<PAGE>

                                  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       September 30, 1996
                                     ------------------
                                       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)

   (515)673-8328
-----------------------------------------------------
(Registrant's telephone number, including area code)

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

Check 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                               425,540
                 ------------                      -----------------------
                    Class                            Shares Outstanding
                                                   as of November 12, 1996

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


<PAGE>



             HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>

<S>                                                                                         <C>  
Part I.   Financial Information                                                                 Page

          Item 1.  Financial Statements

          Consolidated Balance Sheets at September 30, 1996 and June 30, 1996.                     1

          Consolidated Statements of Operations for the three months ended                         2
          September 30, 1996 and 1995.

          Consolidated Statements of Cash Flows for the three months ended                         3
          September 30, 1996 and 1995.

          Notes to Consolidated Financial Statements                                               4

          Item 2.  Management's Discussion and Analysis of Financial Condition and                 5
                     Results of Operations


Part II.  Other Information                                                                       10

          Signatures                                                                              11

          Index of Exhibits                                                                       12

</TABLE>



<PAGE>




                                     PART I

ITEM 1.  FINANCIAL STATEMENTS

             HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                        September 30,      June 30,
Assets                                                      1996             1996
------                                                 ---------------    ---------
<S>                                                      <C>             <C>         
Cash and cash equivalents                                $  3,783,787    $  3,470,538
Securities available for sale                              19,283,100      18,049,483
Loans receivable, net                                      50,576,835      49,104,188
Real Estate                                                   618,071         504,457
Stock in Federal Home Loan Bank, at cost                      632,600         558,800
Office property and equipment, net                          1,101,033       1,133,315
Accrued interest receivable                                   510,471         513,629
Prepaid expenses and other assets                             146,454         129,776
                                                         ------------    ------------

     Total assets                                        $ 76,652,351    $ 73,464,186
                                                         ============    ============

Liabilities and Stockholders' Equity
Savings deposits                                         $ 55,209,711    $ 54,758,967
Advances from Federal Home Loan Bank                       12,646,665       9,661,271
Advance payments by borrowers for taxes and insurance          84,754         386,272
Accrued taxes on income:
     Current                                                  (39,517)         36,347
     Deferred                                                 (11,937)         11,000
Accrued expenses and other liabilities                        535,149         220,103
                                                         ------------    ------------

     Total liabilities                                     68,424,825      65,073,960
                                                         ------------    ------------

Stockholders' equity
Preferred stock, $.01 par value, authorized 250,000
     shares, none issued                                         --              --
Common stock, $.01 par value, 1,500,000 shares
     authorized, issued and outstanding 523,099 shares          5,231           5,231
Additional paid-in capital                                  4,763,930       4,752,930
Retained earnings, substantially restricted                 4,996,344       5,157,486
Treausry stock, at cost                                    (1,022,921)     (1,022,921)
Unearned employee stock ownership plan shares                (243,209)       (260,303)
Unearned recognition and retention plan shares                (74,817)        (83,871)
Unrealized losses on assets available for sale               (197,032)       (158,326)
                                                         ------------    ------------

     Total stockholders' equity                             8,227,526       8,390,226
                                                         ------------    ------------

Total liabilities and stockholders' equity               $ 76,652,351    $ 73,464,186
                                                         ============    ============
</TABLE>

                                                        -1-

<PAGE>



             HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                                          Three Months
                                                                        Ended September 30,
                                                                       1996           1995
                                                                   -----------     -----------
<S>                                                               <C>              <C>
Interest income:                                                                   
Interest on loans                                                 $  1,073,339      $  991,495
Interest on mortgage backed & related securities                            --         181,058
Interest on securities available for sale                              343,288         104,074
Interest on investment securities                                           --           2,271
Other interest earning assets                                           16,009          45,662
                                                                  ------------     -----------
                                                                                   
Total interest income                                                1,432,636       1,324,560
                                                                  ------------     -----------
                                                                                   
Interest expense:                                                                  
Interest on deposits                                                   645,641         646,965
Interest on advances and other borrowings                              162,485         131,613
                                                                  ------------     -----------
                                                                                   
Total interest expense                                                 808,126         778,578
                                                                  ------------     -----------
                                                                                   
Net interest income                                                    624,510         545,982
                                                                  ------------     -----------
                                                                                   
Provision for losses on loans                                           95,073           6,000
                                                                                   
Net interest income after provision for Losses on loans                529,437         539,982
                                                                  ------------     -----------
                                                                                   
Noninterest income:                                                                
Fees, commissions and service charges                                   84,850          90,625
Other                                                                    5,575          41,603
                                                                  ------------     -----------
                                                                                   
Total noninterest income                                                90,425         132,228
                                                                  ------------     -----------
                                                                                   
Noninterest expense:                                                               
Compensation, payroll taxes and employee benefits                      258,680         223,357
Advertising                                                             21,445          12,097
Office property and equipment                                           74,219          76,116
Federal insurance premiums                                             361,800          28,958
Data processing services                                                26,012          18,941
Other real estate expense, net                                          22,736           7,571
Other                                                                   57,969          66,106
                                                                  ------------     -----------
                                                                                   
Total noninterest expense                                              822,861         433,146
                                                                  ------------     -----------
                                                                                   
Earnings before taxes on income                                      (202,999)         239,064
                                                                  ------------     -----------
                                                                                   
Taxes on income                                                       (75,700)          84,600
                                                                  ------------     -----------
                                                                                   
Net earnings                                                        ($127,299)        $154,464
                                                                  ============     ===========
                                                                                   
Earnings per common share - primary and fully diluted             $     (0.29)     $      0.33
                                                                  ============     ===========
                                                                                   
Weighted average common shares outstanding                             447,937     $   489,322
                                                                  ============     ===========
</TABLE>
                                                                               
                                       -2-

<PAGE>




             HORIZON FINANCIAL SERVICES CORPORATION and SUBSIDIARIES
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                           Three months ended
                                                                              September 30,
                                                                          1996           1995
                                                                       ----------     ----------
<S>                                                                   <C>            <C>
Cash flows from operating activities:
Net earnings                                                          $  (127,299)   $   154,464
Adjustments to reconcile net earnings to net cash provided
by operating activities:
  Depreciation                                                             38,421         36,162
  Amortization of fees, premiums and accretion of discounts, net           12,092         13,647
  Provision for losses on loans                                            95,073          6,000
  (Increase) decrease in accrued interest receivable                        3,158        (46,023)
  Deferred taxes on income                                                   --            1,317
  Amortization of stock compensation plans                                 26,148         23,513
  Other, net                                                              233,668         69,356
                                                                      -----------    -----------

Net cash provided by operating activities                                 281,261        258,436
                                                                      -----------    -----------

Cash flows from investing activities:
  Principal collected on securities available for sale                    563,267          5,057
  Purchase of securities available for sale                            (1,870,783)          --
  Principal collected on mortgage-backed and related securities              --          434,712
  Purchase Federal Home Loan Bank Stock                                   (73,800)          --
  Loans to customers, net                                              (1,682,150)    (1,015,705)
  Proceeds from sale of real estate                                          --          190,000
  Purchase of office property and equipment, net                           (5,323)          (500)
  Investment in real estate                                                  --          (65,000)
                                                                      -----------    -----------

Net cash (used in) provided by investing activities                    (3,068,789)      (451,436)
                                                                      -----------    -----------

Cash flows from financing activities:
  Increase in customer deposit accounts, net                              450,744        876,317
  (Decrease) in advance payments by borrowers for taxes & insurance      (301,518)      (309,177)
  Proceeds from advances from FHLB                                      3,000,000           --
  Principal payments on advance from FHLB                                 (14,606)       (13,772)
  Payment of dividends                                                    (33,843)       (37,716)
  Treasury stock aquired                                                     --         (322,555)
                                                                      -----------    -----------

 Net cash provided by financing activities                              3,100,777        193,097
                                                                      -----------    -----------

Net increase (decrease) in cash and cash equivalents                      313,249             97

Cash and cash equivalents at beginning of year                          3,470,538      3,811,665
                                                                      -----------    -----------

Cash and cash equivalents at end of year                              $ 3,783,787    $ 3,811,762
                                                                      ===========    ===========

Supplemental disclosures of cash flow information:
  Cash paid for interest                                              $   813,654    $   641,077
  Cash paid for taxes                                                       7,429         23,000
  Transfers of loans to real estate aquired through foreclosures          114,430           --

To mark securities available for sale to fair value:
  Change in fair value                                                $   (61,807)   $    (3,531)
  Less deferred taxes                                                      23,101          1,317
                                                                      -----------    -----------
  Change in valuation allowance                                       $    38,706    $     2,214
                                                                      ===========    ===========
</TABLE>


                                       -3-

<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     HORIZON FINANCIAL SERVICES CORPORATION


1.  BASIS OF PRESENTATION

The consolidated financial statements for the three months ended September 30,
1996 are unaudited. In the opinion of management of Horizon Financial Services
Corporation (the "Registrant" or "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 September
30, 1996 and its results of operations and statements of cash flows for the
periods presented. Certain information and footnote disclosure normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted.

2.  ORGANIZATION

The Company was organized as a Delaware corporation at the direction of Horizon
Federal Savings Bank (the "Bank") for the purpose of becoming a savings bank
holding company, as part of the conversion from a mutual to a stock institution.
The conversion was completed on June 28, 1994 with the sale of 506,017 shares of
the Company's common stock at a price of $10 per share. Total proceeds from the
conversion of $4,148,060 (net of issuance costs of $507,300 and ESOP shares of
$404,810) have been recorded as common stock and paid-in capital.

3.  PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, 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.


                                       -4-

<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 "Conversion"). All references to the Company prior to
June 28, 1994, except where otherwise indicated, are to the Bank and its
subsidiary on a consolidated basis.

The principal business of the Company, (through its operating subsidiary, the
Bank) has historically consisted of attracting deposits from the general public
and making loans secured by residential and, to a lesser extent, other
properties. The Company's results of operations are primarily dependent on net
interest rate spread, which is the difference between the average yield earned
on loans, mortgage-backed securities, investments and other interest-earning
assets, and the average rate paid on deposits and other borrowings. 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 profit on assets available for sale, the
establishment of provisions for possible 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 housing 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.

FINANCIAL CONDITION

The Company's total assets at September 30, 1996 increased $3.2 million, or
4.35%, to $76.7 million from $73.5 million at June 30,1996. This increase was
reflected in a $1.5 million increase in net loans receivable, a $1.2 million
increase in securities available for sale and an increase of $313,000 in cash
and cash equivalents which were funded primarily through a $3.0 increase in
advances from the Federal Home Loan Bank, ("FHLB") and a $451,000 increase in
deposits. Real estate and stock in the Federal Home Loan Bank increased $114,000
and $74,000, respectively, while net office property and equipment decreased
$32,000.



                                       -5-

<PAGE>



Total liabilities increased $3.4 million to $68.4 million from June 30, 1996 to
September 30, 1996. In addition to the increase in FHLB advances, dicussed
above, advance payments by borrowers for taxes and insurance decreased $301,000
from $386,000 at June 30, 1996 to $85,000 at September 30,1996, while current
and deferred accrued taxes decreased $99,000. Liabilities also increased due to
a one-time special assesment of $331,000 to recapitalize the Federal Deposit
Insurance Corporation's ("FDIC") Savings Association Insurance Fund ("SAIF").
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 noninterest income and the level of its 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, respectively. The Company's noninterest income consists primarily
of fees charged on transaction accounts which help to offset the costs
associated with establishing and maintaining these accounts.

Comparison of three month periods ended September 30, 1996 and 
September 30, 1995

GENERAL

The Company experienced a net loss of $127,00 for the three month period ended
September 30, 1996 compared to a net income of $155,000 for the three month
period ended September 30, 1995. The decrease was primarily due to the one time
special assesment of $207,000, net of taxes, by the FDIC to recapitalize the
SAIF. Net income, without the SAIF assesment, for the three months ended
September 30, 1996 would have been $80,000 as compared to $155,000 for the same
three month period in 1995, resulting in a decrease of $75,000.

INTEREST INCOME

Interest income increased $108,000, or 8.16%, to $1.4 million for the three
month period ended September 30, 1996 compared to $1.3 million for the three
month period ended September 30, 1995. The increase was primarily the result of
an increase in the average outstanding balance of interest-earning assets,
consisting primarily of mortgage loans and securities available for sale of
approximately $2.9 million for the three month period ended September 30, 1996.
The weighted average yield on average interest-earning assets increased to 8.10%
for the three months ended September 30, 1996 from 8.08% for the same period in
1995.

INTEREST EXPENSE

Interest expense increased $29,000, or 3.72%, to $808,000 for the three month
period ended September 30, 1996 compared to $779,000 for the three month period
ended September 30, 1995. The increase in interest expense was attributable to
increased balances of average outstanding deposits and to a lesser extent an
increase in advances from the Federal Home Loan Bank, outstanding during the
period, which were used to fund mortgage loan growth and securites for sale. The
weighted average yield on interest-bearing liabilities decreased 30 basis points
to 4.86% for the three month period ended September 30, 1996 from 5.16% for the
same period in 1995.


                                       -6-

<PAGE>



NET INTEREST INCOME

Net interest income increased $79,000 from $546,000 for the three month period
ended September 30, 1995 to $625,000 for the three month period ended September
30, 1996. The increase in net interest income was primarily a result of the
increase in interest income as discussed above. The Company's net interest
margin was 3.24 % for the three month period ended September 30, 1996 compared
to 2.92% for the same period in 1995.

PROVISION FOR LOSSES ON LOANS

The provision for losses on loans is a result of management's periodic analysis
of the adequacy of the Company's allowance for losses on loans. During the three
month period ended September 30, 1996 the Company's provision for losses on
loans was $95,000 compared to $6,000 for the three month period ended September
30, 1995. The increase in the provision for losses on loans was predominantly
attributable to a $70,000 commercial business operating loan classified as a
loss during the period. As of September 30, 1996, the Company's nonperforming
assets, consisting of nonaccural loans, accruing loans 90 days or more
delinquent, real estate owned and repossessed consumer property, totaled
$855,000 or 1.11% of total assets compared to $935,000 or 1.27% of total assets
as of June 30, 1996. As of September 30, 1996 the Company's allowance for losses
on loans was $387,000 representing 45.3% of non-performing assets and .76% 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 toward reserve levels,
consistent with 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 to non-performing loans are dependant upon
the economy, changes in real estate values and interest rates. Because the
Company has had extremely low loan losses during its history, management also
considers the loss experience of similar portfolios in comparable lending
markets. In addition, federal regulators may require additional reserves as a
result of their examination of the Company. Accordingy, the calculation of the
adequacy of the allowance for losses on loans is not based directly on the level
of non-performing assets. 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.

NONINTEREST INCOME

Noninterest income was $90,000 for the three months ended September 30, 1996 as
compared to $132,000 for the same period ended September 30, 1995. Other
noninterest income decreased $36,000 due primarily to a non-recurring special
patronage dividend received from the Bank's data processing service during the
three month period ended September 30, 1995 which was not received in 1996.

NONINTEREST EXPENSE

Total noninterest expense increased $390,000, or 90.06%, from $433,000 for the
three months ended September 30, 1995 to $823,000 for the three month period
ended September 30, 1996. The increase was primarily the result of the one time
special assesment of $331,000 by the FDIC to recapitalize the SAIF. Also
contributing to the increase in noninterest expense was an increase in
compensation, advertising, and

                                       -7-

<PAGE>



real estate expense of $35,000, $9,000, and $15,000, respectively, for the three
month period ended September 30, 1996 as compared to the same period ended in
1995.

On September 30, 1996, federal legislation was enacted that requires the SAIF to
be recapitalized with a one-time assesment on virtually all SAIF-insured
institutions, such as the Bank, equal to 65.7 basis points on SAIF-insured
deposits maintained by those institutions as of March 31, 1995. This SAIF
assesment, which is to be paid to the FDIC by November 27, 1996, is
approximately $331,000 and has been accrued by the Company at September 30,
1996.

As a result of the SAIF recapitalization, the FDIC has proposed to amend its
regulation concerning the insurance premiums payable by SAIF-insured
institutions. Effective October 1, 1996 through December 31, 1996, the FDIC has
proposed that the SAIF insurance premium for all SAIF-insured institutions that
are required to pay the Financing Corporation (FICO) obligation, such as the
Bank, be reducted to a range of 18 to 27 basis points from 23 to 31 basis points
per $100 of domestic deposits. The Bank currently qualifies for the minimum SAIF
insurance premium to a range of 0 to 27 basis points per $100 of domestic
deposits, effective January 1, 1997. Management cannot predict whether or in
what form the FDIC's final regulation may be promulgated.




TAXES ON INCOME

The Company had an income tax benefit of $75,000 for the three months ended
September 30, 1996 compared to income tax expenses of $85,000 for the same
period in 1995, primarily as a result of the SAIF assesment.

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 of Des Moines or utilize other borrowings of funds
based on need, comparative costs and availability at the time.

The Office of Thrift Supervision (the "OTS") requires minimum levels of liquid
assets. OTS regulations presently require the Bank to maintain an average daily
balance of liquid assets (United States Treasury and federal agency securities
and other investments having maturities of five years of less) equal to at least
5.0% of the sum of its average daily balance of net withdrawable deposit
accounts and borrowings payable in one year or less. Such requirements may be
changed from time to time by the OTS to reflect changing economic conditions.
Such investments are intended to provide a source of relatively liquid funds
upon which the Bank may rely, if necessary, to fund deposit withdrawals and
other short-term funding needs. The Bank has historically maintained its
liquidity ratio in excess of that required. The Banks liquidity ratio was 5.3%
at September 30, 1996 and 6.65% on June 30, 1996.

At September 30 1996, the Company had $12.6 million of advances from the FHLB of
Des Moines outstanding. The Company uses its liquidity resources principally to
meet ongoing commitments, to fund

                                       -8-

<PAGE>



maturing certificates of deposit and deposit withdrawals and to meet operating
expenses. The Company anticipates that it will have sufficient funds available
to meet current loan commitments. At September 30, 1996, the Company had
outstanding commitments to extend credit which amounted to $787,000 (including
$536,000, in available revolving commercial lines of credit). 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 Company 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 September 30, 1996, the Bank had tangible and core capital of $5.8 million,
or 7.8% of adjusted total assets, which was approximately $4.7 million and $3.6
million above the minimum requirements of 1.5% and 3.0%, respectively, of the
adjusted total assets in effect on that date. At September 30, 1996, the Bank
had risk-based capital of $6.1 million (including $5.8 million in core capital),
or 14.7% of risk-weighted assets of $41.5million. This amount was $2.7 million
above the 8.0% requirement in effect on that date.


                                       -9-

<PAGE>



                                     PART II
                                OTHER INFORMATION

ITEM 1.      Legal Proceedings

             None

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:
                   Exhibit 11-Computation of Per Share Earnings
                   Exhibit 27-Financial Data Schedule

             (b)   Reports on Form 8K

                   None


                                      -10-

<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: November 14, 1996            /s/ Robert W DeCook
                                   --------------------------------------
                                   Robert W DeCook
                                   President and Chief Executive Officer


Date: November 14, 1996            /s/ Sharon McCrea
                                   --------------------------------------
                                   Sharon McCrea
                                   Vice President and Chief
                                   Financial Officer








                                      -11-

<PAGE>





                                INDEX OF EXHIBITS


Exhibit                                                                   Page

11.    Statement regarding computation of per share earnings                13

27.    Financial Data Schedule                                              14

















                                      -12-