UNITED STATES
                        SECURITY AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934

            For the quarterly period ended March 31, 2003
                                                ---------------

                                       or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from                to
                               --------------    -------------

Commission File Number:   0-24036
                        ----------

   Horizon Financial Services Corporation
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)

   Delaware
-----------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)

   42-1419757
-----------------------------------------------------------------
(I.R.S. Employer Identification No.)

   301 First Avenue East, Oskaloosa, Iowa                         52577
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

   (641)673-8328
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

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 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. [X] YES [ ] NO

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

             Common Stock                                    739,711
--------------------------------------------------------------------------------
                Class                                   Shares Outstanding
                                                          as of May 06, 2003

Transitional Small Business Disclosure Format (check one):
Yes         :  No      X
   ---------      -----------



<PAGE>

<TABLE>
<CAPTION>


              HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARY

                                      INDEX


Part I.  Financial Information                                                      Page
                                                                                    ----

          Item 1.  Financial Statements (Unaudited)

<S>                                                                                  <C>
          Consolidated Balance Sheets at March 31, 2003 and June 30, 2002             1

          Consolidated Statements of Operations for the three months and              2
          nine months ended March 31, 2003 and 2002

          Consolidated Statements of Comprehensive Income for the three months        3
          and nine months ended March 31, 2003 and 2002

          Consolidated Statements of Cash Flows for the nine months ended             4
          March 31, 2003 and 2002

          Notes to Consolidated Financial Statements                                  5

          Item 2.  Management's Discussion and Analysis                               7

          Item 3.  Controls and Procedures                                           15



Part II.  Other Information                                                          16

          Signatures                                                                 17

          Certifications                                                             18

          Index of Exhibits                                                          21


</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                     PART I

ITEM 1.  FINANCIAL STATEMENTS
         --------------------

              HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARY
                           Consolidated Balance Sheets

                                                               March 31,          June 30,
Assets                                                          2003                2002
------                                                     --------------       ------------
                                                             (Unaudited)
<S>                                                          <C>                <C>
Cash and cash equivalents                                    $ 9,656,467        $  8,124,566
Securities available-for-sale                                 14,384,037          12,086,313
Loans receivable, net                                         65,927,988          65,098,795
Real estate                                                      314,395             417,137
Stock in Federal Home Loan Bank, at cost                         509,200             509,200
Office property and equipment, net                             1,554,105           1,351,486
Accrued interest receivable                                      600,827             587,134
Deferred tax asset                                               183,000             211,800
Prepaid expenses and other assets                                 58,234              51,576
                                                           -------------        ------------

     Total assets                                           $ 93,188,253        $ 88,438,007
                                                           =============        ============

Liabilities and Stockholders' Equity
------------------------------------

Deposits                                                    $ 76,619,221        $ 71,953,695
Advances from Federal Home Loan Bank                           5,551,343           5,571,497
Advance payments by borrowers for taxes and insurance            251,037             373,147
Accrued income taxes                                               1,365             490,522
Accrued expenses and other liabilities                           538,732             645,694
                                                           -------------        ------------

     Total liabilities                                        82,961,698          79,034,555
                                                           -------------        ------------

Stockholders' equity
--------------------
Preferred stock, $.01 par value, authorized 250,000
     shares, none issued                                             ---                 ---
Common stock, $.01 par value, authorized 1,500,000
     shares, 1,046,198 issued                                     10,462              10,462
Additional paid-in capital                                     5,029,126           5,025,598
Retained earnings, substantially restricted                    7,226,024           6,515,330
Treasury stock, at cost, (293,377 and 293,016 shares
      at March 31, 2003 and June 30, 2002, respectively)      (2,133,672)         (2,119,466)
Accumulated other comprehensive income (loss)-net
      unrealized gain (loss) on securities available-for-sale     94,615             (28,472)
                                                           --------------       ------------

     Total stockholders' equity                               10,226,555           9,403,452
                                                           -------------        ------------

Total liabilities and stockholders' equity                 $  93,188,253        $ 88,438,007
                                                           =============        ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                       -1-

<PAGE>

<TABLE>
<CAPTION>


                                       HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARY
                                               Consolidated Statements of Operations

                                                             Three Months                      Nine months
                                                           Ended March 31,                  Ended March 31,
                                                          2003           2002              2003              2002
                                                          ----           ----              ----              ----
                                                               (Unaudited)                      (Unaudited)
<S>                                                   <C>              <C>              <C>              <C>
Interest income:
Interest and fees on loans                            $1,254,335       $1,330,258       $3,873,368       $4,050,907
Interest on securities available-for-sale                159,294          161,927          443,410          550,296
Other interest income                                     14,094           20,623           58,577           85,508
                                                      ----------       ----------       ----------       ----------

Total interest income                                  1,427,723        1,512,808        4,375,355        4,686,711
                                                      ----------       ----------       ----------       ----------

Interest expense:
Interest on deposits                                     409,897          509,678        1,347,203        1,881,842
Interest on FHLB advances                                 71,363           72,975          215,541          296,475
                                                      ----------       ----------       ----------       ----------

Total interest expense                                   481,260          582,653        1,562,744        2,178,317
                                                      ----------       ----------       ----------       ----------

Net interest income                                      946,463          930,155        2,812,611        2,508,394

Provision for losses on loans                             37,500          127,500          175,800          214,000
                                                      ----------       ----------       ----------       ----------

Net interest income after provision for
  losses on loans                                        908,963          802,655        2,636,811        2,294,394
                                                      ----------       ----------       ----------       ----------

Non-interest income:
Fees, commissions and service charges                    170,320          156,986          481,128          462,453
Gain on sale of securities, net                           14,597           128,092          27,218          196,057
Gain on sale of mortgage loans                            26,370            9,714           63,531           47,521
Impairment loss on equity securities                          --               --         (161,662)              --
Other                                                         50               --           19,022               --
                                                      ----------       ----------       ----------       ----------

Total non-interest income                                211,337          294,792          429,237          706,031
                                                      ----------       ----------       ----------       ----------

Non-interest expense:
Compensation, payroll taxes and
  employee benefits                                      367,367          324,057        1,024,489          930,301
Advertising                                               28,741           22,500           63,824           53,799
Office property and equipment                            106,749           76,893          281,897          206,460
Federal deposit insurance premiums                         3,083            3,210            9,276           20,533
Data processing services                                  58,547           49,099          164,334          139,610
Other real estate                                         20,581           31,592           30,163           39,032
Other                                                     73,653           84,704          248,350          293,336
                                                      ----------       ----------       ----------       ----------

Total non-interest expense                               658,721          592,055        1,822,333        1,683,071
                                                      ----------       ----------       ----------       ----------

Earnings before taxes on income                          461,579          505,392        1,243,715        1,317,354

Taxes on income                                          159,700          175,900          419,100          447,500
                                                      ----------       ----------       ----------       ----------

Net earnings                                          $  301,879       $  329,492       $  824,615       $  869,854
                                                      ==========       ==========       ==========       ==========

     Earnings per common share-
       Basic                                               $0.40            $0.44            $1.09            $1.16
       Diluted                                             $0.39            $0.43            $1.07            $1.14

</TABLE>

See Notes to Consolidated Financial Statements.

                                       -2-

<PAGE>
<TABLE>
<CAPTION>



                                       HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARY
                                          Consolidated Statements of Comprehensive Income

                                                                       Three Months Ended              Nine Months Ended
                                                                            March 31,                      March 31,
                                                                        2003          2002             2003          2002
                                                                        ----          ----             ----          ----
                                                                           (Unaudited)                     (Unaudited)

<S>                                                                <C>             <C>            <C>             <C>
Net income                                                         $ 301,879       $ 329,492      $ 824,615       $ 869,854

Other Comprehensive Income:
   Unrealized (losses) gains on securities available for sale:
      Unrealized holding (losses) gains arising
         during the period, net of tax                               (20,707)         52,083         38,791          64,901
   Reclassification adjustment for net (gains) losses
         included in net income, net of tax                           (9,152)        (80,314)        84,296        (122,928)
                                                                   ---------       ---------      ---------       ---------

Other comprehensive (loss) income, net of tax                        (29,859)        (28,231)       123,087         (58,027)
                                                                   ---------       ---------      ---------       ---------


Comprehensive income                                               $ 272,020       $ 301,261      $ 947,702       $ 811,827
                                                                   ---------       ---------      ---------       ---------

</TABLE>


See Notes to Consolidated Financial Statements.

                                       -3-

<PAGE>

<TABLE>
<CAPTION>


                                       HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARY
                                               Consolidated Statements of Cash Flows
                                                                                                  Nine months ended
                                                                                                       March 31,
                                                                                                2003                2002
                                                                                              --------            --------
                                                                                                      (Unaudited)
<S>                                                                                        <C>               <C>
Cash flows from operating activities:
Net earnings                                                                               $   824,615       $    869,854
Adjustments to reconcile net earnings to net cash provided
by operating activities:
   Depreciation                                                                                110,971             79,841
   Amortization of fees, premiums and accretion of discounts, net                               60,259             52,534
   Provision for losses on loans                                                               175,800            214,000
   Loans originated for sale                                                                (8,807,136)        (8,317,765)
   Proceeds on sales of loans                                                                8,175,554          8,418,223
   Gain on sale of securities                                                                  (27,218)          (196,057)
   Impairment losses on securities                                                             161,662              - - -
   Reinvested dividends                                                                         (8,198)           (12,995)
   Gain on sale of mortgage loans                                                              (63,531)           (47,521)
   Gain on sale of fixed assets                                                                   (120)              (535)
   (Increase) decrease in accrued interest receivable                                          (13,693)            80,010
   (Decrease) increase in accrued income taxes                                                (533,457)           150,936
   Other, net                                                                                  (82,610)          (337,740)
                                                                                           -----------       ------------

Net cash (used in) provided by operating activities                                            (27,102)           952,785
                                                                                           ------------      ------------

Cash flows from investing activities:
   Securities available-for-sale:
      Purchases                                                                             (7,693,903)        (5,540,850)
      Proceeds from sale                                                                     1,561,875          7,105,035
      Proceeds from maturity and principal collected                                         3,843,986          3,015,679
   Loans to customers, net                                                                    (425,005)          (476,707)
   Purchase of Federal Home Loan Bank stock                                                      - - -            (29,100)
   Proceeds from sale of real estate                                                           190,386            120,000
   Purchase of office property and equipment, net                                             (313,470)          (132,931)
                                                                                           -----------       ------------

Net cash (used in) provided by investing activities                                         (2,836,131)         4,061,126
                                                                                           ------------     -------------

Cash flows from financing activities:
   Increase in deposits                                                                      4,665,526          2,961,694
   Decrease in advance payments by borrowers for taxes and insurance                          (122,110)          (132,532)
   Principal payments on advances from Federal Home Loan Bank                                  (20,154)        (4,017,209)
   Treasury stock acquired                                                                     (24,628)             - - -
   Net proceeds from options exercised                                                           9,459              - - -
   Payment of dividends                                                                       (112,959)          (101,448)
                                                                                           -----------       ------------

Net cash provided by (used in) financing activities                                          4,395,134         (1,289,495)
                                                                                           -----------       ------------

Net increase in cash and cash equivalents                                                    1,531,901          3,724,416

Cash and cash equivalents at beginning of period                                             8,124,566          5,591,526
                                                                                           -----------       ------------
Cash and cash equivalents at end of period                                                 $ 9,656,467       $  9,315,942
                                                                                           ===========       ============

Supplemental disclosures of cash flow information:
 Cash paid during the period for:
      Interest                                                                             $ 1,700,225       $  2,597,422
      Taxes                                                                                $   949,028       $    296,564
   Noncash investing and financing activities:
      Transfer from loans to other real estate                                             $   115,125       $    228,221
                                                                                           ===========       ============

</TABLE>

See Notes to Consolidated Financial Statements.

                                       -4-

<PAGE>



                     HORIZON FINANCIAL SERVICES CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The consolidated  financial statements for the three and nine months ended March
31,  2003 are  unaudited.  In the  opinion of  management  of Horizon  Financial
Services  Corporation (the "Company"),  these financial  statements  reflect all
adjustments,  consisting only of normal occurring accruals, necessary to present
fairly the consolidated  financial position of the Company at March 31, 2003 and
its  results of  operations  and cash  flows for the  periods  presented.  These
consolidated  financial  statements  do not purport to contain all the necessary
disclosures  required by accounting  principles generally accepted in the United
States of America that might  otherwise be  necessary in the  circumstances  and
should be read in conjunction  with the  consolidated  financial  statements and
notes  therein  included  in the  annual  report of Horizon  Financial  Services
Corporation  for the year  ended  June 30,  2002.  The  results  of the  periods
presented are not  necessarily  representative  of the results of operations and
cash flows which may be expected for the entire year.


2. PRINCIPLES OF CONSOLIDATION

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned  subsidiary,  Horizon Federal Savings Bank (the "Bank") and the
Bank's wholly owned subsidiary,  Horizon Investment Services, Inc. The principal
business activity of Horizon  Investment  Services,  Inc. is to sell credit life
insurance  to  customers of the Bank.  All  material  intercompany  accounts and
transactions have been eliminated.


                                       -5-

<PAGE>



3. EARNINGS PER SHARE

The following provides a reconciliation of the amounts used in the determination
of basic and  diluted  earnings  per share for the three and nine month  periods
ended March 31, 2003 and 2002:
<TABLE>
<CAPTION>

                                                                  Three Months Ended        Nine Months Ended
                                                                       March 31,                 March 31,
                                                                  2003         2002         2003         2002
                                                                  ----         ----         ----         ----

<S>                                                               <C>         <C>           <C>          <C>
Net Earnings                                                   $301,879     $329,492     $824,615     $869,854
                                                               ========     ========     ========     ========


Basic earnings per share:

Weighted average number of common shares outstanding            754,000      751,462      753,505      751,462
                                                               --------     --------     --------     --------

Earnings per common share - basic                              $   0.40     $   0.44     $   1.09     $   1.16
                                                               ========     ========     ========     ========

Diluted earnings per share:

      Weighted average shares outstanding                       754,000      751,462      753,505      751,462

      Assumed incremental option shares
         using the treasury stock method                         19,978       14,853       18,461       12,294
                                                               --------     --------     --------     --------

Common and common equivalent shares outstanding                 773,978      766,315      771,966      763,756
                                                               ========     ========     ========     ========

Earnings per common share - diluted                            $   0.39     $   0.43     $   1.07     $   1.14
                                                               ========     ========     ========     ========
</TABLE>




                                       -6-

<PAGE>



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        ------------------------------------------------------------------------
        OF OPERATIONS
        -------------

GENERAL
-------

Horizon Financial Services Corporation ("the Company") is a savings bank holding
company,  the  primary  asset of which is  Horizon  Federal  Savings  Bank ("the
Bank").  The Company was  incorporated  in March 1994 and sold 506,017 shares of
common  stock on June 28, 1994 for the purpose of  acquiring  all of the capital
stock of the Bank in connection with the Bank's  conversion from mutual to stock
form of ownership.

The principal  business of the Company  (through its operating  subsidiary,  the
Bank), has historically consisted of attracting deposits from the general public
and making  residential  and commercial real estate loans,  commercial  business
loans and a variety of consumer loans.  The Company's  results of operations are
primarily dependent on the difference or spread ("interest rate spread") between
the  average  yield  on  loans,   mortgage-backed  and  related  securities  and
investments  and the average rate paid on deposits and other  borrowings as well
as the relative amounts of such assets and liabilities. The interest rate spread
is affected by  regulatory,  economic and  competitive  factors  that  influence
interest  rates,  loan  demand  and  deposit  flows.  The  Company,  like  other
non-diversified  savings institution  holding companies,  is subject to interest
rate risk to the degree that its  interest-earning  assets  mature or reprice at
different times, or on a different basis, than its interest-bearing liabilities.

The Company's  results of  operations  are also affected by, among other things,
fee income received,  loss or gain on securities available for sale and mortgage
loans, the establishment of provisions for probable loan losses,  income derived
from subsidiary  activities,  the level of operating  expenses and income taxes.
The Company's operating expenses  principally  consist of employee  compensation
and benefits,  occupancy  expenses,  federal deposit  insurance  premiums,  data
processing expenses and other general and administrative expenses.

The  Company  is  significantly   affected  by  prevailing  economic  conditions
including  federal  monetary  and fiscal  policies  and  federal  regulation  of
financial  institutions.  Deposit balances are influenced by a number of factors
including interest rates paid on competing personal investments and the level of
personal  income and  savings  within the  institution's  market  area.  Lending
activities  are  influenced  by the demand for all of the various types of loans
the Company offers as well as competition from other lending  institutions.  The
primary sources of funds for lending activities include deposits, loan payments,
borrowings and funds provided from operations.

Local  economic  conditions  in the  Bank's  current  markets  are  mixed.  Some
retailing  concerns are reporting  improving  sales and others are not.  Housing
sales are somewhat inconsistent from month to month in our current market areas,
but small business lending has increased.  We are currently experiencing factory
layoffs and some decline in retail  business.  In the event current economic and
market  conditions  persist or worsen,  loan  demand and  existing  loans may be
affected,  which could adversely  affect the financial  condition and results of
operations of the Company and the Bank.  The Bank hopes to extend its ability to
maintain  an  adequate  loan  portfolio  by its May 1,  2003  opening  of a loan
origination office in Pleasant Hill, Iowa.  Pleasant Hill is located on the east
side of Des  Moines,  Iowa and has  experienced  substantial  population  growth
during the period from 1990 to 2000. This population growth trend is expected to
continue.



                                       -7-

<PAGE>



DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
-----------------------------------------------

The  Company,  and its  subsidiaries  may from time to time make written or oral
"forward-looking  statements",  including  statements contained in the Company's
filings with the Securities and Exchange  Commission  (including  this Quarterly
Report on Form 10-QSB and the exhibits  hereto and  thereto),  in its reports to
stockholders and in other communications by the Company,  which are made in good
faith by the Company and the Bank  pursuant to the "safe  harbor"  provisions of
the Private Securities Litigation Reform Act of 1995.

These  forward-looking   statements  include  statements  with  respect  to  the
Company's  and the  Bank's  beliefs,  plans,  objectives,  goals,  expectations,
anticipations,  estimates and intentions,  that are subject to significant risks
and  uncertainties,  and are subject to change based on various factors (some of
which are  beyond  the  Company's  and the  Bank's  control).  The words  "may",
"could",  "should",  "would",  "believe",  "anticipate",  "estimate",  "expect",
"intend",   "plan"  and   similar   expressions   are   intended   to   identify
forward-looking statements. The following factors, among others, could cause the
Company's and the Bank's  financial  performance to differ  materially  from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements:

o    the  strength of the United  States  economy in general and the strength of
     the  local  economies  in which  the  Company  and the Bank  conduct  their
     operations;
o    the effects of, and changes in,  trade,  monetary  and fiscal  policies and
     laws,  including  interest  rate  policies  of the Federal  Reserve  Board,
     inflation, interest rate, market and monetary fluctuations;
o    the timely  development  of and  acceptance of new products and services of
     the Bank and the perceived  overall value of these products and services by
     users, including the features, pricing and quality compared to competitors'
     products and services;
o    the willingness of users to substitute  competitors'  products and services
     for the Bank's products and services;
o    the success of the Bank in gaining regulatory  approval of its products and
     services, when required;
o    the  impact  of  changes  in  financial   services'  laws  and  regulations
     (including laws concerning taxes, banking, securities and insurance);
o    technological changes;
o    acquisitions;
o    changes in consumer spending and saving habits; and
o    the success of the Company and the Bank at managing  the risks  involved in
     the foregoing.

The foregoing list of important factors is not exclusive.  Additional discussion
of factors  affecting  the  Company's  business is  contained  in the  Company's
periodic filings with the Securities and Exchange  Commission.  The Company does
not undertake and expressly  disclaims any intent or  obligation,  to update any
forward-looking statements,  whether written or oral, that may be made from time
to time by or on behalf of the Company or the Bank.


FINANCIAL CONDITION
-------------------

The Company's  total assets at March 31, 2003 of $93.2 million  increased  $4.75
million, or 5.4%, from $88.4 million at June 30, 2002. Cash and cash equivalents
increased  $1.6  million,  from $8.1 million at June 30, 2002 to $9.7 million at
March 31,  2003.  The  increase  in cash was the  result of  deposit  growth and
reduced reinvestment activity of funds received from maturing available-for-sale
securities  and principal  payments on  securities  as the Company  continues to
search for desirable investments.  Securities  available-for-sale increased $2.3
million from  $12.1million  at June 30, 2002 to $14.4 million at March 31, 2003.
Loans receivable,  net increased  $829,000 , as loan origination  volume for the




                                       -8-

<PAGE>



Bank  remains  steady  but  sales of first  mortgage  loan  originations  to the
secondary market continue to increase. Office property and equipment also had an
increase of $203,000.

Total liabilities increased $4.0 million, or 5.0%, to $83.0 million at March 31,
2003 from $79.0  million at June 30,  2002,  primarily  the result of  increased
deposits.  Deposits  increased $4.7 million,  or 6.5%, to $76.6 million at March
31, 2003 from $71.9  million at June 30,  2002.  The  increase  in deposits  was
partially  offset by a  decrease  in accrued  income  taxes of  $489,000.  Total
stockholders' equity increased $823,000, to $10.2 million at March 31, 2003 from
$9.4 million at June 30, 2002, the result of an increase of $711,000 in retained
earnings and an increase in unrealized gain on securities available-for- sale of
$123,000.  There  were no other  significant  changes in the  components  of the
Company's balance sheet.


RESULTS OF OPERATIONS
---------------------

The  Company's  results of operations  depend  primarily on the level of its net
interest  income and  non-interest  income and the level of operating  expenses.
Net  interest  income  depends  upon the volume of  interest-earning  assets and
interest-bearing liabilities and interest rates earned or paid on such assets or
liabilities.  The  Company's  non-interest  income  consists  primarily  of fees
charged on transaction  accounts which help to offset the costs  associated with
establishing and maintaining  these accounts,  and to a lesser extent,  gains or
losses on sale of securities.


Comparison  of three month and nine month periods ended March 31, 2003 and March
31, 2002


GENERAL
-------

Net earnings for the three month period ended March 31, 2003 decreased  slightly
by $27,600, to $301,900 from $329,500 for the three month period ended March 31,
2002.  The  small  decrease  in net  earnings  for  the  quarter  was  primarily
attributable  to a decrease  in  interest  income as rates  continue to decline,
decreased  non-interest income the result of a substantial  reduction in gain on
sales of  securities,  and increased  non-interest  expense.  These factors were
largely offset by decreased total interest  expense as interest paid on deposits
and FHLB advances declined and decreased  provision for losses on loans. For the
nine months ended March 31, 2003, net earnings  decreased  $45,200 , to $824,600
from $869,800 for the comparable period ended 2002. Decreases for the nine month
period  were also  generally  attributable  to  decreased  interest  income  and
non-interest  income and  increased  non-interest  expense.  Earnings  per share
decreased  by four cents on a basic and fully  diluted  basis  during this three
month  period  compared  to the same  period  in 2002,  and  earnings  per share
decreased  seven  cents on a basic and fully  diluted  basis for the nine  month
period compared to the equivalent period ended March 31, 2002. Both earnings per
share  decreases were due to decreased net earnings for the periods.  There were
2,081 shares of Horizon Financial Services  Corporation stock repurchased during
the periods.

INTEREST INCOME
---------------

Interest  income  decreased  $85,000 to $1.43 million for the three month period
ended March 31, 2003  compared to $1.51 million for the three month period ended
March 31, 2002 and  $311,400 to $4.4  million  for the nine month  period  ended
March 31, 2003 compared to $4.7 million for the period ended March 31, 2002. The
decrease for the three month period was primarily the result of a 65 basis point
decrease in the weighted  average  yield on average  interest-earning  assets to
6.43% for the three month  period  ended March 31, 2003 as compared to 7.08% for
the same period in 2002.  Average  net loans  receivable  increased  slightly by
$105,500,  but the weighted  average yield on loans decreased 47 basis points to
7.59% for the three  month  period  ended March 31, 2003 from 8.06% for the same
period  ended 2002,  resulting  in an overall  decrease in interest  and fees on


                                       -9-

<PAGE>



loans of $76,000,  or 5.7%. Interest on securities  available-for-sale  slightly
impacted  interest  income with a $2,600  decrease for the three month period as
the average balance for securities  available-for-sale increased by $2.5 million
for the  period  ended  March  31,  2003 over the same  period in 2002,  but the
weighted  average yield  decreased 108 basis points for the March 2003 period to
4.54% from 5.62% for the three month period ended March 31, 2002.  For the three
month period other  interest  income  decreased  $6,500,  or 31.7%,  The average
outstanding balance of other interest-earning assets increased $749,000, but the
average  yield on other  interest-earning  assets  for the  three  month  period
decreased  42 basis points to .51% for the period ended March 31, 2003 from .93%
for the three month period ended March 31, 2002.

For the nine month  period  results  were  similar  with an overall  decrease in
interest  income of $311,400 to $4.4 million for the period ended March 31, 2003
compared to $4.7 million for the period  ended 2002.  Interest and fees on loans
decreased $177,500 to $3.9 million for the period ended March 31, 2003 from $4.1
million for the nine month period ended March 31, 2002 as average  loans for the
period  increased  $50,000,  but  weighted  average  yield on  loans  receivable
decreased 37 basis  points to 7.83% for the period ended 2003  compared to 8.20%
for the  nine  month  period  ended  March  31,  2002.  Interest  on  securities
available-for-sale also decreased for the nine month period ended March 31, 2003
compared to 2002 by $106,900 to $443,400  for the nine month  period ended March
31, 2003  compared  to $550,300  for the period  ended 2002,  a 19.4%  decrease.
Average balance for securities  available-for-sale had a slight decrease for the
nine  month  period  ended  2003 of  $192,000  and  weighted  average  yield  on
securities  available-for-sale  for the nine month  period  decreased  101 basis
points to 4.51% for the  period  ended  March 31,  2003 from  5.52% for the nine
month   period  ended  March  31,  2002.   Weighted   average   yield  on  other
interest-earning  assets for the nine month period  decreased 67 basis points to
..79% for the nine month  period  ended  March 31, 2003 from 1.46% for the period
ended March 31, 2002,  the result of sharp  decreases in interest  rates paid by
FHLB on the Bank's demand and daily time accounts.

INTEREST EXPENSE
----------------

Interest  expense  decreased  $101,400 to $481,300  from  $582,700 for the three
month period and $615,600 to $1.56 million from $2.18 million for the nine month
period  ended  March 31,  2003 as  compared  to the same  periods  in 2002.  The
decrease in interest expense was  predominantly due to the weighted average rate
on deposits  decrease of 64 basis  points from 2.81% for the three month  period
ended March 31, 2002 to 2.17% for the  comparable  period  ended March 31, 2003.
Weighted  average rate on deposits  decreased  106 basis points to 2.42% for the
nine month  period ended March 31, 2003 as compared to 3.48% for the same period
in 2002.  Average  outstanding  balance of deposits  increased $3.2 million from
$72.5  million for the three month period ended March 31, 2002 to $75.7  million
for the three month period ended March 31, 2003 and increased  $2.3 million from
$72.1  million  to  $74.4  million  for  the   comparable   nine  month  period.
Contributing  to the decrease in interest  expense was a decrease in interest on
FHLB  advances  for the three and nine month  periods  ended  March 31,  2003 as
compared to the same  periods  ended March 31,  2002.  Interest on advances  and
other  borrowings  decreased  $1,600 to $71,400 from $73,000 for the three month
period and $81,000 to $215,500  from  $296,500 for the nine month  period.  This
decrease is attributable to reduced average  borrowings of $274,000,  from $5.83
million for the three month period ended March 31, 2002,  at a weighted  average
rate of 5.01%,  to $5.55  million for the same period ended 2003,  at a weighted
average rate of 5.14%.  The decrease in average  borrowings  for the  comparable
nine month period was $1.82 million from $7.38 million,  with a weighted average
rate of 5.35%,  for the period  ended  March 31, 2002 to $5.56  million,  with a
weighted average rate of 5.17%, for same period ended 2003.

NET INTEREST INCOME
-------------------

Net interest income was $946,500 and $2.81 million for the three months and nine
months  ended March 31,  2003,  respectively,  compared  to  $930,200  and $2.51
million for the comparable periods ended 2002. The Company's net interest margin
increased  42 basis points for the nine month period ended March 31, 2003 , from
3.87% to 4.29% as compared to the same period ended 2002.  This  increase is the
result of decreased  rates paid on deposits and FHLB advances  accompanied  with


                                      -10-

<PAGE>



the slower  reduction  in loan rates for the  beginning  months of the 2003 nine
month period.  The net interest margin decreased 9 basis points to 4.26% for the
three month period ended March 31, 2003 as compared to 4.35% for the same period
in 2002 as the rates on the Bank's  loan  portfolio  continue  to adjusts to the
declining  lagging market index used on the majority of the Bank's variable rate
loans and rates on  deposits  and FHLB  advances  have  stabilized.  The Company
expects the current decrease in net interest margin to continue as rates paid on
deposits  remain  constant or increase  in  response  to local  competition  and
recovery in the national  economy and as our loan portfolio  continues to adjust
to the lagging market loan index.

PROVISION FOR LOSSES ON LOANS
-----------------------------

The provision for losses on loans is based on management's  periodic analysis of
the  adequacy of the  Company's  allowance  for losses on loans.  The  Company's
provision for losses on loans was $175,800 for the nine month period ended March
31,  2003 as compared to  $214,000  for the same period  ended 2002.  Additional
provisions  were applied in the 2002 period in response to some  weakness in the
local economy and continued  into the current period ended March 31, 2003. As of
March 31, 2003, the Company's  non-performing  assets,  consisting of nonaccrual
loans,  $2,968,000,  and real estate owned and  repossessed  consumer  property,
$115,000,  totaled $3,083,000 or 3.31% of total assets,  compared to $2,128,000,
or  2.41% of total  assets  as of June 30,  2002.  As of  March  31,  2003,  the
Company's  allowance  for losses on loans was  $558,000,  representing  18.1% of
non-performing assets and .85% of net loans receivable.

The Company continues to monitor and adjust its allowance for losses on loans as
management's analysis of its loan portfolio and economic conditions dictate. The
Company believes it has taken an appropriate  approach to maintain the allowance
for loan losses at a level  consistent  with the Company's loss  experiences and
considering,  among  other  factors,  the  composition  of  the  Company's  loan
portfolio,  the level of the Company's classified and non-performing  assets and
their estimated value. Future additions to the Company's allowance for losses on
loans and any change in the related  ratio of the  allowance for losses on loans
to non-performing  loans are dependent upon the economy,  changes in real estate
values  and  interest  rates.  In  addition,   federal  regulators  may  require
additional  reserves  as a  result  of their  examination  of the  Company.  The
allowance for losses on loans reflects what the Company currently believes is an
adequate  level of  reserves,  although  there can be no  assurance  that future
losses will not exceed the estimated amounts, thereby adversely affecting future
results of operations.

NON-INTEREST INCOME
-------------------

Non-interest  income  decreased  to $211,300 and $429,200 for the three and nine
month  periods  ended March 31,  2003,  respectively,  compared to $294,800  and
$706,000  for the periods  ended March 31,  2002.  The $83,500  decrease for the
three month period ended March 31, 2003 was primarily attributable to a $113,500
decrease in gain on sale of securities  which was partially  offset by increased
gain on sale of mortgage loans of $17,000 and increased fees,  commissions,  and
service  charges  collected  of $13,300.  For the nine month period the $276,800
decrease was  attributable  to the recorded  $161,660  impairment loss on equity
securities  and a $168,800  decrease in gain on sale of  securities,  net. Fees,
commissions, and service charges collected increased by $18,700 and gain on sale
of mortgage loans  increased  $16,000 for the nine month periods being compared.
Other non-interest income also increase $19,000 for the nine month period.


NON-INTEREST EXPENSE
--------------------

Total non-interest expense was $658,700 and $1.82 million for the three and nine
month periods ended March 31, 2003, respectively, compared to $592,000 and $1.68
million  for the  same  periods  in 2002.  Compensation  and  employee  benefits
expenses,  the largest component of non-interest expense,  increased $43,300 and
$94,200 for the three and nine month periods ended March 31, 2003 as compared to
the same  period  ended March 31,  2002.  Office  property  and  equipment  also


                                      -11-

<PAGE>



increased  for both periods  being  compared by $29,900 and  $75,400.  Partially
offsetting these increases were decreases in other real estate expense,  federal
deposit insurance premiums and other expense.

TAXES ON INCOME
---------------

Income taxes  decreased  $16,200 for the three month period ended March 31, 2003
as  compared  to the same  period  ended  March 31,  2002,  and  $28,400 for the
comparable nine month periods.  The income tax decreases for the periods are the
result of decreased  earnings before taxes on income. The effective tax rate for
the three month  period  ended March 31, 2003 was 34.6% as compared to 34.8% for
the same period  ended 2002.  For the nine month period ended March 31, 2003 the
effective tax rate was 33.7% compared to 34.0% for the same period ended 2002.

COMMITMENTS AND CONTINGENCIES
-----------------------------

In the  ordinary  course of business,  the Company is engaged in various  issues
involving  litigation.  Management  believes  that  none of this  litigation  is
material to the Company's results of operations.

CRITICAL ACCOUNTING POLICIES
----------------------------

The company has identified one critical  accounting policy and practice relative
to the financial  conditions and results of operation.  This  accounting  policy
relates to the allowance for loan losses.

The allowance for loan losses is based on management's  opinion, and is adequate
to  absorb  losses in the  existing  portfolio.  In  evaluating  the  portfolio,
management takes into consideration numerous factors, including current economic
conditions,  prior loan loss experience,  the composition of the loan portfolio,
and management's estimate of probable credit losses. The allowance for loan loss
is established through a provision for loss based on management's  evaluation of
the risk  inherent in the loan  portfolio,  the  composition  of the  portfolio,
specific impaired loans, and current economic conditions. Such evaluation, which
includes  a  review  of all  loans  on  which  full  collectibility  may  not be
reasonably assured,  considers among other matters, the estimated net realizable
value  or the fair  value of the  underlying  collateral,  economic  conditions,
historical  loss  experience,  and other  factors  that warrant  recognition  in
providing for an adequate allowance for loan loss.

In the event that management's evaluation of the level of the allowance for loan
losses is inadequate,  the Company would need to increase its provision for loan
losses.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's principal sources of funds are deposits and principal and interest
payments collected on mortgage loans, investments and related securities.  While
scheduled loan repayments and maturing  investments are relatively  predictable,
deposit flows and early loan  prepayments are more influenced by interest rates,
general  economic  conditions  and  competition.  Additionally,  the Company may
borrow funds from the FHLB or utilize  other  borrowings of funds based on need,
comparative costs and availability at the time.

The Bank has historically maintained its liquidity ratio at, or above, the level
needed to meet its operational  needs.  The Bank's liquidity ratio was 12.95% on
March 31, 2003 and 12.16% on June 30, 2002.

At March 31, 2003, the Company had advances of $5.6 million outstanding from the
FHLB.  The Company  uses its  liquidity  resources  principally  to meet ongoing
commitments,  to fund maturing  certificates of deposit and deposit withdrawals,
and to meet operating  expenses.  At March 31, 2003, the Company had outstanding
commitments  to extend credit which totaled  $2,128,000  (including  $734,000 in
available revolving commercial lines of credit). At March 31, 2003, certificates
of deposit scheduled

                                      -12-

<PAGE>



to mature in one year or less totaled $19.1 million.  Management believes,  that
loan  repayments  and  other  sources  of  funds  will be  adequate  to meet the
Company's foreseeable liquidity needs.

Liquidity management is both a daily and long-term responsibility of management.
The Bank  adjusts  its  investments  in liquid  assets  based upon  management's
assessment  of (i) expected  loan demand,  (ii) expected  deposit  flows,  (iii)
yields available on interest-bearing  investments and (iv) the objectives of its
asset/liability  management  program.  Excess liquidity generally is invested in
interest-earning  overnight deposits and other short-term  government and agency
obligations.

At March 31, 2003,  the Bank had tangible and core capital of $8.1  million,  or
8.9% of adjusted  total assets,  which was  approximately  $6.8 million and $4.5
million above the minimum  requirements of 1.5% and 4.0%,  respectively,  of the
adjusted  total assets in effect on that date.  At March 31, 2003,  the Bank had
risk-based capital of $8.7 million (including $8.1 million in core capital),  or
14.2% of risk- weighted  assets of $61.3  million.  This amount was $3.8 million
above the 8.0%  requirement in effect on that date. The Bank is considered to be
"well-capitalized" under Federal regulatory guidelines.

EFFECT OF NEW ACCOUNTING STANDARDS
----------------------------------

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  SFAS No. 143  requires  the Company to record the fair value of an
asset  retirement  obligation  as a liability in the period in which it incurs a
legal obligation  associated with the retirement of tangible  long-lived  assets
that result from the acquisition, construction, development and/or normal use of
assets. The Company also records a corresponding asset which is depreciated over
the life of the asset. The Company was required to adopt SFAS No. 143 for fiscal
years  beginning  after June 15, 2002.  This  Statement  did not have a material
effect on our consolidated financial statements.

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal of Long- Lived  Assets.  SFAS No. 144  supersedes  SFAS No. 121 and the
accounting  and reporting  provision of APB Opinion No. 30 for the disposal of a
segment of a business. SFAS No. 144 addresses financial accounting and reporting
for the impairment or disposal of long-lived assets and requires that long-lived
assets be reviewed for impairment  whenever  events or changes in  circumstances
indicate  that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
Recoverability  of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated  future cash
flows,  an  impairment  charge is recognized by the amount by which the carrying
amount of the asset  exceeds the fair value of the asset.  SFAS No. 144 requires
companies  to  separately  report  discontinued   operations  and  extends  that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment,  or in a distribution to owners) or is classified as held for sale.
Assets to be disposed of are  reported  at the lower of the  carrying  amount or
fair value less costs to sell.  The Company  was  required to adopt SFAS No. 144
for fiscal  years  beginning  after  December  15,  2001.  The  adoption of this
Statement  did  not  have  a  material  effect  on  our  consolidated  financial
statements.

SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement  No.  13,  and  Technical  Corrections  was issued  April  2002.  This
Statement  rescinds  FASB  Statement  No. 4,  Reporting  Gains and  Losses  from
Extinguishment  of Debt, and an amendment of that Statement,  FASB Statement No.
64,  Extinguishments  of Debt Made to Satisfy  Sinking-Fund  Requirements.  This
Statement also rescinds FASB Statement No. 44,  Accounting for Intangible Assets
of Motor Carriers.  This Statement amends FASB Statement No. 13,  Accounting for
Leases,  to  eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.   This  Statement   also  amends  other   existing   authoritative
pronouncements  to make various  technical  corrections,  clarify  meanings,  or
describe their applicability  under changed  conditions.  The provisions of this
Statement  related to the  rescission  of Statement 4 shall be applied in fiscal
years  beginning  after May 15, 2002.  The provisions in paragraph 8 and 9(c) of


                                      -13-

<PAGE>



this  Statement  related to  Statement 13 shall be  effective  for  transactions
occurring  after May 15, 2002. All other  provisions of this Statement  shall be
effective for financial  statements issued on or after May 15, 2002. The effects
of implementation are not material.

SFAS No. 146 Accounting for Costs  Associated  with Exit or Disposal  Activities
was  issued  June  2002.  This  Statement  addresses  financial  accounting  and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force  (EITF) Issue No. 94-3,  Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a  Restructuring).  The provisions of this
Statement  are  effective  for exit and disposal  activities  that are initiated
after December 31, 2002, and will have no affect on the Company at this time.

In  September  2002,  the FASB  issued  SFAS No.  147,  Acquisition  of  Certain
Financial  Institutions.  SFAS  No.  147  changed  the  special  accounting  for
unidentifiable  intangible  assets  recognized  under  SFAS No.  72.  Transition
provisions  for  previously  recognized  unidentifiable  intangible  assets were
effective on October 1, 2002. The effects of implementation had no impact on the
Company's consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, Guarantor's  Accounting
and Disclosure  Requirements  for Guarantees  Including  Indirect  Guarantees of
Indebtedness  of  Others  (FIN 45).  FIN 45  requires  disclosures  be made by a
guarantor in its interim and annual  financial  statements about its obligations
under certain guarantees that it has issued. It also requires the recognition of
a liability by a guarantor at the  inception of certain  guarantees  that it has
issued and that a  guarantor  recognize,  at the  inception  of a  guarantee,  a
liability  for the fair  value  of the  obligation  undertaken  in  issuing  the
guarantee.  The initial recognition and initial  measurement  provisions of this
Interpretation  are  applicable on a prospective  basis to guarantees  issued or
modified after December 31, 2002. The disclosure  requirements are effective for
financial  statements  of interim or annual  periods  ending after  December 15,
2002. The Company does not have any guarantees which qualify under FIN 45.

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation-  Transition and Disclosure-an amendment of FASB Statement No. 123.
This Statement amends SFAS No. 123, Accounting for Stock-Based Compensation,  to
provide alternative methods of transition for voluntary change to the fair value
based method of accounting for stock-based employee  compensation.  In addition,
this  Statement  amends the disclosure  requirements  of SFAS No. 123 to require
prominent  disclosures in both the annual and interim financial statements about
the method of accounting for stock- based employee  compensation  and the effect
of the method  used on  reported  results.  The  amendments  to SFAS No. 123 are
effective  for fiscal  years ending  after  December 15, 2002 and for  condensed
interim financial statements issued after December 15, 2002. The Company has not
adopted the voluntary  change to the fair value based method of  accounting  for
stock-based employee compensation as of March 31, 2003.

In  January  2003,  the FASB  issued  Interpretation  No. 46,  Consolidation  of
Variable Interest Entities (FIN 46). FIN 46 addresses  consolidation by business
enterprises of variable interest entities that have certain characteristics.  It
requires a business  enterprises  that has a controlling  interest in a variable
interest entity (as defined by FIN 46) to include the assets,  liabilities,  and
results of the activities of the variable  interest  entity in the  consolidated
financial statements of the business  enterprise.  FIN 46 applies immediately to
variable  interest  entities  created  after  January 31, 2003,  and to variable
interest  entities in which an enterprise  obtains an interest  after that date.
For variable  interest acquired before February 1, 2003, it applies in the first
fiscal  year or interim  period  beginning  after June 15,  2003.  The impact of
adopting FIN 46 will not be material as the Company does not presently  have any
variable interest entities.



                                      -14-

<PAGE>



ITEM 3. CONTROLS AND PROCEDURES
        ------------------------

With the  participation  and under the supervision of the Company's  management,
including the Company's Chief Executive Officer and Chief Financial Officer, and
within 90 days of the filing date of the quarterly  report,  the Company's Chief
Executive  Officer and Chief Financial  Officer have evaluated the effectiveness
of the design and operation of the Company's  disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14(c) and 15(d)- 14(c) and, based on their
evaluation,  have  concluded  that the  disclosure  controls and  procedures are
effective.  There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their  evaluation,  including any  corrective  action with regard to
significant deficiencies and material weaknesses.

                                      -15-

<PAGE>





                                     PART II
                                OTHER INFORMATION

ITEM 1. Legal Proceedings
        -----------------

          None, other than debt collection in the ordinary course of business.

ITEM 2. Changes in Securities
        ----------------------

          None

ITEM 3. Defaults Upon Senior Securities
        --------------------------------

          None

ITEM 4. Submission of Matters to a Vote of Security Holders
        ----------------------------------------------------

          None

ITEM 5. Other Information
        ------------------

          None

ITEM 6. Exhibits and Reports on Form 8-K.
        ---------------------------------

          (a) Exhibits:
          See Index to Exhibits

          (b) The  following is a  description  of the Form 8-K filed during the
              three months ended March 31, 2003:

               On  January  24,  2003,  current  report on Form 8-K was filed to
               announce the Company's earnings for the three month and six month
               periods ended December 31, 2002.

               On  January  30,  2003,  current  report on Form 8-K was filed to
               announce the approval of the Company's stock repurchase plan.

                                      -16-

<PAGE>









                                   SIGNATURES


Pursuant  to the  requirement  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 FINANCIAL SERVICES CORPORATION
                                         Registrant


Date: May 13, 2003                       /s/Robert W. DeCook
      -------------                      ---------------------------------------
                                            Robert W. DeCook
                                           President and Chief Executive Officer




Date: May 13, 2003                       /s/ Vicki Hladik
      -------------                      ---------------------------------------
                                             Vicki Hladik
                                             Chief Financial Officer



                                      -17-

<PAGE>



                                  Certification

  (Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)

I, Robert W. DeCook, certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Horizon  Financial
     Services Corporation (the "registrant");

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: May 13, 2003
                                         /s/  Robert W. DeCook
                                         ---------------------------------------
                                              Robert W. DeCook
                                              Chief Executive Officer




                                      -18-

<PAGE>



                                  Certification

  (Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended)

I, Vicki Hladik, certify that:

1.   I have reviewed this quarterly  report on Form 10-QSB of Horizon  Financial
     Services Corporation (the "registrant");

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: May 13, 2003
                                           /s/  Vicki Hladik
                                         ---------------------------------------
                                                Vicki Hladik
                                                Chief Financial Officer

                                      -19-

<PAGE>



                                  Certification

      (Furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)


I, Robert W. DeCook, certify that:

1.   This  quarterly  report  on  Form  10-QSB  of  Horizon  Financial  Services
     Corporation  fully complies with the  requirements  of section 13(a) of the
     Securities Exchange Act of 1934; and

2.   The information  contained in this quarterly report fairly presents, in all
     material  respects,  the  financial  condition and results of operations of
     Horizon Financial Services Corporation.

Date: May 13, 2003

                                           /s/  Robert W. DeCook
                                         ---------------------------------------
                                                Robert W. DeCook
                                                Chief Executive Officer


A signed original of this written  statement as required by Section 906 has been
provided  to Horizon  Financial  Services  Corporation  and will be  retained by
Horizon  Financial  Services  Corporation  and furnished to the  Securities  and
Exchange Commission or its staff upon request.




I, Vicki Hladik, certify that:

1.   This  quarterly  report  on  Form  10-QSB  of  Horizon  Financial  Services
     Corporation  fully complies with the  requirements  of section 13(a) of the
     Securities Exchange Act of 1934; and

2.   The information  contained in this quarterly report fairly presents, in all
     material  respects,  the  financial  condition and results of operations of
     Horizon Financial Services Corporation.

Date: May 13, 2003

                                         /s/  Vicki Hladik
                                         ---------------------------------------
                                              Vicki Hladik
                                              Chief Financial Officer


A signed original of this written statement as required by Section 906 has been
provided to Horizon Financial Services Corporation and will be retained by
Horizon Financial Services Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.


                                      -20-

<PAGE>





                                INDEX TO EXHIBITS

Exhibit
Number                              Document
------                              --------

     3    The Articles of Incorporation  and Bylaws,  filed on March 18, 1994 as
          exhibits  3.1  and  3.2,  respectively,  to  Registrants  Registration
          Statement on Form S-1 (File No. 33-76674),  are incorporated herein by
          reference.

     4    Registrant's  Specimen Stock  Certificate,  filed on March 18, 1994 as
          Exhibit to Registrant's  Registration  Statement on Form S-1 (File No.
          33- 76674), is incorporated herein by reference.

     10.1 Employment   Agreements  between  the  Bank  and  Messrs.  DeCook  and
          Gillespie,   filed  as  Exhibits  10.1  and  10.2,  respectively,   to
          Registrant's  Report on Form 10-KSB for the fiscal year ended June 30,
          1994 (File No. 0-24036), are incorporated herein by reference.

     10.2 1994  Stock  Option  and  Incentive  Plan,  filed as  Exhibit  10.3 in
          Registrant's  Report on Form 10-KSB for the fiscal year ended June 30,
          1994 (File No. 0-24036), is incorporated herein by reference.

     10.3 Recognition and Retention Plan,  filed as Exhibit 10.4 to Registrant's
          Report on Form  10-KSB for the fiscal  year ended June 30,  1994 (File
          No. 0-24036), is incorporated herein by reference.

     11   Statement re  computation of earnings per share (See Footnote 4 of the
          Registrant's  Notes to  Consolidated  Financial  Statements  contained
          herein)











                                      -21-












































                                                       -22-

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