<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE
ACT of 1934
For the Quarterly Period Ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the transition period from to
------------- ------------
Commission File No. 1-13652
First West Virginia Bancorp, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
West Virginia 55-6051901
- ------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1701 Warwood Avenue
Wheeling, West Virginia 26003
- ------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (304) 277-1100
--------------
N/A
- -----------------------------------------------------------------------------
(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 such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No [X] N/A
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practible date.
The number of shares outstanding of the issuer's common stock as of May 5,
2000:
Common Stock, $5.00 Par Value, shares outstanding 1,508,526 shares
- ---------------------------------------------------------------------
<PAGE> 2
FIRST WEST VIRGINIA BANCORP, INC.
PART I
FINANCIAL INFORMATION
2
<PAGE> 3
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31, March 31,
2000 1999 1999
-------------- -------------- --------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 4,440,502 $ 5,335,861 $ 4,200,013
Due from banks - interest bearing 6,572,176 6,478,406 4,645,913
-------------- -------------- --------------
Total cash and cash equivalents 11,012,678 11,814,267 8,845,926
Federal funds sold 5,346,000 2,485,000 4,568,000
Investment securities
Available for sale (at fair value) 55,054,802 49,449,312 44,256,415
Held to maturity - fair value of
$11,010,251 at March 31, 2000;
$10,436,842 at December 31, 1999;
and $11,831,436 at March 31, 1999 11,218,657 10,646,112 11,763,945
Loans, net of unearned income 111,918,593 110,488,432 103,847,602
Less allowance for possible loan losses (1,176,097) (1,147,720) (1,120,994)
-------------- -------------- --------------
Net loans 110,742,496 109,340,712 102,726,608
Premises and equipment, net 2,788,177 2,841,337 3,139,932
Accrued income receivable 1,388,104 1,356,419 1,298,173
Other assets 1,465,776 1,239,475 847,113
-------------- -------------- --------------
Total assets $ 199,016,690 $ 189,172,634 $ 177,446,112
============== ============== ==============
LIABILITIES
Noninterest bearing deposits:
Demand $ 14,659,076 $ 14,780,305 $ 14,200,622
Interest bearing deposits:
Demand 25,797,049 23,961,233 28,075,369
Savings 56,481,196 52,872,689 47,429,104
Time 70,777,857 69,943,705 63,813,478
-------------- -------------- --------------
Total deposits 167,715,178 161,557,932 153,518,573
-------------- -------------- --------------
Federal funds purchased and
repurchase agreements 13,573,124 10,273,925 7,032,098
Accrued interest on deposits 540,611 499,352 488,139
Other liabilities 909,392 785,953 771,291
-------------- -------------- --------------
Total liabilities 182,738,305 173,117,162 161,810,101
-------------- -------------- --------------
STOCKHOLDERS' EQUITY
Common Stock - 2,000,000 shares authorized at
$5 par value 1,508,526 shares issued at
March 31, 2000 and December 31, 1999;
1,257,252 shares issued at March 31, 1999 7,542,630 7,542,630 6,286,260
Surplus 4,739,381 4,739,381 4,739,381
Retained Earnings 4,956,921 4,638,742 4,622,305
Accumulated other comprehensive income (960,547) (865,281) (11,935)
-------------- -------------- --------------
Total stockholders' equity 16,278,385 16,055,472 15,636,011
-------------- -------------- --------------
Total liabilities and stockholders'
equity $ 199,016,690 $ 189,172,634 $ 177,446,112
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE> 4
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans and lease financing:
Taxable $2,338,913 $2,206,071
Tax-exempt 51,679 49,359
Investment Securities:
Taxable 821,663 639,637
Tax-exempt 128,816 136,057
Dividends 10,974 8,012
Other interest income 92,065 23,999
Interest on Federal Funds Sold 53,228 53,955
---------- ----------
Total interest income 3,497,338 3,117,090
INTEREST EXPENSE
Deposits 1,476,417 1,263,261
Other borrowings 116,150 57,978
---------- ----------
Total interest expense 1,592,567 1,321,239
---------- ----------
Net interest income 1,904,771 1,795,851
PROVISION FOR POSSIBLE LOAN LOSSES 97,500 76,500
---------- ----------
Net interest income after provision
for possible loan losses 1,807,271 1,719,351
NONINTEREST INCOME
Service charges and other fees 113,090 116,128
Securities gains (losses) 23,443 9,153
Other operating income 94,093 82,866
---------- ----------
Total noninterest income 230,626 208,147
NONINTEREST EXPENSES
Salary and employee benefits 652,379 608,469
Net occupancy expense of premises 207,287 188,149
Other operating expenses 367,745 336,668
---------- ----------
Total noninterest expense 1,227,411 1,133,286
---------- ----------
Income before income taxes 810,486 794,212
---------- ----------
INCOME TAXES 250,943 245,996
---------- ----------
Net income $ 559,543 $ 548,216
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,508,526 1,508,526
========== ==========
EARNINGS PER COMMON SHARE $ 0.37 $ 0.36
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE> 5
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTIOON>
Accumulated
Common Stock Other
-------------------------- Retained Comprehensive Comprehensive
Shares Amount Surplus Earnings Income Income Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 1,508,526 $ 7,542,630 $ 4,739,381 $ 4,638,742 $ (865,281) $ $16,055,472
Comprehensive income
Net income for the
three months ended
March 31, 2000 -- -- -- 559,543 -- 559,543 559,543
Other comprehensive
income, net of tax
Unrealized gains
(losses) on
securities, net of
reclassification
adjustment
(see disclosure) -- -- -- -- (95,266) (95,266) (95,266)
-----------
Comprehensive income $ 464,277
===========
Cash dividend
($.16 per share) -- -- -- (241,364) -- (241,364)
------------ ----------- ----------- ----------- ----------- -----------
Balance,
March 31, 2000
(Unaudited) 1,508,526 $ 7,542,630 $ 4,739,381 $ 4,956,921 $ (960,547) $16,278,385
============ =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Common Stock Other
-------------------------- Retained Comprehensive Comprehensive
Shares Amount Surplus Earnings Income Income Total
------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 1,257,252 $ 6,286,260 $ 4,739,381 $ 4,275,249 $ 160,048 $ $15,460,938
Comprehensive income
Net income for the
three months ended
March 31, 1999 -- -- -- 548,216 -- 548,216 548,216
Other comprehensive
income, net of tax
Unrealized gains
(losses) on
securities, net of
reclassification
adjustment
(see disclosure) -- -- -- -- (171,983) (171,983) (171,983)
-----------
Comprehensive income $ 376,233
===========
Cash dividend
($.13 per share) -- -- -- (201,160) -- (201,160)
----------- ----------- ----------- ----------- ----------- -----------
Balance,
March 31, 1999
(Unaudited) 1,257,252 $ 6,286,260 $ 4,739,381 $ 4,622,305 $ (11,935) $15,636,011
=========== =========== =========== =========== =========== ===========
For the three months ended
March 31,
2000 1999
---------- ----------
<S> <C> <C>
Disclosure of reclassification amount:
Unrealized holding gains (losses)
arising during the period $ (80,572) $ (166,214)
Less: reclassification adjustment for
gains (losses) included in net income 14,694 5,769
----------- ----------
Net unrealized gains (losses) on securities $ (95,266) $ (171,983)
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE> 6
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
-------------- --------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 559,543 $ 548,216
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 97,500 76,500
Depreciation and amortization 84,355 94,416
Amortization of investment securities, net (53,958) (24,733)
Investment security losses (gains) (23,443) (9,153)
Decrease (increase) in interest receivable (31,685) (55,567)
Increase (decrease) in interest payable 41,259 16,042
Other, net (46,141) 9,678
-------------- --------------
Net cash provided by operating activities 627,430 655,399
-------------- --------------
INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold (2,861,000) (476,000)
Net (increase) decrease in loans, net of charge offs (1,518,700) (374,284)
Proceeds from sales of securities available for sale 877,703 102,696
Proceeds from maturities of securities available for sale 2,500,000 9,750,000
Proceeds from maturities of securities held to maturity 105,000 505,000
Principal collected on mortgage-backed securities 907,115 1,286,438
Purchases of securities available for sale (9,963,455) (12,247,673)
Purchases of securities held to maturity (678,984) (920,396)
Recoveries on loans previously charged-off 19,416 3,584
Purchases of premises and equipment (31,195) (29,618)
-------------- --------------
Net cash used by investing activities (10,644,100) (2,400,253)
-------------- --------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 6,157,246 5,733,754
Dividends paid (241,364) (201,160)
Increase (decrease) in short term borrowings 3,299,199 38,074
-------------- --------------
Net cash provided by financing activities $ 9,215,081 $ 5,570,668
-------------- --------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (801,589) 3,825,814
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 11,814,267 5,020,112
-------------- --------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 11,012,678 $ 8,845,926
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE> 7
First West Virginia Bancorp, Inc. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000 AND 1999
1. The accompanying financial statements are unaudited. However in the
opinion of management, they contain the adjustments ( all of which are normal
and recurring in nature) necessary to present fairly the financial position
and the results of operations. The notes to the financial statements
contained in the annual report for December 31, 1999, should be read in
conjunction with these financial statements.
2. The provision for income taxes is at a rate which management believes will
approximate the effective rate for the year.
3. Certain prior year amounts have been reclassified to conform to the 2000
presentation.
<PAGE> 8
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
---------------------------------------------------------------
First West Virginia Bancorp, Inc., a West Virginia corporation
headquartered in Wheeling, West Virginia, has two wholly-owned subsidiaries:
Progressive Bank, N.A., which operates in Wheeling, Wellsburg, and
Moundsville, West Virginia and Bellaire, Ohio; and Progressive Bank,
N.A.-Buckhannon, which operates in Buckhannon and Weston, West Virginia.
Following is a discussion and analysis of the significant changes in the
financial condition and results of operations of First West Virginia Bancorp,
Inc., (the Holding Company), and its subsidiaries for the three months ended
March 31, 2000 and 1999. This discussion and analysis should be read in
conjunction with the Consolidated Financial Statements, Notes, and tables
contained in this report, as well as with the Holding Company's 1999 financial
statements, the notes thereto and the related Management's Discussion and
Analysis.
OVERVIEW
The Holding Company reported net income of $559,543 for the three months ended
March 31, 2000 as compared to $548,216 for the same period during 1999. The
2.1% increase in earnings during the first quarter of 2000 over 1999 can be
primarily attributed to increased net interest income and noninterest income,
partially offset by increased operating expenses and the provision for loan
losses. Earnings per common share were $.37 in 2000 compared to $.36 in 1999.
Operational earnings improved with net interest income increasing $108,920 or
6.1%, to $1,904,771 during the three months ended March 31, 2000 as
compared to the same period in 1999. The increase primarily results from an
increase in the investment securities portfolio and the growth in the loan
portfolio.
The return on average assets (ROA), which measures the effectiveness of asset
utilization to produce net income, was 1.16% and 1.28% at March 31, 2000 and
1999, respectively. The return on average equity (ROE), which measures the
return on the stockholders' investment, was 13.22% and 14.36% at March 31,
2000 and 1999, respectively.
The Holding Company as of March 31, 2000 had total assets of $199,016,690 an
increase of 5.2% over the $189,172,634 reported for the year ended December
31, 1999. Loans net of reserves increased during the first quarter of 2000 by
$1,401,784 to $110,742,496, as compared to $109,340,712 reported at December
31, 1999. Total deposits increased in 2000 by $6,157,246, from $161,557,932
at December 31, 1999 to $167,715,178 at March 31, 2000, primarily due to the
increase in interest bearing demand and savings deposits.
The allowance for loan losses amounted to $1,176,097 at March 31, 2000 or 1.1%
of total loans, compared to $1,147,720 or 1.0% of total loans at December 31,
1999. Non-performing assets were $674,000 at March 31, 2000, as compared to
$892,000 at December 31, 1999.
The Board of Directors declared and paid cash dividends of $.16 per share
during the first quarter of 2000 as compared to $.13 during the same period in
1999.
Table One is a five-year summary of Selected Financial Data of the Holding
Company. The sections that follow discuss in more detail the information
summarized in Table One.
<PAGE> 9
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- -----------------------------------------------------------------------------
Table One
SELECTED FINANCIAL DATA
(Unaudited, figures in thousands, except per share data)
First West Virginia Bancorp, Inc.
<TABLE>
<CAPTION>
Three months ended Years ended
March 31, December 31,
--------------------- ---------------------------------------------
1999 1998 1999 1998 1997 1996
--------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Total interest income $ 3,497 $ 3,117 $ 13,207 $ 12,452 $ 11,507 $10,067
Total interest expense 1,592 1,321 5,602 5,324 4,745 3,925
Net interest income 1,905 1,796 7,605 7,128 6,762 6,142
Provision for loan losses 98 77 348 256 131 71
Total other income 231 208 1,073 787 639 568
Total other expenses 1,227 1,133 4,740 4,674 4,377 4,182
Income before income taxes 811 794 3,590 2,985 2,893 2,457
Net income 560 548 2,450 2,033 1,931 1,644
PER SHARE DATA (1)
Net income $ .37 $ .36 $ 1.62 $ 1.35 $ 1.28 $ 1.09
Cash dividends declared .16 .13 .55 .49 .43 .38
Book value per share 10.79 10.37 10.64 10.25 9.37 8.39
AVERAGE BALANCE SHEET SUMMARY
Total loans, net $ 110,764 $103,747 $105,775 $ 99,345 $ 86,609 $ 74,469
Investment securities 65,028 55,154 60,405 48,543 51,754 48,557
Deposits - Interest Bearing 149,348 134,740 141,768 127,520 120,589 112,768
Stockholders' equity 17,031 15,474 16,087 14,697 13,400 12,186
Total Assets 194,556 173,993 183,436 164,630 153,290 137,810
BALANCE SHEET
Investments $ 66,273 $ 56,020 $ 60,095 $ 54,735 $ 45,444 $ 50,440
Loans 111,919 103,848 110,489 103,555 95,374 80,417
Other Assets 20,825 17,578 18,589 13,105 15,325 13,689
--------- -------- -------- --------- -------- --------
Total Assets $ 199,017 $177,446 $189,173 $ 171,395 $156,143 $144,546
========= ======== ======== ========= ======== ========
Deposits $ 167,715 $153,519 $161,558 $ 147,785 $137,045 $125,271
Federal funds purchased and
Repurchase Agreements 13,573 7,032 10,274 6,994 4,075 5,931
Other Liabilities 1,450 1,259 1,285 1,155 894 695
Shareholders' Equity 16,279 15,636 16,056 15,461 14,129 12,649
--------- -------- -------- ---------- -------- --------
Total Liabilities and
Shareholders' Equity $ 199,017 $177,446 $189,173 $ 171,395 $156,143 $144,546
========= ======== ======== ========= ======== ========
SELECTED RATIOS
Return on average assets 1.16% 1.28% 1.34% 1.23% 1.26% 1.19%
Return on average equity 13.22% 14.36% 15.23% 13.83% 14.41% 13.49%
Average equity to average assets 8.75% 8.89% 8.77% 8.93% 8.74% 8.84%
Dividend payout ratio (1) 43.24% 36.11% 33.95% 36.30% 33.59% 34.86%
Loan to Deposit ratio 66.73% 67.65% 68.39% 70.07% 69.59% 64.19%
</TABLE>
(1) Adjusted for 6 for 5 stock split in the effect of a twenty (20) percent
common stock dividend, declared October 12, 1999 to shareholders of
record as of November 1, 1999, a 4 percent common stock dividend to
stockholders of record as of October 1, 1998, a 3 for 2 stock split in
the effect of a fifty (50) percent common stock dividend to shareholders
of record as of October 1, 1997, a 4 percent common stock dividend to
stockholders of record as of December 2, 1996.
- ------------------------------------------------------------------------------
<PAGE> 10
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ---------------------------------------------------------------------------
EARNINGS ANALYSIS
Net Interest Income
Net interest income, which is the difference between interest earned on
loans and investments and interest paid on deposits and other liabilities,
is the primary source of earnings for the Holding Company. Changes in the
volume and mix of earning assets and interest bearing liabilities combined
with changes in market rates of interest greatly effect net interest income.
Table Two presents the average balance sheets and an interest rate analysis
for the three months ended March 31, 2000 and 1999.
Net interest income was $1,904,771 for the three months ended March 31, 2000,
an increase of $108,920 or 6.1%, from the same period in 1999. The increase
in net interest income during the first quarter of 2000 compared to the
same period in 1999 was primarily attributable to the increase in investment
securities and the growth in the loan portfolio offset in part by the
increase in the average rates paid on savings deposits and federal funds
purchased and repurchase agreements.
Interest income on investment securities increased $177,747 or 22.7% during
the three months ended March 31, 2000 over 1999. The increase in the average
volume of investment securities primarily contributed to the increase in net
interest income during the first quarter of 2000. The average volume of
investment securities increased $9,874,000 since March 31, 1999. The average
yield on investment securities increased .21%, from 5.73% at December 31,
1999 to 5.94% at March 31, 2000.
Interest and fees on loans increased $135,162 or 6.0% for the three month
period ended March 31, 2000 as compared the same period in 1999. The
increased
interest income on loans and lease financing resulted primarily from increase
in the average loan volume which was partially offset by a decrease in average
rates earned. Increases in real estate residential loans and commercial loans
primarily contributed to the loan growth. The average yield on loans
decreased
from 8.80% at December 31, 1999 to 8.68% at March 31, 2000.
During the three months ended March 31, 2000, interest expense increased
$271,328 or 20.5% as compared to the same period in 1999. Interest expense
increased as a result of the increase in the average interest rates paid on
interest bearing liabilities combined with the growth in deposits. Average
volume increases of interest bearing liabilities during the first quarter of
2000 were primarily the result of the growth in time deposits and savings
deposits and in repurchase agreements. The average yield paid on interest
bearing liabilities increased .26%, from 3.72% at December 31, 1999 to 3.98%
at March 31, 2000. The increase in the average yield on interest bearing
liabilities during the first quarter of 2000 was primarily the result of an
increase in the interest rates paid on savings deposits and repurchase
agreements.
The changes in the volume and mix of earning assets and interest bearing
liabilities combined with the changes in the market rates of interest
resulted in taxable equivalent net interest yields on average earning assets
of 4.37% at March 31, 2000, as compared to 4.61% at December 31, 1999 and
4.70% at March 31, 1999.
<PAGE> 11
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Noninterest Income
Service charges and other fees represent the major component of noninterest
income. These charges are earned from assessments made on checking and
savings accounts. Service charges decreased $3,038 during the three months
ended March 31, 2000, down 2.6%, from the same period in 1999.
Sales of investment securities for the three month periods ended March 31,
2000 and 1999 were primarily the result of sales by the Holding Company.
The Holding Company accounted for securities gains of $37,940 and securities
losses of $14,508 during the period ended March 31, 2000 and securities gains
of $9,813 and securities losses of $660 during the period ended March 31,
1999 and those sales were attributable to sales of marketable equity
securities.
Other operating income represents fees from safe deposit box rentals, sales
of checkbooks, sales of cashiers' checks and money orders, utility
collections, ATM charges and card fees, home equity credit line fees, credit
life commissions, credit card fees and commissions and various other charges
and fees related to normal customer banking relationships. During the first
quarter of 2000, other operating income was $94,093, an increase of $11,227
or 13.5% compared to the same period in 1999.
Non-Interest Expense
Salary and employee benefits are the largest component of noninterest
expense. Salary and employee benefits increased $43,910 or 7.2% during the
three months ended March 31, 2000 over the same period in 1999. The increase
in salary and employee benefits in 2000 was primarily due to the normal
annual merit adjustments.
The major components of other operating expenses include: stationery and
supplies, directors' fees, service expense, postage and transportation,
other taxes, advertising, and regulatory assessment and deposit insurance.
Other operating expenses increased $31,077 or 9.2% for the three months ended
March 31, 2000 over 1999. The increase in other operating expenses during
the first quarter of 2000 was primarily due to the increase in advertising,
service expense, regulatory assessment and deposit insurance, postage and
transportation expense.
Income Taxes
Income tax expense for the period ended March 31, 2000 was $250,943, an
increase of 2.0% over the same period in 1999. The increase was primarily
due to the increase in pre-taxable income of $16,274 for the period
ended March 31, 2000 over 1999. Components of the income tax expense for
March 31, 2000 were $208,577 for federal taxes and $42,366 for West
Virginia corporate net income taxes.
For federal income tax purposes, tax-exempt income is based on qualified
state, county, and municipal bonds and loans. Tax-exempt income was $180,495
and $185,416 for the three month periods ended March 31, 2000 and 1999,
respectively.
Federal income tax rates and West Virginia corporate net income tax rates
remain consistent at 34% and 9%, respectively, for the three months ended
March 31, 2000 and 1999 and for the year ended December 31, 1999.
<PAGE> 12
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Table Two
Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates
and Interest Differential The following table presents an average balance
sheet, interest earned on interest bearing assets, interest paid on interest
bearing liabilities, average interest rates and interest differentials for the
three months ended March 31, 2000 and March 31, 1999 and the year ended
December 31, 1999. Average balance sheet information as of March 31, 2000 and
March 31, 1999 and the year ended December 31, 1999 was compiled using the
daily average balance sheet. Loan fees and unearned discounts were included
in income for average rate calculation purposes. Non-accrual loans were
included in the average balance computations; however, no interest was
included in income subsequent to the non-accrual status classification.
Average rates were annualized for the three month periods ended March 31, 2000
and 1999.
<TABLE>
<CAPTION>
For the three For the three
months ended months ended
March 31, 2000 December 31, 1999 March 31, 1999
----------------------------- ------------------------------- ----------------------------
Average Average Average Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
-------- -------- ------- ------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment securities:
U.S. Treasury and other U. S.
Government agencies $ 50,248 $ 780 6.24% $ 46,283 $ 2,799 6.05% $ 40,029 $ 605 6.13%
Obligations of states and
political subdivisions 11,576 129 4.48% 11,546 507 4.39% 12,292 136 4.49%
Other securities 3,204 52 6.53% 2,576 156 6.06% 2,833 43 6.16%
-------- ------ ----- -------- ------- ----- -------- ------ -----
Total Investment securities: 65,028 961 5.94% 60,405 3,462 5.73% 55,154 784 5.76%
Interest bearing deposits 6,538 92 5.66% 3,861 195 5.05% 2,034 24 4.79%
Federal funds sold 3,785 53 5.63% 4,923 244 4.96% 4,621 54 4.74%
Loans, net of unearned income 110,764 2,391 8.68% 105,775 9,306 8.80% 103,747 2,255 8.81%
-------- ------ ----- -------- ------- ----- -------- ------ -----
Total earning assets 186,115 3,497 7.56% 174,964 13,207 7.55% 165,556 3,117 7.64%
Cash and due from banks 4,674 4,628 4,408
Bank premises and equipment 2,814 2,994 3,171
Other assets 2,135 2,005 1,993
Allowance for possible loan losses (1,182) (1,155) (1,135)
-------- -------- --------
Total Assets $194,556 $183,436 $173,993
======== ======== ========
LIABILITIES
Certificates of deposit $ 70,487 $ 933 5.32% $ 67,309 $ 3,535 5.25% $ 63,686 $ 853 5.43%
Savings deposits 54,156 451 3.35% 48,752 1,368 2.81% 45,969 302 2.66%
Interest bearing demand deposits 24,705 93 1.51% 25,707 406 1.58% 25,085 108 1.75%
Federal funds purchased and
Repurchase agreements 11,812 116 3.95% 9,012 293 3.25% 8,157 58 2.88%
-------- ------ ----- -------- ------- ----- -------- ------ -----
Total interest bearing liabilities 161,160 1,593 3.98% 150,780 5,602 3.72% 142,897 1,321 3.75%
Demand deposits 14,958 15,241 14,442
Other liabilities 1,407 1,328 1,180
-------- -------- --------
Total Liabilities 177,525 167,349 158,519
STOCKHOLDERS' EQUITY 17,031 16,087 15,474
-------- -------- --------
Total Liabilities
and Stockholders' Equity $194,556 $183,436 $173,993
======== ======== ========
Net yield on earning assets $1,904 4.11% $ 7,605 4.35% $ 1,796 4.40%
====== ===== ======= ===== ======= =====
</TABLE>
The fully taxable equivalent basis of interest income from obligations of
states and political subdivisions has been determined using a combined
Federal and State corporate income tax rate of 40% for the three months ended
March 31, 2000 and 1999, and the year ended December 31, 1999, respectively.
The effect of this adjustment is presented below (in thousands).
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Obligations of states and
political subdivisions:
Investment securities $ 11,576 $ 215 7.47% $ 11,546 $ 845 7.32% $ 12,292 $ 227 7.48%
Loans 110,764 2,425 8.81% 105,775 9,434 8.92% 103,747 2,288 8.95%
======== ====== ===== ======== ======= ===== ======== ====== =====
Total earning assets $186,115 $ 3,617 7.82% $174,964 $13,673 7.81% $165,556 $3,241 7.94%
======== ======= ===== ======== ======= ===== ======== ======. =====
Taxable equivalent net yield on
earning assets $ 2,024 4.37% $ 8,071 4.61% $1,920 4.70%
======= ===== ======= ===== ======= =====
</TABLE>
<PAGE> 13
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Balance Sheet Analysis
Investments
- -----------
Investment securities increased $6,178,035 or 10.3% from $60,095,424
at December 31, 1999, to $66,273,459 at March 31, 2000. Taxable securities
comprised 82.3% of total securities at March 31, 2000, as compared to 81.4%
at December 31, 1999. Other than the normal risks inherent in purchasing
U.S. Treasury securities, U.S. Government corporation and agencies securities,
and obligations of states and political subdivisions, i.e. interest rate risk,
management has no knowledge of other market or credit risk involved in these
investments. The corporation does not have any high risk hybrid/derivative
instruments.
Available for sale securities, at market value increased $5,605,490
or 11.3% from December 31, 1999, and represented 83% of the investment
portfolio at March 31, 2000. The increase was primarily due to the purchase
of U.S. Government agency securities. The held to maturity securities
increased $572,545 or 5.4% from December 31, 1999 and represented 17% of the
investment portfolio as of March 31, 2000. The increase was primarily the
result of purchases of tax exempt municipal securities. As the investment
portfolio consists primarily of fixed rate debt securities, changes in the
market rates of interest will effect the carrying value of securities
available for sale, adjusted upward or downward under the requirements of FAS
115 and represent temporary adjustments in values. The carrying value of
securities available for sale was decreased by $1,532,455 and $1,380,468 at
March 31, 2000 and December 31, 1999, respectively. The market value of
securities classified as held to maturity was below book value by $208,406 and
$209,270 at March 31, 2000 and December 31, 1999, respectively.
Table Three
Investment Portfolio
The following table presents the book values of investment securities:
(in thousands) (Unaudited):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
2000 1999 1999
-------- -------- --------
<S> <C> <C> <C>
Securities held to maturity:
Obligations of states
and political subdivisions $ 11,218 $ 10,646 $ 11,764
-------- -------- --------
Total held to maturity $ 11,218 $ 10,646 $ 11,764
-------- -------- --------
Securities available for sale:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies 45,547 $ 40,700 $ 36,935
Obligations of states
and political subdivisions 506 507 516
Corporate debt securities 598 102 697
Mortgage-backed securities 7,301 7,049 5,211
Equity Securities 1,103 1,091 897
-------- -------- -------
Total available for sale 55,055 49,449 44,256
-------- -------- -------
Total $ 66,273 $ 60,095 $ 56,020
======== ======== ========
</TABLE>
- -------------------------------------------------------------------------------
<PAGE> 14
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Table Four
Investment Portfolio ( Continued)
(in thousands)
The maturity distribution using book value including accretion of discounts
and amortization of premiums (expressed in thousands) and approximate yield
of investment securities at March 31, 2000 and December 31, 1999 are presented
in the following table. Tax equivalent yield basis was used on tax exempt
obligations. Approximate yield was calculated using a weighted average of
yield to maturities.
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
----------------------------------------------- ----------------------------------------
Securities Securities Securities Securities
Held to Maturity Available for Sale Held to Maturity Available for Sale
------------------ -------------------- ------------------ ----------------
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ---- -------- ---- -------- ---- -------- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other U.S.
Government Agencies
Within One Year $ -- -- % $ 10,676 5.56 % $ -- -- % $ 4,504 5.25 %
After One But
Within Five Years -- -- 18,320 6.30 -- -- 18,750 6.16
After Five But
Within Ten Years -- -- 16,551 6.80 -- -- 17,446 6.78
-------- ---- -------- ---- -------- ---- -------- ----
-- -- 45,547 6.31 -- -- 40,700 6.33
States & Political Subdivisions
Within One Year 1,020 6.04 -- -- 1,020 6.40 -- --
After One But
Within Five Years 3,525 6.24 -- -- 3,626 6.67 -- --
After Five But
Within Ten Years 6,140 6.42 506 7.26 5,467 6.64 507 7.59
After Ten Years 533 6.45 -- -- 533 6.81 -- --
-------- ---- -------- ---- -------- ---- -------- ----
11,218 6.33 506 7.26 10,646 6.64 507 7.59
Corporate Debt Securities
Within One Year -- -- 598 5.95 -- -- -- --
After One But
Within Five Years -- -- -- -- -- -- 102 8.42
-------- ---- -------- ---- -------- ---- -------- ----
-- -- 598 5.95 -- -- 102 8.42
Mortgage-Backed Securities -- -- 7,301 6.65 -- -- 7,049 6.44
Equity Securities -- -- 1,103 5.35 -- -- 1,091 5.29
-------- ---- -------- ---- -------- ---- -------- ----
Total $ 11,218 6.33 % $ 55,055 6.34 % $ 10,646 6.64 % $ 49,449 6.34 %
======== ==== ======== ==== ======== ==== ======== ====
</TABLE>
- ------------------------------------------------------------------------------
<PAGE> 15
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Loans
- -----
Loans net of unearned income increased $1,430,161 or 1.3% from December
31, 1999. The loan growth during the first quarter of 2000 can be attributed
primarily to the increases in other loans, residential real estate loans, and
commercial loans, offset in part by the decrease in installment loans.
Real estate residential loans which include real estate construction,
real estate farmland, and real estate residential loans comprise thirty-six
percent (36%) of the loan portfolio. Commercial loans which include real
estate secured by non-farm, non residential and commercial and industrial
loans comprise thirty-nine percent (39%) of the loan portfolio. Installment
loans comprise twenty-one percent (21%) of the loan portfolio. Other loans
include nonrated industrial development obligations, direct financing leases
and other loans comprise four percent (4%) of the loan portfolio. The only
change in the composition of the loan portfolio from December 31, 1999 to
March 31, 2000 was a 1% increase in other loans and a 1% decrease in
installment loans.
The loan portfolio is not dominated by concentrations of credit within
any one industry; therefore, the impact of a weakening economy on any
particular industry should be minimal. Management believes that the loan
portfolio does not contain any excessive or abnormal elements of risk.
Table Five
Loan Portfolio
(Unaudited)
<TABLE>
<CAPTION>
Loans outstanding are as follows (in thousands) :
March 31, December 31,
-------------------------- ----------
2000 1999 1999
<S> <C> <C> <C>
Real Estate - Residential
Real estate-construction $ 136 $ 122 $ 73
Real estate-farmland 78 110 79
Real estate-residential 40,467 36,092 39,898
--------- --------- ---------
$ 40,681 $ 36,324 $ 40,050
--------- --------- ---------
Commercial
Real estate-secured by
nonfarm, nonresidential $ 29,701 $ 25,194 $ 29,218
Commercial & industrial 13,622 13,886 13,542
--------- --------- ---------
$ 43,323 $ 39,080 $ 42,760
--------- --------- ---------
Installment
Installment and other
loans to individuals $ 23,885 $ 25,063 $ 24,513
--------- --------- ---------
Others
Nonrated industrial
development obligations $ 3,804 $ 3,444 $ 2,867
Other loans 317 39 396
--------- --------- ---------
$ 4,121 $ 3,483 $ 3,263
--------- --------- ---------
Total 112,010 103,950 110,586
Less unearned interest 91 102 97
--------- --------- ---------
$ 111,919 $ 103,848 $ 110,489
========= ========= =========
</TABLE>
<PAGE> 16
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- --------------------------------------------------------------------------
Table Six
Loan Portfolio - Maturities and sensitivities of Loans to Changes in
Interest Rates
The following table presents the contractual maturities of loans other than
installment loans and residential mortgages for all banks as of
March 31, 2000 and December 31, 1999 (in thousands) (Unaudited):
<TABLE>
<CAPTION>
March 31, 2000
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
<S> <C> <C> <C>
Commercial $ 647 $ 6,904 $ 6,071
Real Estate - construction 136 -- --
-------- -------- --------
Total $ 783 $ 6,904 $ 6,071
======== ======== ========
<CAPTION>
December 31, 1999
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
<S> <C> <C> <C>
Commercial $ 712 $ 7,564 $ 5,266
Real Estate - construction 73 -- --
-------- -------- --------
Total $ 785 $ 7,564 $ 5,266
======== ======== ========
</TABLE>
The following table presents an analysis of fixed and variable rate loans as
of March 31, 2000 and December 31, 1999 along with the contractual maturities
of loans other than installment loans and residential mortgages (in thousands)
(Unaudited):
<TABLE>
<CAPTION>
March 31, 2000
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
<S> <C> <C> <C>
Fixed Rates $ 608 $ 5,097 $ 848
Variable Rates 175 1,807 5,223
-------- -------- --------
Total $ 783 $ 6,904 $ 6,071
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
<S> <C> <C> <C>
Fixed Rates $ 586 $ 5,564 $ 1,150
Variable Rates 199 2,000 4,116
-------- -------- --------
Total $ 785 $ 7,564 $ 5,266
======== ======== ========
</TABLE>
- ---------------------------------------------------------------------------
<PAGE> 17
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Total non-performing loans were $674,000 at March 31, 2000 and $892,000
at December 31, 1999. Loans classified as non-accrual were $514,000 or .5% of
total loans as of March 31, 2000, as compared to $573,000 or .5% of total
loans at December 31, 1999. There were no loans classified as renegotiated as
of March 31, 2000 and December 31, 1999. The loans past due 90 days or more
decreased $159,000 to $160,000 at March 31, 2000. There was no other real
estate owned at March 31, 2000 or December 31, 1999. Management continues to
monitor the non-performing assets to ensure against deterioration in
collateral values.
Table Seven
Risk Elements
(UNAUDITED)
The following table presents loans which are in the process of collection, but
are contractually past due 90 days or more as to interest or principal,
non-accrual loans and other real estate ( in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
----------------- ------------
2000 1999 1999
<S> <C> <C> <C>
Past Due 90 Days or More:
Real Estate - residential $ 74 $ 29 $ 66
Commercial 6 18 11
Installment 80 54 242
------ ------ ----------
$ 160 $ 101 $ 319
------ ------ ----------
Non-accrual:
Real Estate - residential $ 412 $ 75 $ 17
Commercial 72 305 440
Installment 30 184 116
------ ------ ----------
$ 514 $ 564 $ 573
------ ------ ----------
Other Real Estate $ -- $ -- $ --
------ ------ ----------
Total non-performing assets $ 674 $ 665 $ 892
====== ====== ==========
Total non-performing assets
to total loans and
other real estate 0.60% 0.64% 0.81%
</TABLE>
Generally, all Banks recognize interest income on the accrual basis, except
for certain loans which are placed on a non-accrual status. Loans are placed
on a non-accrual status, when in the opinion of management doubt exists as to
its collectibility. In accordance with the Office of the Comptroller of the
Currency Policy, banks may not accrue interest on any loan which either the
principal or interest is past due 90 days or more unless the loan is both well
secured and in the process of collection.
The amount of interest income that would have been recognized had the loans
performed in accordance with their original terms was approximately $15,400
and $17,000 for the periods ended March 31, 2000 and 1999, respectively.
As of March 31, 2000, there are no loans known to management other than those
previously disclosed about which management has any information about possible
credit problems of borrowers which causes management to have serious doubts as
to the borrower's ability to comply with present loan repayment terms.
- ------------------------------------------------------------------------------
<PAGE> 18
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Allowance for Possible Loan Losses
- ----------------------------------
The corporation maintains an allowance for possible loan losses to absorb
probable loan losses. The provision for loan losses was $97,500 during the
three months ended March 31, 2000, as compared to $76,500 during the same
period of the prior year. In comparison to December 31, 1999, the allowance
for possible loan losses at March 31, 2000 continues to represent 1.0% of
total loans outstanding. Net loan charge-offs for the three months ended
March 31, 2000 were primarily consumer loans. Personal bankruptcies continues
to contribute to the increase in net charge-offs on consumer type loans. The
reserve for possible loan losses is considered to be adequate to provide for
future losses in the portfolio. The amount charged to earnings is based upon
management's evaluations of the loan portfolio, as well as current and
anticipated economic conditions, net loans charged off, past loan experiences,
changes in character of the loan portfolio, specific problem loans and
delinquencies and other factors.
Table Eight
Analysis of Allowance for Possible Loan Losses
(UNAUDITED)
The following table presents a summary of loans charged off and recoveries of
loans previously charged off by type of loan (in thousands).
<TABLE>
<CAPTION>
Summary of Loan Loss Experience
-----------------------------------
March 31, December 31,
--------------------- ------------
2000 1999 1999
<S> <C> <C> <C>
Balance at Beginning of period
Allowance for Possible
Loan Losses $ 1,148 $ 1,123 $ 1,123
Loans Charged Off:
Real Estate - residential -- -- 14
Commercial -- -- 16
Installment 89 82 315
--------- --------- ---------
89 82 345
Recoveries:
Real Estate - residential -- -- --
Commercial -- -- --
Installment 19 3 22
--------- --------- ---------
19 3 22
Net Charge-offs 70 79 323
Additions Charged to Operations 98 77 348
--------- --------- ---------
Balance at end of period: $ 1,176 $ 1,121 $ 1,148
========= ========= =========
Average Loans Outstanding $ 110,764 $ 103,747 $ 105,775
========= ========= =========
Ratio of net charge-offs
to Average loans
outstanding for the period .06% .08% .31%
Ratio of the Allowance for Loan
Losses to Loans Outstanding for
the period 1.05% 1.08% 1.04%
</TABLE>
- ------------------------------------------------------------------------------
<PAGE> 19
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Allowance for Possible Loan Losses - continued
- -----------------------------------------------
The corporation has allocated the allowance for possible loan losses
to specific portfolio segments based upon historical net charge-off
experience, changes in the level of non-performing assets, local
economic conditions and management experience as presented in Table Nine.
The Corporation has historically maintained the allowance for loan losses
at a level greater than actual charge-offs. In determining the allocation
of the allowance for possible loan losses, charge-offs for 2000 are
anticipated to be within the historical ranges. Although a subjective
evaluation is determined by management, the corporation believes it has
appropriately assessed the risk of loans in the loan portfolio and has
provided for an allowance which is adequate based on that assessment.
Because the allowance is an estimate, any change in the economic
conditions of the corporation's market area could result in new
estimates which could affect the corporation's earnings. Management
monitors loan quality through reviews of past due loans and all
significant loans which are considered to be potential problem loans
on a monthly basis. The internal loan review function provides for
an independent review of commercial, real estate, and installment loans
in order to measure the asset quality of the portfolio. Management's
review of the loan portfolio has not indicated any material amount of
loans, not disclosed in the accompanying tables and discussions which
are known to have possible credit problems that cause management to
have serious doubts as to the ability of each borrower to comply with
their present loan repayment terms.
Table Nine
Loan Portfolio - Allocation of allowance for possible loan losses
The following table presents an allocation of the allowance for possible loan
losses at each of the five year periods ended December 31, 1999, and the three
month period ended March 31, 2000 ( expressed in thousands). The allocation
presented below is based on the historical average of net charge offs per
category combined with the change in loan growth and management's review of
the loan portfolio.
<TABLE>
<CAPTION>
March 31, December 31,
--------------- -----------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
--------------- --------------- ---------------- -------------- ---------------- ------------------
Percent Percent Percent Percent Percent Percent
of loans of loans of loans of loans of loans of loans
in each in each in each in each in each in each
category category category category category category
to total to total to total to total to total to total
Amount loans Amount loans Amount loans Amount loans Amount loans Amount loans
------- ------- ------- ------- ------- -------- ----- -------- ------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate -
residential $ 244 36.3% $ 238 36.2% $ 208 34.2% $ 202 34.6% $ 192 36.5% $ 215 39.9%
Commercial 490 38.7 490 38.7 490 37.8 622 38.0 619 39.1 618 36.5
Installment 422 21.3 400 22.2 374 23.8 343 23.6 298 21.6 265 20.0
Others 20 3.7 20 2.9 20 4.2 20 3.8 20 2.8 20 3.6
Unallocated -- -- -- -- 31 -- 31 -- 31 -- 31 -
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total $1,176 100.0% $1,148 100.0% $1,123 100.0% $1,218 100.0% $1,160 100.0% $1,149 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
<PAGE> 20
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Deposits
- --------
Total deposits were $167,715,178 at March 31, 2000 as compared to
$161,557,932 at December 31, 1999, an increase of 3.8%. Deposit growth
increased primarily in savings and interest bearing demand deposits. At
March 31, 2000, noninterest bearing deposits comprised 9% of total deposits
and interest bearing deposits which include NOW, money market, savings and
time deposits comprised 91% of total deposits. The were no changes in the
deposit mix from December 31, 1999 to March 31, 2000.
Table Ten
Deposits
The following table presents other time deposits of $100,000 or more issued by
domestic offices by time remaining until maturity of 3 months or less; over 3
through 6 months; over 6 through 12 months; and over 12 months. (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
Maturities of Time Deposits in Excess of $100,000
--------------------------------------------------
In Three Over Three Over Six Over
Months And Less Than And Less Than Twelve
Or Less Six Months Twelve Months Months TOTAL
------- ------------ ------------- ------ -----
(Expressed in Thousands)
<S> <C> <C> <C> <C> <C>
Time Certificates
of Deposit $ 6,122 $ 1,263 $ 3,652 $ 4,840 $ 15,877
<CAPTION>
December 31, 1999
Maturities of Time Deposits in Excess of $100,000
--------------------------------------------------
In Three Over Three Over Six Over
Months And Less Than And Less Than Twelve
Or Less Six Months Twelve Months Months TOTAL
------- ------------ ------------- ------ -----
(Expressed in Thousands)
<S> <C> <C> <C> <C> <C>
Time Certificates
of Deposit $ 6,862 $ 2,129 $ 2,916 $ 3,696 $ 15,603
</TABLE>
Federal funds purchased and repurchase agreements
- --------------------------------------------------
Federal funds purchased and repurchase agreements are short-term
borrowings, of which repurchase agreements represent the largest component.
Repurchase agreements were $13,573,124 at March 31, 2000, an increase of
$3,649,199, as compared to December 31, 1999. The increase of repurchase
agreements was primarily due to the increase in the balances maintained by
existing commercial customers.
- ------------------------------------------------------------------------------
<PAGE> 21
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- ------------------------------------------------------------------------------
Capital Resources
- -----------------
A strong capital base is vital to continued profitability because it
promotes depositor and investor confidence and provides a solid foundation for
future growth. Stockholders' equity increased 2.0% during the first three
months of 2000 entirely from current earnings after quarterly dividends, and a
decrease of .6% resulting from the effect of the change in the net unrealized
gain (loss) on securities available for sale. Stockholders' equity amounted
to 8.2% of total assets at March 31, 2000 as compared to 8.5% at December 31,
1999.
The Holding Company's primary source of funds for payment of dividends to
shareholders is from the dividends from its subsidiary banks. Earnings from
subsidiary bank operations are expected to remain adequate to fund payment of
stockholders' dividends and internal growth. In management's opinion, the
subsidiary banks have the capability to upstream sufficient dividends to meet
the cash requirements of the Holding Company.
The Holding Company is subject to regulatory risk-based capital
guidelines administered by the Federal Reserve Board. These risk-based
capital guidelines establish minimum capital ratios of Total capital, Tier 1
Capital, and Leverage to assess the capital adequacy of bank holding
companies.
The following chart shows the regulatory capital levels for the
company at March 31, 2000, March 31, 1999, and December 31, 1999:
<TABLE>
<CAPTION>
March 31, Dec. 31
-------------- -------
Ratio Minimum 2000 1999 1999
- ---------------------- -------- ------- ----- -----
<S> <C> <C> <C> <C>
Leverage Ratio 3% 8.4 8.7 8.4
Risk Based Capital
Tier 1 (core) 4% 13.6 14.0 13.8
Tier 2 (total) 8% 14.5 15.1 14.8
</TABLE>
Liquidity
- ---------
Liquidity management ensures that funds are available to meet loan
commitments, deposit withdrawals, and operating expenses. Funds are provided
by loan repayments, investment securities maturities, or deposits, and can be
raised by liquidating assets or through additional borrowings. The
corporation had investment securities with an estimated market value of
$55,054,802 classified as available for sale at March 31, 2000. These
securities are available for sale at any time based upon management's
assessment in order to provide necessary liquidity should the need arise.
In addition, the Holding Company's subsidiary banks, Progressive Bank, N.A.,
and Progressive Bank, N.A.- Buckhannon, are members of the Federal Home Loan
Bank of Pittsburgh (FHLB). Membership in the FHLB provides an additional
source of short-term and long-term funding, in the form of collateralized
advances. At March 31, 2000, Progressive Bank, N.A. and Progressive Bank,
N.A.- Buckhannon, had an available line of approximately $8,560,000 and
$1,700,000, respectively, without purchasing any additional capital stock from
the FHLB. As of March 31, 2000 there were no borrowings outstanding pursuant
to these agreements.
At March 31, 2000 and December 31, 1999, the Holding Company had
outstanding loan commitments and unused lines of credit totaling $12,635,000
and $11,071,000, respectively. As of March 31, 2000, management placed a high
probability for required funding within one year of approximately $9,249,000.
Approximately $3,361,000 is principally unused home equity and credit card
lines on which management places a low probability for required funding.
<PAGE> 22
FIRST WEST VIRGINIA BANCORP, INC.
PART I
Item 3 Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The quantitative and qualitative disclosures about market risk at
March 31, 2000 have not materially changed from the information presented
in Item 7A of Form 10-K for the year ended December 31, 1999.
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
- -----------------------------------
The nature of the business of the Holding Company's subsidiaries
generates a certain amount of litigation involving matters arising in the
ordinary course of business. The Company is unaware of any litigation other
than ordinary routine litigation incidental to the business of the Company, to
which it or any of its subsidiaries is a party or of which any of their
property is subject.
Item 2 Changes in Securities
- ---------------------------------------
Inapplicable
Item 3 Defaults Upon Senior Securities
- -------------------------------------------------
Inapplicable
Item 4 Submission of Matters to Vote of Security Holders
- -------------------------------------------------------------------
a. The matters discussed in 4c. were submitted to a vote of security
holders at the April 11, 2000, Annual Meeting of Shareholders.
b. Inapplicable
c. Election of Directors
The following directors were re-elected to the Board of Directors as
Class II, for terms expiring at the annual meeting in 2003: Sylvan J. Dlesk,
Benjamin R. Honecker, James C. Inman, Jr. and Thomas A. Noice.
The results of the election were as follows:
<TABLE>
<CAPTION>
SHARES VOTED
------------------------------------------------------------
Against/ Abstentions
NAME For Withheld Broker Non-Votes
<S> <C> <C> <C>
Sylvan J. Dlesk 1,537,787 * 129,488 0
Benjamin R. Honecker 1,176,713 9,266 0
James C. Inman, Jr. 1,056,143 129,836 0
Thomas A. Noice 1,183,487 2,492 0
* Cumulative Shares Voted 1,667,275
</TABLE>
Continuing directors were as follows:
Terms Expiring
Charles K. Graham 2001
R. Clark Morton 2001
William G. Petroplus 2001
Ronald L. Solomon 2001
George F. Beneke 2002
Laura G. Inman 2002
Karl W. Neuman 2002
d. Inapplicable
Item 5 Other Information
- -----------------------------------
Inapplicable
<PAGE> 23
Item 6 Exhibits and Reports on Form 8-K
- --------------------------------------------------
(a) Financial
----------
The consolidated financial statements of First West Virginia Bancorp, Inc.
and subsidiaries, for the three month period ended March 31, 2000, are
incorporated by reference in Part I:
------
(b) Reports on Form 8-K
-------------------
The following report on Form 8-K was filed during the quarter ended March
31, 2000.
At the regular meeting of the Board of directors of First West Virginia
Bancorp, Inc. on February 8, 2000, Ronald L. Solomon announced his resignation
as Vice Chairman, President and Chief Executive Officer of First West Virginia
Bancorp, Inc. (the "Holding Company") and as Vice Chairman and Chief Executive
Officer of Progressive Bank, N.A. and as Vice Chairman of Progressive Bank,
N.A. - Buckhannon, subsidiaries of the Holding Company, effective March 31,
2000. By resolution of the Board of Directors of the Holding Company made at
that meeting, the Board of Directors accepted the resignation of Mr. Solomon,
acknowledging his 21 years of service to the Holding Company and its
subsidiary banks and recognizing his good success and leadership. In
conformity with the existing succession plans of the Holding Company, the
Board of Directors also announced that Charles K. Graham, currently serving as
Executive Vice-President of the Holding Company, will assume the position of
President and Chief Executive Officer of the Holding Company effective April
1, 2000. The Board also announced that Beverly A. Barker, currently serving
as Senior Vice-President and Treasurer of the Holding Company, will assume the
position of Executive Vice-President and Treasurer of the Holding Company
effective April 1, 2000.
(c) Exhibits
--------
The exhibits listed in the Exhibit Index on page 25 of this FORM 10-Q are
incorporated by reference and/or filed herewith.
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
First West Virginia Bancorp, Inc
--------------------------------
(Registrant)
By: /s/ Charles K. Graham
---------------------------------------------------------
Charles K. Graham
President and Chief Executive Officer/Director
By: /s/ Francie P. Reppy
---------------------------------------------------------
Francie P. Reppy
Senior Vice President and Chief Financial Officer
Dated: May 5, 2000
<PAGE> 25
EXHIBIT INDEX
The following exhibits are filed herewith and/or are incorporated herein by
reference.
Exhibit
Number Description
- ------- -----------
10.1 Employment Contract dated December 28, 1999 between
First West Virginia Bancorp, Inc. and Ronald L. Solomon.
Incorporated herein by reference.
10.2 Employment Contract dated December 28, 1999 between
First West Virginia Bancorp, Inc. and Charles K. Graham.
Incorporated herein by reference.
10.3 Employment Contract dated December 28, 1999 between
First West Virginia Bancorp, Inc. and Beverly A. Barker.
Incorporated herein by reference.
10.4 Lease dated July 20, 1993 between Progressive Bank, N.A., formerly
known as "First West Virginia Bank, N.A.", and Angela I. Stauver.
Incorporated herein by reference.
10.5 Banking Services License Agreement dated October 26, 1994 between
Progressive Bank, N.A., formerly known as "First West Virginia Bank,
N.A.", and The Kroger Co. Incorporated herein by reference.
10.6 Lease dated November 14, 1995 between Progressive Bank, N.A.
Buckhannon and First West Virginia Bancorp, Inc and O. V. Smith
& Sons of Big Chimney, Inc. Incorporated herein by reference.
10.7 Lease dated May 20, 1998 between Progressive Bank, N.A.
and Robert Scott Lumber Company. Incorporated herein by reference.
11.1 Statement regarding computation of per share earnings.
Filed herewith and incorporated herein by reference.
13.3 Summarized Quarterly Financial Information.
Filed herewith and incorporated herein by reference.
15 Letter re unaudited interim financial information. Incorporated
herein by reference. See Part 1, Notes to Consolidated Financial
Statements
27 Financial Data Schedule. Filed herewith and incorporated herein by
reference.
99.1 Independent Accountant's Report. Filed herewith and incorporated
herein by reference.
<PAGE> 26
EXHIBIT 11.1
Statement Regarding Computation of Per Share Earnings
<PAGE> 27
Computation of Earnings Per Share
- ---------------------------------
The following formula was used to calculate the earnings per share,
Consolidated Statements of Income for the three months ended
March 31, 2000 and 1999, included in this report as Exhibit 13.3
Earnings Per Share
Net Income /
Weighted average shares of common stock outstanding for the period
<TABLE>
<CAPTION>
Three months ended
March 31,
2000 1999
------- -------
<S> <C> <C>
Weighted Average
Shares Outstanding 1,508,526 1,508,526
Net Income 559,543 548,216
Per Share Amount .37 .36
</TABLE>
No common stock equivalents exist.
<PAGE> 28
EXHIBIT 13.3
Summarized Quarterly Financial Information
<PAGE> 29
- ------------------------------------------------------------------------------
First West Virginia Bancorp, Inc.
Summarized Quarterly Financial Information
- ------------------------------------------------------------------------------
A summary of selected quarterly financial information follows:
<TABLE>
<CAPTION>
First
2000 Quarter
-------------
<S> <C>
Total interest income $ 3,497,338
Total interest expense 1,592,567
Net interest income 1,904,771
Provision for loan losses 97,500
Investment Securities Gain (Loss) 23,443
Total other income 207,183
Total other expenses 1,227,411
Income before income taxes 810,486
Net income 559,543
Net income per share (1) .37
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total interest income $ 3,117,090 $ 3,220,452 $ 3,455,711 $ 3,413,428
Total interest expense 1,321,239 1,340,768 1,440,894 1,499,061
Net interest income 1,795,851 1,879,684 2,014,817 1,914,367
Provision for loan losses 76,500 76,500 97,500 97,500
Investment Securities Gain (Loss) 9,153 3,312 54 (20)
Total other income 198,994 479,611 199,019 183,297
Total other expenses 1,133,286 1,177,455 1,284,423 1,145,078
Income before income taxes 794,212 1,108,652 831,967 855,066
Net income 548,216 744,190 566,517 591,458
Net income per share (1) .36 .49 .38 .39
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1998 Quarter Quarter Quarter Quarter
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total interest income $3,017,292 $ 3,062,636 $ 3,148,133 $ 3,224,052
Total interest expense 1,276,939 1,325,792 1,363,263 1,357,847
Net interest income 1,740,353 1,736,844 1,784,870 1,866,205
Provision for loan losses 46,500 56,500 76,500 76,500
Investment Securities Gain (Loss) (1,608) -- 2,786 -
Total other income 191,504 183,293 215,373 195,010
Total other expenses 1,109,594 1,125,921 1,172,069 1,266,218
Income before income taxes 774,155 737,716 754,460 718,497
Net income 519,740 501,192 515,715 496,378
Net income per share (1) .35 .33 .34 .33
</TABLE>
(1) Adjusted for 6 for 5 stock split in the effect of a twenty (20)
percent common stock dividend, declared October 12, 1999 to
shareholders of record as of November 1, 1999, a 4 percent common
stock dividend to stockholders of record as of October 1, 1998, and a
3 for 2 stock split in the effect of a fifty (50) percent common stock
dividend to shareholders of record as of October 1, 1997.
- --------------------------------------------------------------------------------
<PAGE> 31
INDEPENDENT ACCOUNTANT'S REPORT
-------------------------------
We have reviewed the accompanying consolidated balance sheet of First West
Virginia Bancorp, Inc. and subsidiaries as of March 31, 2000, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the three-month period then ended. These financial statements are
the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical and
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1999, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the year then ended (not presented herein); and in our report
dated January 21, 2000, we expressed an unqualified opinion on those
consolidated financial statements.
/s/ S.R. Snodgrass A.C.
Wheeling, West Virginia
May 5, 2000
S.R. Snodgrass, A.C.
980 National Road
Wheeling, West Virginia 26003
Phone: 304-233-5030
Facsimile: 304-233-3062
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 4,441
<INT-BEARING-DEPOSITS> 6,572
<FED-FUNDS-SOLD> 5,346
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 55,055
<INVESTMENTS-CARRYING> 11,219
<INVESTMENTS-MARKET> 11,010
<LOANS> 111,919
<ALLOWANCE> 1,176
<TOTAL-ASSETS> 199,017
<DEPOSITS> 167,715
<SHORT-TERM> 13,573
<LIABILITIES-OTHER> 1,450
<LONG-TERM> 0
0
0
<COMMON> 7,543
<OTHER-SE> 8,736
<TOTAL-LIABILITIES-AND-EQUITY> 199,017
<INTEREST-LOAN> 2,391
<INTEREST-INVEST> 961
<INTEREST-OTHER> 145
<INTEREST-TOTAL> 3,497
<INTEREST-DEPOSIT> 1,476
<INTEREST-EXPENSE> 1,592
<INTEREST-INCOME-NET> 1,905
<LOAN-LOSSES> 98
<SECURITIES-GAINS> 23
<EXPENSE-OTHER> 1,227
<INCOME-PRETAX> 811
<INCOME-PRE-EXTRAORDINARY> 811
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 560
<EPS-BASIC> 0.37
<EPS-DILUTED> 0.37
<YIELD-ACTUAL> 4.37
<LOANS-NON> 514
<LOANS-PAST> 160
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,148
<CHARGE-OFFS> 89
<RECOVERIES> 19
<ALLOWANCE-CLOSE> 1,176
<ALLOWANCE-DOMESTIC> 1,176
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
