total   assets                                |  | $                           | 155,228
|                                              |  |                             |        
|LIABILITIES AND   STOCKHOLDERS EQUITY        |  |                             |        
|Interest-bearing   liabilities:               |  |                             |        
|Transactional   accounts                      |  | $                           | 41,395 
|Savings   deposits                            |  |                             | 4,745  
|Time   deposits                               |  |                             | 74,983 
|Other   borrowings                            |  |                             | 10,667 
|                                              |  |                             |        
|Total   interest-bearing liabilities          |  |                             | 131,790
|                                              |  |                             |        
|Noninterest-bearing   liabilities             |  |                             | 12,275 
|Stockholders equity                          |  |                             | 11,163 
|                                              |  |                             |        
|Total   liabilities and stockholders equity  |  | $                           | 155,228
|                                              |  |                             |        
|Interest rate spread                          |  |                             |        
|                                              |  |                             |        
|Net interest income and net   interest Margin |  |                             |        
|                                              |  |                             |        

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Net interest income represents the excess of income on interest-earning assets over interest expense on interest bearing liabilities.  The principal interest-earning assets are federal funds sold, investment securities and loans receivable.  Interest-bearing liabilities primarily consist of FHLB borrowings, time deposits, interest-bearing checking accounts (NOW accounts), savings deposits and money market accounts.  Funds attracted by these interest-bearing liabilities are invested in interest-earning assets.  Accordingly, net interest income depends upon the volume of average interest-earning assets and average interest bearing liabilities and the interest rates earned or paid on them.

Noninterest Income

For the three months ended June 30, 2006, noninterest income was $44,000, compared to $56,000 for the same period in 2005, a decrease of $12,000 or 21%.  This decrease was primarily due to the decreased service charges of $10,000.

For the six months ended June 30 2006, noninterest income was $100,000, compared to $215,000 for the same period in 2005.  The decrease of $115,000, or 53%, was primarily the result of a gain on sale of loans of $102,000 recorded in 2005 as opposed to no gain or loss recorded in 2006.  Service charges decreased by $15,000 in 2006.

Noninterest Expense

Total noninterest expense for the three months ended June 30, 2006, was $920,000, compared to $798,000 for the same period in 2005, an increase of approximately $123,000 or 15%. The increase is related to the cost of employee compensation and benefits that increased $27,000, increased professional expenses of $38,000 and increased building and equipment expense of $64,000; offset by slight decreases in postage, State of Florida assessments, operating losses, annual report expense and investor relations expense amounting to $23,000. The increases in compensation and benefits and building and equipment expense are primarily attributable to the opening of a new branch in Palmetto in the fall of 2005.

For the six months ended June 30, 2006, noninterest expense was $1.783 million, compared to $1.545 million for the same period in 2005.  The increase of $237,000 or 15% was also attributable to the aforementioned expenses.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the Companys ability to meet all deposit withdrawals immediately, while also providing for the credit needs of customers. The June 30, 2006 financial statements evidence a satisfactory liquidity position as total cash and cash equivalents amounted to $3.6 million, representing 2.2% of total assets. Investment securities, which amounted to $20.2 million or 12.7% of total assets, provide a secondary source of liquidity because they can be converted into cash in a timely manner. The Bank is a member of the Federal Reserve System and maintains relationships with several correspondent banks and, thus, could obtain funds from those banks on short notice. The Companys management closely monitors and maintains appropriate levels of interest earning assets and interest bearing liabilities, so that maturities of assets can provide adequate funds to meet customer withdrawals and loan demand. The Company knows of no trends, demands, commitments,
events or uncertainties that will result in or are reasonably likely to result in its liquidity increasing or decreasing in any material way.

The Bank maintains an adequate level of capitalization as measured by the following capital ratios and the respective minimum capital:

|                    |  | Banks    June 30 , 2006 |     | Minimum   Regulatory Requirement | 
|------------------- |  | ------------------------ | --- | -------------------------------- | 
|                    |  |                          |     |                                  | 
|Leverage ratio      |  |                          | 7.2 | %                                | 
|Risk weighted ratio |  |                          | 9.5 | %                                | 

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With respect to the leverage ratio, the regulators expect a minimum of 5.0% to 6.0% ratio for banks that are not rated CAMELS 1. The Banks leverage ratio of 7.2% and risk weighted ratio of 9.5% are above the required minimum.

The Company is not aware of any current recommendation by the regulatory authorities which, if implemented, would have a material effect on the Companys liquidity, capital resources, or results of operations.

The Company cautions readers of this report that any forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Although the Companys management believes that its expectations of future performance are based on reasonable assumptions within the bounds of its knowledge of the Companys business and operations, there can be no assurance that actual results will not differ materially from their expectations.

Item 3:  Controls and Procedures

The Company, with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation and as of the end of the period covered by this report, the Companys Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to information required to be disclosed in its reports that the Company files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934. There have been no changes in the Companys internal controls over financial reporting that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

There have been no material changes to the pending legal proceedings to which the Company or the Bank is a party since the filing of the registrants Form 10-KSB for the year ended December 31, 2005.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

Following the approval by the shareholders, at the 2006 Annual Meeting on May 11, 2006, of the 2005 Non-Employee Director Stock Option Plan, certain grants of nonqualified stock options made in November 2005 to the eight non-employee directors of the Company became effective.  Specifically, stock options to purchase, on or before November 29, 2015, 500 shares of the common stock at $12.00 per share, were granted to the following individuals:

| | Michael S. Glasgow, Barclay Kirkland, D.D.S., C.   Donald Miller, David K. Scherer, Bruce E. Shackelford, Elizabeth Thomason,   D.D.S., Mary Ann Turner and Clarence R. Urban.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The options vest in three equal annual installments, beginning on November 29, 2006.

This sale was exempt from registration as a private placement under Section 4(2) of the Securities Act of 1933, as amended.  Each purchaser is a director of the issuer.

Item 3.   Defaults Upon Senior Securities

Not Applicable.

Item 4.   Submission of Matters to a Vote of Shareholders

The Company held its 2006 Annual Meeting of Shareholders on May 11, 2006.  The following directors were elected at the annual meeting to serve a three year term.

|                          |  | For |           | Against/   Abstentions | 
|------------------------- |  | --- | --------- | ---------------------- | 
|                          |  |     |           |                        | 
|Charles S. Conoley        |  |     | 1,423,733 |                        | 
|Michael S. Glasgow        |  |     | 1,423,733 |                        | 
|Barclay Kirkland, D. M. D |  |     | 1,423,733 |                        | 
|Bruce E. Shackelford      |  |     | 1,423,733 |                        | 

The following persons did not stand for reelection at the 2006 Annual Meeting of Shareholders as their term of office continued after the Annual Meeting: Dr. Elizabeth Thomason, David K. Scherer, Mary Ann Turner, C. Donald Miller and Clarence Urban.

A vote was taken to ratify the appointment of Francis & Co., CPAs as independent auditors for the fiscal year ending December 31, 2006.  The appointment was approved by the following votes:  1,412,583 for and 11,150 against/abstentions.

A vote was also taken to approve the 2005 Non-Employee Director Stock Option Plan.  The Plan was approved by the following votes: 964,815 for and 14,300 against/abstentions.

Item 5.   Other Information

None

15

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Item 6.   Exhibits

(a) Exhibits

| | 31.1 | Certification of Principal Executive Officer                                                                                                        
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                     
| | 31.2 | Certification of Principal Financial Officer                                                                                                        
| |      |                                                                                                                                                     
| | 32.1 | Certification of Chief Executive Officer Pursuant to   18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002
| |      |                                                                                                                                                     
| | 32.2 | Certification of Chief Financial Officer Pursuant to   18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002

16

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SIGNATURES

In accordance with 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.

|Date: August 14, 2006 |  | /s/ Charles S. Conoley                           
|--------------------- |  | -------------------------------------------------
|                      |  |                                                  
|                      |  | Charles S. Conoley                               
|                      |  | President and Chief Executive Officer            
|                      |  |                                                  
|                      |  |                                                  
|Date: August 14, 2006 |  | /s/ Kathleen M. Jepson                           
|                      |  |                                                  
|                      |  | Kathleen M. Jepson                               
|                      |  | Senior Vice President and Chief Financial Officer
|                      |  | (Principal Financial and Accounting Officer)     

17

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