U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended June 30, 1995
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________________ to
__________________
Commission file number 0-12724
Belmont Bancorp.
An Ohio Corporation
IRS Employer ID number - 34-1376776
325 Main Street
Bridgeport, Ohio 43912
Telephone (614) 695-3323
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
The number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $0.50 par value,
2,114,644 shares outstanding
as of July 26, 1995
FORM 10-QSB
BELMONT BANCORP.
Quarter Ending June 30,1995
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - June 30, 1995,
December 31, 1994, and June 30, 1994
Consolidated Statements of Income-Three Months and
Six Months Ended June 30, 1995 and June 30, 1994
Consolidated Statements of Cash Flows-Six Months
Ended June 30, 1995 and June 30, 1994
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended June 30, 1995 and Year Ended
December 31, 1994
Notes to the Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II - Other Information
Legal Proceedings
Changes in Securities
Defaults upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Signature page
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
June 30 1995 1994 % CHANGE
Earnings and Dividends ($000's)
Net Income $2,104 $1,433 46.8
Operating Earnings (1) 2,666 1,826 46.0
Cash Dividends Declared on
Common Shares 455 359 26.7
Per Common Share (2):
Net Income $0.98 $0.66 48.5
Cash Dividends Declared 0.215 0.168 28.0
Book Value 10.47 8.85 18.4
Market Price for the Quarter:
High 19.75 9.80 101.5
Low 16.00 8.80 81.8
At Quarter-End ($000's)
Assets $310,644 $280,970 10.6
Loans and Leases 155,199 134,455 15.4
Deposits 249,547 247,753 0.7
Stockholders' Equity 23,149 19,710 17.4
Key Ratios
Return on Average Assets 1.36% 1.04% 31.2
Return on Average Common
Shareholders' Equity 20.01% 15.09% 32.6
Net Interest Margin 4.60% 4.17% 10.3
Number of Shares (2) 2,114,644 2,114,536 0.0
Number of Full Time
Equivalent Employees 112.0 108.0 3.7
Total Assets per FTE Employee $ 2,774 $ 2,602 6.6
(1) Operating earnings are defined as earnings before
income taxes minus securities and trading gains or plus
securities and trading losses.
(2) Per common share amounts have been adjusted to reflect
the effect of a 25% common stock dividend paid in July 1994
and a 100% common stock dividend paid in May 1995.
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The following consolidated financial statements and
related notes of Belmont Bancorp. and subsidiaries were
prepared by management which has the primary responsibility
for the integrity of the financial information. The
statements are prepared in conformity with generally
accepted accounting principles appropriate in the
circumstances, and include amounts that are based on
management's best estimates and judgments. Financial
information elsewhere in the quarterly report is prepared on
a basis consistent with that in the financial statements.
In meeting its responsibility for the accuracy of the
financial statements, management relies on the Corporation's
comprehensive system of internal accounting controls. This
system provides reasonable assurance that assets are
safeguarded and transactions are recorded to permit the
preparation of appropriate financial information. The
system of internal controls is characterized by an effective
control oriented environment within the Corporation which is
augmented by written policies and procedures, internal
audits and the careful selection and training of qualified
personnel.
The functioning of the accounting system and related
internal accounting controls is under the general oversight
of the Audit Committee of the Board of Directors which is
comprised of five outside directors. The accounting system
and related controls are reviewed by a program of internal
audits and by the Corporations' independent accountants.
The Audit Committee meets regularly with the internal
auditor and the independent public accountants to review the
work of each and ensure that each group is properly
discharging its responsibilities. In addition, the
Committee reviews and approves the scope and timing of the
internal and external audits and any findings with respect
to the system of internal controls. Reports of examinations
conducted by federal regulatory agencies are also reviewed
by the Committee.
The annual consolidated financial statements of Belmont
Bancorp. and subsidiaries will be examined by S.R. Snodgrass
A.C., the Corporation's independent certified public
accountants. Their examination will be conducted in
accordance with generally accepted auditing standards and
will include a review of internal controls and a test of
transactions in sufficient detail to allow them to report on
the fair presentation of the consolidated operating results
and financial condition of Belmont Bancorp. and
subsidiaries.
BASIS OF PRESENTATION
The consolidated financial statements include the
accounts of Belmont Bancorp. and its subsidiaries, Belmont
National Bank and Belmont Financial Network.
<TABLE>
Consolidated Condensed Balance Sheet
(Unaudited) ($000s except per share amounts)
<CAPTION> Belmont Bancorp. and Subsidiaries
June 30, December 31 June 30
1995 1994 1994
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 9,732 $ 11,770 $ 8,051
Securities available for sale at
market value 46,589 49,132 37,180
Securities held to maturity 87,927 92,463 89,833
Loans 155,199 147,096 134,455
Less allowance for possible
loan losses 2,228 1,537 1,352
Net loans 152,971 145,559 133,103
Premises and equipment, net 4,930 4,648 4,324
Other real estate owned 579 586 -
Accrued income receivable 2,110 2,133 1,898
Other assets 5,806 6,672 6,581
Total Assets 310,644 312,963 280,970
LIABILITIES
Non-interest bearing deposits
Demand $ 25,645 $ 27,269 $ 24,853
Interest-bearing deposits:
Demand 25,826 26,273 26,637
Savings 79,016 84,023 97,525
Time 119,060 118,358 98,738
Total deposits 249,547 255,923 247,753
Short-term borrowings 36,792 35,498 12,427
Accrued interest on deposits
and other borrowings 713 590 609
Other liabilities 443 738 471
Total liabilities $ 287,495 $ 292,749 $ 261,260
SHAREHOLDERS' EQUITY
Preferred stock - authorized 90,000 shares
with no par value; issued and outstanding,
none - - -
Senior cumulative preferred stock -
authorized, issued and outstanding
10,000 shares with a $100 par value $ 1,000 $ 1,000 $ 1,000
Common stock - $0.50 par value, 8,900,000
shares authorized; 2,115,476 issued in 1995
and 1994 1,057 3,777 3,023
Surplus 7,782 5,061 5,061
Treasury stock (832 shares in 1995 and
856 shares in 1994) (8) (8) (8)
Retained earnings:
Unappropriated 12,635 11,026 9,709
Appropriated for contingencies 850 850 850
Stock dividend to be distributed - - 760
Net unrealized loss on securities
available for sale (167) (1,492) (685)
Total shareholders' equity $ 23,149 $ 20,214 $ 19,710
Total liabilities and shareholders' $ 310,644 $ 312,963 $ 280,970
</TABLE>
<TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
<CAPTION> Belmont Bancorp. and Subsidiaries
For the three For the six
months ended months ended
June 30 June 30 June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and lease
financing
Taxable 3,423 2,786 6,792 5,408
Tax-exempt 74 47 132 87
Investment
securities:
Taxable 1,913 1,570 4,012 2,924
Tax-exempt 338 300 693 529
Dividends 1 - 2 1
Interest on fed
funds sold 13 - 30 3
Total interest
income 5,762 4,703 11,661 8,952
INTEREST EXPENSE
Deposits 2,339 1,902 4,588 3,727
Short-term
borrowings 309 137 806 199
Total interest
expense 2,648 2,039 5,394 3,926
Net interest
income 3,114 2,664 6,267 5,026
Provision for
possible loan losses 300 270 700 520
Net interest
income after
provision for
possible loan
losses 2,814 2,394 5,567 4,506
NON-INTEREST INCOME
Trust fees 113 78 296 210
Service charges on
deposits 144 134 274 258
Other operating
income 110 103 226 223
Investment
securities gains - (2) 1 (5)
(losses)
Trading profits
(losses) - 1 - 1
Gains (losses) on
securities avail-
able for sale 37 (2) 163 16
Total non-
interest income 404 312 960 703
NON-INTEREST EXPENSE
Salary and
employee benefits 700 669 1,505 1,303
Net occupancy
expense of premises 127 134 274 274
Equipment expenses 200 152 377 295
Other operating
expenses 730 772 1,541 1,499
Total non-
interest
expense 1,757 1,727 3,697 3,371
Income before
income taxes 1,461 979 2,830 1,838
INCOME TAXES 363 187 726 405
Net income 1,098 792 2,104 1,433
PER COMMON SHARE DATA
Net income per
share 0.50 0.36 0.98 0.66
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30
(Unaudited) ($ expressed in 000s)
BELMONT BANCORP.
<CAPTION>
1995 1994
<S> <C> <C>
Operating Activities:
Net income 2,104 1,433
Adjustments to reconcile net
income to net
cash flows provided by operating
activities:
Provision for loan losses 700 520
Depreciation expense 299 250
Amortization of investment
security
premiums 483 1,154
Accretion of investment security
discounts (185) (136)
Investment and trading
securities (gains) losses (164) (12)
Proceeds on sale of securities
available for sale 49,144 12,601
Proceeds on sale of securities
held in trading account 0 970
Purchase of securities available
for sale (51,500) (10,467)
Purchase of securities for
trading account 0 (969)
Loss (Gain) on sale of fixed
assets 4 0
Gain on sale of loans (27) 0
(Increase) decrease in interest
receivable 23 (185)
Increase (decrease) in interest
payable 123 156
Others, net (111) 1,266
Net cash provided by
operating activities 893 6,581
Investing Activities:
Proceeds from maturities and
calls of investment securities 5,583 1,500
Purchases of investment
securities (2,322) (31,326)
Principal collected on mortgage-
backed securities 8,047 19,195
Net (increase) decrease in loans
and leases, net of charge offs (10,449) (11,449)
Proceeds on loans sold 2,454 1,416
Loans purchased (94) 0
Recoveries on loans previously
charged off 12 29
Proceeds on sale of other real
estate owned 0 64
Purchases of fixed assets (589) (114)
Proceeds on sale of fixed assets 4 0
Net cash used by
investing activities 2,646 (20,685)
Financing Activities:
Net increase (decrease) in
deposits (6,376) 4,521
Net increase (decrease) in short-
term borrowings 1,294 8,718
Dividends paid on common and
preferred stock (495) (399)
Sale of treasury stock 0 6
Net cash provided by (5,577) 12,846
financing activities
Increase (decrease) in cash and
cash equivalents (2,038) (1,258)
Cash and equivalents, beginning 11,770 9,309
Cash and equivalents, ending 9,732 8,051
</TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) ($ expressed in 000s)
<TABLE>
BELMONT BANCORP.
Year Ended December 31, 1994 and
Six Months Ended June 30, 1995
<CAPTION>
Unrealized
Stock Loss On
Retained Earnings Dividend Securities
Preferred Common Unappro- Appro- to be Treasury Available
Stock Stock Surplus priated priated Distributed Stock for Sale
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,1993 1,000 2,749 3,647 11,122 850 0 (13) 0
Effect of adopting
SFAS 115 6
10% Common stock
dividend at fair
market value 274 1,413 (1,687)
25% Common stock
dividend at par value 754 (754)
1994 Net income 3,234
Cash dividends
declared:
Preferred stock (80)
Common stock
($0.3780 per share) (799)
Cash paid in lieu-
stock dividends (10)
Change in unrealized
loss-securities
available for sale (1,498)
Sale of treasury 1 5
stock
Balance,
December 31,1994 1,000 3,777 5,061 11,026 850 0 (8) (1,492)
100% Common stock
dividend distributed
at par value (3,775) 3,775
1995 Net income 2,104
Cash dividends
declared:
Preferred stock (40)
Common stock (455)
($0.215 per share)
Change in
unrealized loss-
securities
available-for- 1,325
sale
Change in par value (2,720) 6,496 (3,775)
Balance,
June 30, 1995 1,000 1,057 7,782 12,635 850 0 (8) (167)
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The foregoing financial statements are unaudited,
however, in the opinion of Management, all adjustments
necessary for a fair presentation of the financial
statements have been included. A summary of the
Corporation's significant accounting policies is set forth
in Note 1 to the Consolidated Financial Statements in the
Corporation's Annual Report on Form 10-KSB for 1994.
Related party transactions - The Corporation's and it
Subsidiaries' directors and officers and their associates
were customers of, and had other transactions with, the
subsidiary bank in the ordinary course of business during
1995. All loans and commitments included in such
transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons
and did not involve more than the normal risk of
collectibility.
Per share data has been restated in previous periods
for a 25% common stock dividend paid in July 1994 and a 100%
common stock dividend paid in May 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The net income of Belmont Bancorp. for the second
quarter of 1995 increased 38.6% to $1,098,000, compared to
$792,000 in the second quarter of 1994. Earnings per common
share increased to $0.50 in the second quarter of 1995,
compared to $0.36 in the second quarter of 1994.
For the six months ended June 30, 1995, net income
increased 46.8% to $2,104,000, compared to $1,433,000 for
the first six months of 1994. Earnings per common share
were $0.98 for the first six months of 1995, compared to
$0.66 for the corresponding period last year, an increase of
48.2%.
Operating earnings increased to $2,666,000 for the six
months ended June 30, 1995, up 46.0% from $1,826,000 for the same period
last year. For the second quarter of 1995, operating
earnings were $1,424,000, up 45.0% from $982,000 during the
year ago quarter.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
($000s) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Return on average
assets 1.44% 1.12% 1.36% 1.04%
Return on
shareholders' equity 19.60% 16.35% 19.46% 14.73%
Return on average
common equity 20.14% 16.81% 20.01% 15.09%
Average assets $304,435 $281,904 $309,162 $276,378
Average shareholders'
equity $22,405 $19,372 $21,629 $19,458
</TABLE>
Average assets increased $32.8 million during the six
months ended June 30, 1995 compared to the same period
during 1994. Average shareholders' equity increased $2.2
million for the same period.
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Tables 1 and 3, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the six months and three
months ended June 30, 1995, 1994, and 1993. The tables
contain net interest income, net interest margin and net
interest rate spread for each period. All three of these
measures are reported on a taxable equivalent basis.
The taxable equivalent yield on interest earning assets
increased from 7.23% during the first six months of 1994 to
8.34% in 1995, an increase of 111 basis points. (A basis
point (bp) is equivalent to .01%.) The cost of interest
bearing liabilities increased 75 basis points from 3.42%
during the first half of 1994 to 4.17% in 1995. The net
interest margin (net interest income divided by interest
earning assets) improved from 4.17% to 4.60% during the
comparative year-to-date periods.
The taxable equivalent yield on interest earning assets
increased from 7.43% during the second quarter of 1994 to
8.34% in 1995, an increase of 91 basis points. The cost of
interest bearing liabilities rose 70 basis points from 3.46%
during the second quarter of 1994 to 4.16% in 1995. The net
interest margin increased from 4.33% to 4.62% during the
comparative quarters.
Tables 2 and 4, Analysis of Net Interest Income
Changes, separates the dollar change in the Corporation's
net interest income into three components: changes caused
by (1) an increase or decrease in the average asset and
liability balances outstanding (volume); (2) the changes in
average yields on interest earning assets and average rates
for interest bearing liabilities (yield/rate); and (3)
combined volume and yield/rate effects (mix).
<TABLE>
TABLE 1. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF
NET INTEREST INCOME
(Fully Taxable Equivalent Basis)($000's)
Six Months Ended June 30,
1995 1994 1993
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/ Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning
assets
Loans and leases $148,816 $6,986 9.47% $130,506 $5,536 8.55% $116,668 $5,279 9.12%
Securities
Taxable 116,259 4,012 6.96% 106,421 2,924 5.54% 112,797 2,703 4.83%
Exempt from
income tax 24,842 1,004 8.15% 21,057 798 7.64% 12,422 538 8.73%
Trading account
assets 0 0 0.00% 64 1 3.15% 343 3 1.76%
Federal funds
sold 1,002 30 6.04% 246 3 2.46% 4,381 65 2.99%
Interest bearing
deposits 0 0 0.00% 0 0 0.00% 101 2 3.99%
Total interest
earning assets 290,919 12,032 8.34% 258,294 9,262 7.23% 246,712 8,590 7.02%
Cash and due from
banks 8,348 8,161 7,476
Other assets 12,984 11,883 11,463
Valuation
allowance-
available for
sale securities (1,224) (507) 0
Allowance for
possible loan
loss (1,865) (1,483) (1,227)
Total assets 309,162 276,348 264,424
Liabilities
Interest bearing
liabilities
Interest
Checking 25,545 297 2.34% 27,339 288 2.12% 30,943 394 2.57%
Savings 79,085 1,172 2.99% 100,553 1,489 2.99% 77,182 1,288 3.37%
Other time
Deposits 126,676 3,118 4.96% 91,565 1,950 4.29% 114,471 2,749 4.84%
Short term
borrowings 29,498 807 5.52% 11,744 199 3.42% 3,376 44 2.63%
Total interest
bearing
liabilities 260,804 5,394 4.17% 231,201 3,926 3.42% 225,972 4,475 3.99%
Demand deposits 25,024 24,216 19,458
Other liabilities 1,705 1,473 1,276
Total liabilities 287,533 256,890 246,706
Shareholders'
equity 21,629 19,458 17,718
Liabilities &
shareholders'
equity 309,162 276,348 264,424
Net interest
income
Margin on a
taxable
equivalent
basis 6,638 4.60% 5,336 4.17% 4,115 3.36%
Net interest
rate spread 4.17% 3.81% 3.03%
Interest bearing
liabilities
to interest
earning assets 89.65% 89.51% 91.59%
</TABLE>
<TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
<CAPTION>
Six Months Ended June 30, 1995
1995 Compared to 1994 1994 Compared to 1993
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease)
in Interest Income
Loans and Leases $777 $590 $83 $1,450 $626 ($330) ($39) $257
Securities
Taxable 270 748 70 1,088 (153) 396 (22) 221
Exempt from
Income Taxes 143 53 11 207 374 (67) (47) 260
Trading Account
Assets (1) (1) 1 (1) (2) 2 (2) (2)
Federal Funds Sold 9 4 13 26 (61) (12) 11 (62)
Interest Bearing
Deposits 0 0 0 0 (2) (2) 2 (2)
Total Interest
Income Change 1,198 1,394 178 2,770 782 (13) (97) 672
Increase (Decrease)
in Interest Expense
Interest Checking (19) 30 (2) 9 (46) (68) 8 (106)
Savings (318) 1 0 (317) 390 (145) (43) 202
Other Time
Deposits 748 304 117 1,169 (550) (311) 61 (800)
Short Term
Borrowings 301 122 184 607 109 13 33 155
Total Interest
Expense Change 712 457 299 1,468 (97) (511) 59 (549)
Increase (Decrease)
in Net Interest
Income on a Taxable
Equivalent Basis $486 $937 ($121) $1,302 $879 $498 ($156) $1,221
(Increase) Decrease
in Taxable
Equivalent
Adjustment (61) (113)
Net Interest
Income Change $1,241 $1,108
</TABLE>
<TABLE>
TABLE 3. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
Six Months Ended June 30,
1995 1994 1993
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/ Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest
earning assets
Loans and
Leases $150,618 $3,531 9.40% $133,121 $2,854 8.60% $118,833 $2,662 8.99%
Securities
Taxable 110,091 1,913 6.97% 107,131 1,569 5.87% 108,713 1,268 4.68%
Exempt from
Income Tax 24,507 489 8.00% 23,849 470 7.90% 12,546 275 8.79%
Trading
account assets 0 0 0.00% 64 1 6.27% 688 20 11.66%
Federal funds
sold 813 13 6.41% 24 0 0.00% 6,970 51 2.93%
Interest
Bearing
Deposits 0 0 0.00% 0 0 0.00% 101 1 3.97%
Total interest
earning assets 286,029 5,946 8.34% 264,189 4,894 7.43% 247,851 4,277 6.92%
Cash and due
from banks 8,224 8,153 7,452
Other assets 12,802 12,030 11,484
Valuation
allowance-
available for
sale
securities (579) (1,004) 0
Allowance for
possible loan
loss (2,041) (1,464) (1,318)
Total assets 304,435 281,904 265,469
Liabilities
Interest
bearing
liabilities
Interest
checking 26,020 153 2.36% 27,404 145 2.12% 30,464 188 2.48%
Savings 77,967 582 2.99% 99,910 740 2.97% 82,014 688 3.36%
Other time
deposits 127,960 1,604 5.03% 93,943 1,017 4.34% 110,692 1,312 4.75%
Short term
borrowings 23,490 309 5.28% 14,951 137 3.68% 3,243 20 2.47%
Total interest
bearing
liabilities 255,437 2,648 4.16% 236,208 2,039 3.46% 226,413 2,208 3.91%
Demand
deposits 24,775 24,924 19,943
Other
liabilities 1,818 1,400 1,213
Total
liabilities 282,030 262,532 247,569
Shareholders'
equity 22,405 19,372 17,900
Liabilities
& Shareholders'
equity 304,435 281,904 265,469
Net interest
income margin
on a taxable
equivalent
basis 3,298 4.62% 2,855 4.33% 2,069 3.35%
Net interest
rate spread 4.18% 3.97% 3.01%
Interest
bearing
liabilities
to interest
earning assets 89.30% 89.41% 91.35%
</TABLE>
<TABLE>
TABLE 4. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
<CAPTION>
Six Months Ended June 30,
1995 Compared to 1994 1994 Compared to 1993
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in
Interest Income
Loans and
Leases $375 $267 $35 $677 $320 ($114) ($14) $192
Securities
Taxable 43 293 8 344 (18) 324 (5) 301
Exempt from
Income Taxes 13 6 0 19 248 (28) (25) 195
Trading Account
Assets (1) (1) 1 (1) (18) (9) 8 (19)
Federal Funds
Sold 0 0 13 13 (51) (51) 51 (51)
Interest
Bearing Deposits 0 0 0 0 (1) (1) 1 (1)
Total Interest
Income Change 430 565 57 1,052 480 121 16 617
Increase
(Decrease) in
Interest Expense
Interest
Checking (7) 16 (1) 8 (19) (27) 4 (42)
Savings (163) 6 (1) (158) 150 (81) (19) 50
Other Time
Deposits 368 161 58 587 (199) (114) 19 (294)
Short Term
Borrowings 78 60 34 172 72 10 35 117
Total Interest
Expense Change 276 243 90 609 4 (212) 39 (169)
Increase
(Decrease) in Net
Interest
Income on a
Taxable
Equivalent Basis $154 $322 ($33) $443 $476 $333 ($23) $786
(Increase)
Decrease in
Taxable
Equivalent
Adjustment 7 (113)
Net Interest
Income Change $450 $673
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 15.2%, or $105,000, and totaled $796,000
for the first six months of 1995, compared to $691,000 for
the respective period last year. Changes in various
categories of other income are depicted in the table below.
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
<CAPTION>
($000s) 1995 1994 % Change 1995 1994 % Change
<S> <C> <C> <C> <C> <C> <C>
Trust fees 113 78 44.9% $296 $210 41.0%
Service charges
on deposits 144 134 7.5% 274 258 6.2%
Other income 110 103 6.8% 226 223 1.3%
Subtotal 367 315 16.5% 796 691 15.2%
Security gains
(losses) 0 (2) 100.0% 1 (5) 120.0%
Trading gains
(losses) 0 1 -100.0% 0 1 -100.0%
Gains (losses)
securities
available for
sale 37 (2) 1950.0% 163 16 918.8%
Total $404 $312 29.5% $960 $703 36.6%
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated market values of
securities held to maturity at June 30, 1995 are as follows:
<TABLE>
Gross Gross Estimated
($000s) Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities
and obligations of
U.S. Government
corporations and agencies $3,248 $45 $127 $3,166
Obligations of states and
policital subdivisions 23,541 972 433 24,080
Mortgage-backed securities 48,054 251 483 47,822
Mortgage derivatives 13,084 6 185 12,905
Total $87,927 $1,274 $1,228 $87,973
</TABLE>
Included above in U.S. Government corporations and
agencies is a structured note with a book value of
$2,271,000 and a market value of $2,144,000 which matures in
the year 2000.
The amortized cost and estimated market values of
securities available for sale at June 30, 1995 are as
follows:
<TABLE>
Gross Gross Estimated
($000s) Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of
U.S. Government
corporations and agencies $2,795 $2 $9 $ 2,788
Obligations of states and
political subdivisions 3,764 0 18 3,746
Mortgage-backed securities 35,295 103 279 35,119
Mortgage derivatives 2,895 27 80 2,842
Marketable equity securities 2,094 2,094
Total $46,843 $132 $386 $46,589
</TABLE>
Included above in U.S. Government corporations and
agencies are two structured notes with an aggregate book
value of $1,430,000 and an aggregate market value of
$1,421,000.
The mortgage derivatives are comprised solely of
collateralized mortgage obligations. Market factors and
prepayment speeds can have an impact on the yield and
average lives of mortgage-backed securities including
mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically,
when comparing the Corporation to various peer groups, the
overhead costs of the Corporation have been significantly
lower than peer. The following table shows the dollar
amounts and growth in various components of operating
expenses.
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
<CAPTION>
($000s) 1995 1994 % Change 1995 1994 % Change
<S> <C> <C> <C> <C> <C> <C>
Salaries and
wages $553 $498 11.0% $1,113 $992 12.2%
Employee
benefits 147 171 -14.0% 392 311 26.0%
Net occupancy
expense 127 134 -5.2% 274 274 0.0%
Equipment
expense 200 152 31.6% 377 295 27.8%
Other operating
expenses 730 772 -5.4% 1,541 1,499 2.8%
Total $1,757 $1,727 1.7% $3,697 $3,371 9.7%
</TABLE>
Equipment expense increased 27.8% during the first six
months of 1995 compared to last year. This resulted from
the purchase of automated platform and network equipment
installed during the first quarter of 1995. Management
believes the implementation of these systems will improve
operating efficiencies throughout the organization and will
enhance the marketing capabilities of customer service
personnel.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of
Income. Actual losses on loans and leases are charged
against the allowance built up on the Consolidated Balance
Sheet through the allowance for possible loan losses. The
amount of loans and leases actually removed as assets from
the Consolidated Balance Sheets is referred to as charge-
offs and, after netting out recoveries previously charged-
off assets, becomes net charge-offs.
For the first half of 1995, $700,000 was added to the
allowance and charged to expense compared to $520,000 in
1994. At June 30, 1995, the allowance for possible loan
losses to total loans and leases was 1.44% compared to 1.01%
last year. The ratio of the Allowance for Possible Loan
Losses to underperforming assets increased to 242.4% at June
30, 1995. The following table details the Allowance for
Possible Loan Losses and also includes various loan charge
off statistics for 1995 and 1994.
<TABLE>
Allowance for Possible Loan Losses
<CAPTION>
Three months ended Six months ended
June 30, June 30,
($000S) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Balance, beginning of period $1,931 $1,457 $1,537 $1,617
Provision for possible
loan losses 300 270 700 520
Loans charged-off 10 392 21 814
Recoveries on loans
previously charge-off 7 17 12 29
Net charge offs 3 375 9 785
Balance, end of period $2,228 $1,352 $2,228 $1,352
Loans and leases
outstanding at period $155,199 $134,455
Average loans and leases $150,618 $133,121 $148,816 $130,506
Annualized net charge offs
as a percent of:
Average loans and leases 0.01% 1.13% 0.01% 1.20%
Total loans at end
of period 0.01% 1.17%
Reserve for possible
loan losses 0.54% 110.95% 0.81% 116.12%
Reserve for possible loan
losses to:
Average loans and leases 1.48% 1.02% 1.50% 1.04%
Total loans at end
of period 1.44% 1.01%
Under-performing assets 240.35% 112.67%
</TABLE>
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at June 30 follows:
<TABLE>
<CAPTION>
Under-performing assets June 30,
($000s) 1995 1994
<S> <C> <C>
Non-accrual loans
and leases $326 $1,190
Ninety days past due
loans and leases
still accruing interest 22 10
Other real estate owned 579 0
Total $927 $1,200
</TABLE>
Restructured loans and
leases included in above
totals 0 0
Restructured loans and
leases in compliance with
modified terms 108 108
Asset quality has improved since the year ago period.
Total under-performing assets declined from $1.2 million at
June 30, 1994 to $0.9 million at June 30, 1995.
CAPITAL RESOURCES
At June 30, 1995, shareholders' equity was $23,149,000
compared to $20,214,000 at December 31, 1994 and $19,710,000
at June 30, 1994. The following table presents various
capital ratios as of June 30:
<TABLE>
<CAPTION>
June 30, 1995 1994
<S> <C> <C>
Average shareholder's
equity to :
Average assets 7.0% 7.0%
Average deposits 8.4% 8.0%
Average loans
and leases 14.5% 14.9%
Primary capital 8.2% 7.5%
Risk-based capital
ratio:
Tier 1 12.6% 12.7%
Total 13.9% 13.6%
Leverage ratio 7.0% 6.5%
</TABLE>
The Federal Reserve Board's capital adequacy guidelines
require a minimum primary capital ratio of 5.5%. At June
30, 1995, the Corporation's primary capital (shareholders'
equity plus the allowance for possible loan loans) was
$25,377,000 or 8.2% of total assets.
The Federal Reserve Board has adopted risk-based
capital guidelines that assign risk weightings to assets and
off-balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% or risk-weighted assets and total capital of 8.0% or
risk-weighted assets. Tier 1 capital consists principally
of shareholders' equity less goodwill, while total capital
consists of core capital, certain debt instruments and a
portion of the reserve for possible loan losses. At June
30, 1995, the Corporation had a Tier 1 capital ratio of
12.6% and a total capital ratio of 13.9%, well above
regulatory minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total
assets, referred to as a total assets leverage ratio. At
June 30, 1995, the Corporation's leverage ratio was 7.0%.
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
shareholders
None
Item 5. Other information
None
Item 6. Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Belmont Bancorp.
(Registrant)
J. Vincent Ciroli, Jr.
July 26, 1995 _______________________
J. Vincent Ciroli, Jr.
President & CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 9732
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 46589
<INVESTMENTS-CARRYING> 87927
<INVESTMENTS-MARKET> 87973
<LOANS> 155199
<ALLOWANCE> 2228
<TOTAL-ASSETS> 310644
<DEPOSITS> 249547
<SHORT-TERM> 36792
<LIABILITIES-OTHER> 1156
<LONG-TERM> 0
<COMMON> 1057
0
1000
<OTHER-SE> 21092
<TOTAL-LIABILITIES-AND-EQUITY> 310644
<INTEREST-LOAN> 3497
<INTEREST-INVEST> 2265
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5762
<INTEREST-DEPOSIT> 2339
<INTEREST-EXPENSE> 2648
<INTEREST-INCOME-NET> 3114
<LOAN-LOSSES> 300
<SECURITIES-GAINS> 37
<EXPENSE-OTHER> 1757
<INCOME-PRETAX> 1461
<INCOME-PRE-EXTRAORDINARY> 1098
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1098
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.50
<YIELD-ACTUAL> 4.62
<LOANS-NON> 330
<LOANS-PAST> 10
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 882
<ALLOWANCE-OPEN> 1931
<CHARGE-OFFS> 10
<RECOVERIES> 7
<ALLOWANCE-CLOSE> 2228
<ALLOWANCE-DOMESTIC> 2228
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1832
</TABLE>
