U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from _____________ to _________________
Commission file number 0-12724
BELMONT BANCORP.
(Exact Name of Registrant as specified in its charter)
Ohio (State of Incorporation) I.R.S. Employer
ID No. 34-1376776
325 MAIN STREET
BRIDGEPORT, OHIO 43912
(Address of principal executive offices)
Telephone (614)-695-3323
Securities registered under Section 12(b) of the Exchange
Act:
NONE
Securities registered under Section 12(g) of the Exchange
Act:
Title of each class: Name of each
exchange on which registered:
Common stock, $3.57 par value NASDAQ SmallCapMarket
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
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-K is not contained in
this form, and no disclosure will be contained, to the best
of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference to Part III
of this Form 10-K or any amendment to this Form 10-K._____
Aggregate market value of voting stock held by nonaffiliates
as of March 13, 1995 - $37,006,000
There were 1,057,322 shares of $3.57 par value, common stock
outstanding as of March 13, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of the Registrant dated
March 17, 1995 are incorporated in Items 10, 11, 12, and 13.
The Annual Report of the Registrant is incorporated by
reference in Items 5, 6, 7, and 8.
PART I
ITEM 1-BUSINESS
BELMONT BANCORP.
Belmont Bancorp. is a bank holding company which was organized
under the laws of the State of Ohio in 1982. On April 4, 1984,
Belmont Bancorp. acquired all of the outstanding capital stock of
Belmont National Bank (formerly Belmont County National Bank), a
banking corporation organized as a national banking association.
Belmont National Bank provides a variety of financial services. In
addition to Belmont National Bank, the Corporation owns Belmont
Financial Network, Inc., a non-bank subsidiary.
BELMONT NATIONAL BANK
Belmont National Bank resulted from the merger on January 2,
1959, of the First National Bank of St. Clairsville, and the First
National Bank of Bridgeport. Both banks were organized as national
associations prior to the turn of the century. Belmont National Bank
operates through a network of ten branches located in Belmont,
Harrison and Tuscarawas Counties in Ohio. The main office is located
in the city of St. Clairsville. Other branch locations in Belmont
County include Bridgeport, Lansing, Shadyside, and the Ohio Valley
Mall. Branches in Harrison County are located in Jewett and Cadiz,
Ohio. Branches in Tuscarawas County are located in New Philadelphia,
Ohio. The three New Philadelphia offices were acquired on October 2,
1992, when Belmont National Bank acquired the deposits and loans of
these offices from Diamond Savings and Loan.
Belmont National Bank provides a wide range of retail banking
services to individuals and small to medium-sized businesses. These
services include various deposit products, business and personal
loans, credit cards, residential mortgage loans, home equity loans,
and other consumer oriented financial services including IRA and Keogh
accounts, safe deposit and night depository facilities. Belmont
National Bank also owns automatic teller machines located at the Ohio
Valley Mall and in New Philadelphia, Ohio providing 24 hour banking
service to our customers. Belmont National Bank belongs to Cirrus, a
nationwide ATM network with thousands of locations nationwide.
Belmont National Bank offers a wide variety of fiduciary services.
The trust department of the Bank administers pension, profit-sharing,
employee benefit plans, personal trusts and estates.
BELMONT FINANCIAL NETWORK
On July 1, 1985, Belmont Bancorp. formed a subsidiary
corporation, Belmont Financial Network, Inc.(BFN). The purpose of the
subsidiary was primarily to engage in lease consulting for personal or
real property. Changes to the federal tax code that eliminated new
investment tax credits as of December 31, 1987 adversely affected the
leasing business. The daily operations of Belmont Financial Network
were suspended during 1989 to reduce overhead costs. The leases
formerly serviced by Belmont Financial Network are presently
administered by Belmont National Bank. BFN was inactive throughout
1994.
BELMONT INVESTMENT AND FINANCIAL SERVICES, INC.
During 1988, Belmont National Bank began the operations of
Belmont Investment and Financial Services, Inc., a wholly-owned
subsidiary of the Bank. Belmont Investment and Financial Services,
Inc. was organized so that the Bank's customers would have available
to them a wider array of financial products as well as sound
investment and financial planning. Through Belmont Investment and
Financial Services, Inc., customers can purchase government or
corporate bonds, and mutual fund products. In 1990, the services
provided by the Corporation, other than advisory services, were
reorganized into a department of the Bank.
SUPERVISION AND REGULATION
Belmont Bancorp. is subject to regulation under the Bank Holding
Company Act of 1956, as amended (the "Act"). The Act requires the
prior approval of the Federal Reserve Board for a bank holding company
to acquire or hold more than a 5% voting interest in any bank, and
restricts interstate banking activities. The Act restricts Belmont's
non-banking activities to those which are closely related to banking.
The Act does not place territorial restrictions on the activities of
nonbank subsidiaries of bank holding companies. Belmont's banking
subsidiary is subject to limitations with respect to intercompany
loans and investments. A substantial portion of Belmont's cash
revenues is derived from dividends paid by its subsidiary bank. These
dividends are subject to various legal and regulatory restrictions as
summarized in Note 14 of the financial statements.
The Bank is subject to the provisions of the National Banking Act
and the regulations of the Federal Reserve Board and the Federal
Deposit Insurance Corporation. Under the Bank Holding Company Act of
1956, as amended, and under regulations of the Federal Reserve Board
pursuant thereto, a bank holding company is prohibited from engaging
in certain tie-in arrangements in connection with extensions of
credit.
The monetary policies of regulatory authorities, including the
Federal Reserve Board, have a significant effect on the operating
results of banks and bank holding companies. The nature and future
monetary policies and the effect of such policies on the future
business and earnings of Belmont Bancorp. and its subsidiary bank
cannot be predicted.
FOREIGN OPERATIONS
Belmont Bancorp. has no foreign operations.
EXECUTIVE OFFICERS
For information concerning executive officers of Belmont Bancorp.
and Belmont National Bank, see Item 10 of Form 10-K.
ITEM 2-PROPERTIES
DESCRIPTION OF PROPERTIES
The principal executive offices of Belmont National Bank are
located in St. Clairsville, Ohio, the seat of Belmont County. This
office consists of a two story brick building owned by the Bank with
attached drive-in facilities. The building consists of 9,216 square
feet which houses the commercial bank operations and the executive,
marketing and human resources offices. In addition, the Bank
transacts business in the following branch locations:
Mall Office-This office is located at the Ohio Valley Mall, a
major shopping mall located two miles east of St. Clairsville,
Ohio, and consists of a 4,000 square foot office inside the mall
proper, plus a stand alone drive-in facility at the perimeter of
the Mall. Automatic teller machines are located at the drive-in
location and inside the branch office.
Lansing Office-This 1,352 square foot office is located in
Lansing, Ohio, a small community approximately six miles east of
St. Clairsville on US. Route 40. The facility is a masonry
building with adjoining drive-in facilities.
Bridgeport Office-This office is located in Bridgeport, Ohio, a
community located on the Ohio/West Virginia border, approximately
10 miles east of St. Clairsville. This 5,096 square foot
facility is a recently remodeled masonry building with adjoining
drive-in facilities.
Shadyside Office-This 1,792 square foot office is located in
Shadyside, a village located on Ohio State Route 7. The facility
is a masonry building with accompanying drive-in facilities.
Jewett Office-This office is located in Harrison County
approximately twenty-six miles north of St. Clairsville, across
from Cross Street, the intersection of State Routes 9 and 151.
The building is constructed of masonry brick and contains 2,400
square feet with an accompanying drive-in facility.
Cadiz Office-This office is located in Cadiz, Ohio in Harrison
County, approximately seventeen miles north of St. Clairsville at
the intersection of State Routes 9 and 22. The brick and tile
building contains 1,800 square feet with an accompanying drive-in
facility.
New Philadelphia Office-This office, located at 152 North
Broadway Avenue, is a 33,792 square foot site improved with two
inter-connected, two story brick office buildings with a total
building area of 13,234 square feet. Part of the office space is
leased to other businesses. This location also has a drive-in
facility and an automatic teller machine.
New Philadelphia Office-This office, located at 2300 East High
Avenue, is comprised of a one story, 1,605 square foot brick
structure with a 783 square foot drive-thru canopy.
New Philadelphia Office-This office, located at 525 Wabash
Avenue, is comprised of a 14,250 square foot site with a 246
square foot drive-thru banking facility.
All offices are owned by the Bank except for the Mall Office.
The lease at the Mall location is in effect until the year 1996 with
options to renew thereafter.
ITEM 3-LEGAL PROCEEDINGS
None.
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5-MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDERS' MATTERS
1994
Dividend
Quarter High Low per Share
1st $22.00 $21.00 $0.1680
2nd 24.50 22.00 0.1680
3rd 25.75 21.00 0.2100
4th 36.00 23.00 0.2100
Total $0.7560
1993
Dividend
Quarter High Low per Share
1st $21.00 $21.00 $0.1527
2nd 21.00 20.50 0.1527
3rd 21.00 21.00 0.1527
4th 22.00 21.00 0.2036
Total $0.6617
The number of shareholders of record for the Corporation's stock
as of March 10, 1995 was 598. The latest available market price
based on an actual trade price was $35.00 per share on March 10, 1995.
Belmont Bancorp.'s common stock has a par value of $3.57 and is
traded in the over-the-counter market, principally in St. Clairsville,
Ohio, and in Wheeling, WV areas. The tables above show its high and low
market prices and dividend information for the past two years. In October
1994, the Corporation's stock was listed on The Nasdaq SmallCap Market.
Previously, market prices were based on actual trades known to the
Corporation due to lack of an established market. Cash dividends paid
per share have been restated to reflect the effect of a 10% common
stock dividend paid in January 1994 and a 25% common stock dividend
paid in July 1994.
Information regarding the limitations on dividends available to
be paid can be located in Footnote 15 of the Notes to the Consolidated
Financial Statements in the Corporation's Annual Report (Exhibit 2).
Treasury stock is accounted for using the cost method. There
were 424 shares held in treasury on December 31, 1994 and 728 shares
in treasury on December 31 1993.
ITEM 6.-SELECTED FINANCIAL DATA
The Summarized Quarterly Financial Information and the
Consolidated Five Year Summary of Operations contained in the
Corporation's annual report (Exhibit 2) are hereby incorporated by
reference.
ITEM 7-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The data presented in this discussion should be read in
conjunction with the audited consolidated financial statements.
RESULTS OF OPERATIONS
SUMMARY
Net income increased during 1994 by 25.89% from the previous
year. Net income per common share for 1994 was $2.98 compared to
$2.35 per common share in 1993. The Corporation's net income to
average assets, referred to as return on assets, increased to 1.12%
for the year ended 1994 from .96% last year. Operating income
consists of earnings before income taxes, minus net investment and
trading gains or plus net investment and trading losses. Operating
income increased by $2,292,000 from 1994 to 1993. The table below
summarizes earnings performance for the past three years.
($000s) except per 1994 1993 1992
share data
Operating income $4,324 $2,032 $2,089
Net income 3,234 2,569 1,838
Net income per share $2.98 $2.35 $1.71
Return on average
assets 1.12% 0.96% 0.87%
Return on average common equity 16.71% 14.57% 11.30%
Return on average total equity 16.27% 14.21% 11.33%
NET INTEREST REVENUE
A major share of the Corporation's income results from the spread
between income on interest earning assets and interest expense on the
liabilities used to fund those assets, known as net interest income.
Net interest income is affected by changes in interest rates and
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 incurred on liabilities without regard to the amounts outstanding
in either category.
The Consolidated Average Balance Sheets and Analysis of Net
Interest Income Changes included in the Corporation's annual report
(Exhibit 2), compare interest revenue and interest earning assets
outstanding with interest cost and liabilities outstanding for the
years ended December 31, 1994, 1993, and 1992, and computes 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 Corporation's net interest income grew by $2,963,000 on a
taxable equivalent basis during 1994 compared to the same period last
year, a 34.82% increase. The increase in net interest income was
primarily attributable to the increase in average earning assets and
improved net interest margins. During 1994, the Corporation's average
interest-earning assets grew by approximately $21.2 million, up 8.48%
from 1993.
The yield on interest earning assets improved from 6.86% during
1993 to 7.49% during 1994, and increase of 63 basis points. (A basis
point (bp) is equivalent to .01%.) The cost of interest bearing
liabilities declined by 17 basis points from 1993 to 1994.
Consequently, the net interest rate spread increased from 3.07% during
1993 to 3.87% during 1994.
The 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 assets 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).
This table shows that the increase in the Corporation's net
interest income during the year-to-date periods presented from 1993 to
1994 was generated by growth in the levels of earning assets and
average interest bearing liabilities outstanding (depicted by the
volume column). In addition, higher yields on taxable investment
securities and lower costs on retail deposits (depicted by the yield
column) contributed to the improvement in net interest margin.
OTHER OPERATING INCOME
Other operating income excluding securities gains and losses,
increased 6.64% or $84,000 and totaled $1,349,000 in 1994, compared
to $1,265,000 in 1993. The table below shows the dollar amounts and
growth rates of the components of other operating income.
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C> <C> <C>
($000s) Total Change Total Change Total
Trust income $ 341 24.45% $ 274 1.86% $ 269
Service charges on deposits 527 11.18% 474 15.33% 411
Other service charges 59 -18.06% 72 56.52% 46
Other income 422 -5.17% 445 55.59% 286
Subtotal 1,349 6.64% 1,265 25.00% 1,012
Investment securities
gains (losses) (9) 95.61% (205) -141.58% 493
Gains (losses) on
securities
available for sale (55) -104.35% 1,264 1327.18% (103)
Trading gains (losses) 1 100.86% (116) -73.13% (67)
Total 1,286 -41.76% 2,208 65.39% $1,335
</TABLE>
Service charges on deposits increased 11.18%, or $53,000 during
1994 compared to the prior period. This increase was partially offset
by a decline in Other Service Charges which are primarily comprised of
late charges on loans. Other income declined 5.17% from $445,000 in
1993 to $422,000 in 1994; this decline was the result of lower
commissions earned in the discount brokerage operation as customers'
demand for mutual funds declined as deposit rates improved.
Losses on investments held in the maturity portfolio occurred as
a result of calls on municipal bonds in the portfolio. These losses
totalled $9,000 during 1994. Net losses were realized on securities
available for sale during 1994 totalling $55,000 when securities were
sold to reinvest at higher yields.
Trading gains netted to $1,000 during 1994 compared to $116,000
in losses during 1993. Securities held in the trading account are
valued at market value with a corresponding adjustment to income. No
securities were held in the trading account at December 31, 1994. One
security, a collateralized mortgage obligation, was held in the
trading account at December 31, 1993. The following table summarizes
trading gains and losses realized during the past three years.
($000s) 1994 1993 1992
Trading gains $ 1 $ 5 $ 34
Trading losses - (121) (101)
Net trading gains (losses) $ 1 $ (116) $ (67)
The related income taxes on securities transactions, including
trading and securities available for sale, were $67,000 and $77,000
for the years ended 1993 and 1992, respectively. A tax credit of
$15,000 was attributable to securities transactions for
1994.
OPERATING EXPENSES
Successful expense control is an essential element in maintaining
the Corporation's profitability. The table below details the
percentage changes in various categories of expense for the three
years ended 1994, 1993, and 1992.
<TABLE>
<CAPTION>
($000s) 1994 % Change 1993 % Change 1992
<S> <C> <C> <C> <C> <C>
Salaries and wages $2,281 8.98% $2,093 26.16% 1,659
Employee benefits 665 -6.99% 715 46.22% 489
Net occupancy expense 533 -1.48% 541 28.50% 421
Equipment expense 618 25.87% 491 8.63% 452
Other operating
expenses 2,972 1.89% 2,917 39.84% 2,086
Total $7,069 4.62% $6,757 32.31% $5,107
</TABLE>
One measure of operating efficiency is the amount of assets
managed per full time equivalent employee. Total assets managed per
full time equivalent employee (FTE) were $2.819 million at December
31, 1994 compared to $2.623 million of assets per FTE at December 31,
1993. Equipment expense had the largest percentage increase of the
categories itemized due to the installation of a network system and
the purchase of computer equipment to convert the subsidiary bank's
data processing sytem to an "in-house" operation. The increase in
salaries and wages is primarily attributable to compensation plans for
officers that are tied to earnings performance.
FINANCIAL CONDITION
The book values of investments as of December 31, 1994 and 1993
are detailed in Footnote 3 of the Notes to the Consolidated Financial
Statements in the Corporation's annual report (Exhibit 2).
<TABLE>
<CAPTION>
Securities Held to Maturity
Maturity < 1-5 Year 6-10 Year Over 10
1 Year Maturity Maturity Maturity Total
($000s) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
agencies and
corporations $ - - $974 5.58% $2,274 4.94% $1,000 7.00% $4,248 5.57%
States and
political
subdivisions(a) 1,108 4.15% 919 7.44% 3,942 7.41% 18,275 8.51% 24,244 8.09%
Agency mortgage-
backed
securities(b) 237 9.14% 40,968 7.32% 10,071 7.38% - - 51,276 7.34%
Mortgage
derivative
securities 4,206 5.96% 7,449 5.45% 1,040 5.83% - - 12,695 5.65%
Total $5,551 5.73% $50,310 7.01% $17,327 6.98% $19,275 8.43% $92,463 7.22%
(a) Taxable equivalent yields
(b) Maturities of mortgage-backed securities are based on estimated average life.
</TABLE>
<TABLE>
<CAPTION>
Securities Available for Sale (excluding Equity Securities)
Maturity < 1-5 Year 6-10 Year Over 10
1 Year Maturity Maturity Maturity Total
($000s) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
Agencies and
corporations $ 0 - $ 4,744 7.39% $ 1,516 7.53% $ 0 - $ 6,260 7.42%
Agency mortgage-
backed
securities(b) 57 6.98% 29,517 6.83% 439 8.12% 9,942 6.68% 39,955 6.81%
Mortgage
derivative
securities 0 - 851 5.39% 0 - 0 - 851 5.39%
Total fair value $ 57 6.98% $35,112 6.87% $ 1,955 7.66% $ 9,942 6.68% $47,066 6.86%
Amortized cost $ 56 $36,938 $ 1,973 $10,359 49,326
(a) Taxable equivalent yields
(b) Maturities of mortgage-backed securities are based on estimated average life.
</TABLE>
MARKETABLE EQUITY SECURITIES
The Corporation held marketable equity securities in its
investment portfolio as of December 31, 1994. In accordance with
regulatory requirements, all equity securities were transferred to
Securities Available for Sale on January 1, 1994 because these
securities do not have a stated maturity. Current accounting
principles require that marketable equity securities be recorded at
the lower of cost or market value with a corresponding adjustment to
reduce shareholders' equity if market value is lower than cost. At
December 31, 1994 and 1993, estimated market values approximated
original cost.
<TABLE>
<CAPTION>
Taxable
Market Equivalent
December 31, 1994 ($000s) Cost Value Yield
<S> <C> <C> <C>
Federal Home Loan Bank stock $ 1,724 $ 1,724 6.38%
Corporate Stock 155 155 2.74%
Federal Reserve Bank Stock 187 187 6.00%
Total $ 2,066 $ 2,066
</TABLE>
<TABLE>
<CAPTION>
Taxable
Market Equivalent
December 31, 1993 ($000s) Cost Value Yield
<S> <C> <C> <C>
Federal Home Loan Bank stock $ 1,628 $ 1,628 4.50%
Corporate Stock 155 155 2.47%
Total $ 1,783 $ 1,783
</TABLE>
LOANS AND LEASES
The following table shows the history of commercial and consumer
loans and leases by major category at December 31.
<TABLE>
<CAPTION>
($000s) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Commercial loans:
Real estate construction $1,801 $2,081 $973 $771 $2
Acceptances of other banks 0 0 0 0 14,984
Real estate mortgage 23,701 21,211 19,184 20,817 19,322
Commercial, financial and
agricultural 38,983 25,317 19,568 9,424 7,937
Direct financing leases 5 9 58 476 599
Total commercial loans $64,490 48,618 39,783 $31,488 $42,844
Consumer loans:
Residential mortgage $76,094 $70,301 65,536 $38,720 $38,415
Installment loans 5,116 5,281 7,535 6,538 7,152
Credit card and other consumer 1,396 1,032 1,123 1,309 1,099
Total consumer loans $82,606 $76,614 $ 74,194 $46,567 $46,666
Total loans and leases $147,096 $125,232 $113,977 $78,055 $89,510
</TABLE>
An analysis of maturity and interest rate sensitivity of business
loans at the end of 1994 follows:
<TABLE>
<CAPTION>
Under 1 to 5 Over 5
($000s) 1 Year Years Years Total
<S> <C> <C> <C> <C>
Domestic loans:
Real estate construction $1,441 $42 $318 $1,801
Real estate mortgage 15,612 2,633 5,400 23,645
Commercial and industrial 31,024 4,412 3,182 38,618
Direct financing leases 0 5 5
Total business loans (a) $48,077 $7,092 $8,900 $64,069
Rate sensitivity:
Predetermined rate $3,642 $4,037 $8,900 $16,579
Floating or adjustable rate 44,435 3,055 0 47,490
Total domestic business
loans $48,077 $7,092 $8,900 $64,069
Foreign loans 0 0 0 0
(a) does not include nonaccrual loans
</TABLE>
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation, as part of its philosophy of risk management,
has established various credit policies and procedures intended to
minimize the Corporation's exposure to undue credit risk. Credit
evaluations of borrowers are performed to ensure that loans are
granted on a sound basis. In addition, care is taken to minimize risk
by diversifying specific industry. Credit risk is continuously
monitored by Management through the periodic review of individual
credits to ensure compliance with policies and procedures. Adequate
collateralization, contractual guarantees, and compensating balances
are also utilized by Management to mitigate risk.
Management determines the appropriate level of the allowance for
possible loan losses by continually evaluating the quality of the loan
portfolio. The reserve is allocated to specific loans that exhibit
above average credit loss potential based upon their payment history
and the borrowers' financial conditions. Management maintains a watch
list of substandard loans for monthly review. Although several of
these loans are not delinquent and may be adequately secured,
Management believes that due to location, size, or past payment
history, it is necessary to monitor these loans monthly.
The allowance for possible loan losses totaled $1,537,000, or
1.04% of total loans and leases at December 31, 1994. At the end of
the previous year, the allowance for possible loan losses was
$1,617,000, or 1.29% of total loans and leases. The provision charged
to expense during 1994 was $805,000 compared to $577,000 in the year
ago period.
Management's allocation of the allowance for possible loan losses
based on estimates of potential future loan loss is set forth in the
table below:
<TABLE>
<CAPTION>
% of % of % of
Total Total Total
($000s) 1994 Loans 1993 Loans 1992 Loans
Specific reserves:
<S> <C> <C> <C> <C> <C> <C>
Commercial $ 10 0.01% $ 960 0.77% $ 370 0.32%
Mortgage 5 0.00% 38 0.03% 51 0.04%
Consumer 7 0.00% 21 0.02% 41 0.04%
Criticized loans without specific
allocation 315 0.21% 160 0.13% 153 0.13%
Provision for loan categories
based on historical loss experience:
Commercial 687 0.47% 335 0.27% 284 0.25%
Commercial real estate 103 0.07% 7 0.01% 10 0.01%
Residential mortgage 298 0.20% 28 0.02% 29 0.03%
Consumer 112 0.08% 68 0.05% 86 0.08%
Total $ 1,537 1.04% $ 1,617 1.29% $1,024 0.90%
Total loans and leases outstanding $ 147,096 $ 125,232 $113,977
</TABLE>
The following table sets forth the five year historical
information on the reserve for loan losses:
<TABLE>
<CAPTION>
ALLOWANCE FOR POSSIBLE LOAN LOSSES
Five year history
($000s) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Balance as of January 1 $1,617 $1,024 $1,013 $891 $696
Provision of loan losses 805 577 405 125 225
Adjustment incident to
acquisition - - 4 - -
Loans charged off:
Real estate 49 19 13 19 41
Commercial 806 - 59 6 45
Consumer 85 15 25 22 27
Direct financing leases - - 340 - -
Total loans charged-off 940 34 437 47 113
Recoveries of loans previously
charged-off:
Real estate 18 - 2 9 21
Commercial 29 21 22 19 43
Consumer 7 11 6 16 19
Direct financing leases 1 18 9 - -
Total recoveries 55 50 39 44 83
Net charge-offs (recoveries) 885 (16) 398 3 30
Balance at December 31 $1,537 $1,617 $1,024 $1,013 $891
Loans and leases outstanding
at December 31 $ 147,096 $ 125,232 $ 113,977 $ 78,055 $ 89,510
Allowance as a percent of
loans and leases outstanding 1.04% 1.29% 0.90% 1.30% 1.00%
Average loans and leases $ 134,952 $ 120,218 $ 95,489 $ 76,333 $ 70,095
Net charge-offs as a percent
of average loans and leases 0.66% -0.01% 0.42% 0.00% 0.04%
</TABLE>
The following schedule shows the amount of under-performing
assets and loans 90 days or more past due but accruing interest.
<TABLE>
<CAPTIONS>
UNDER-PERFORMING ASSETS
($000s) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Nonaccrual debt securities $ 0 $ 0 $1,500 $1,500 $ 0
Nonaccrual loans and leases 478 2,358 1,647 1,514 1,582
Loans 90 days or more past
due but accruing interest 11 436 11 988 819
Other real estate owned 586 69 155 185 81
Total $ 1,075 $ 2,863 $3,313 $4,187 $2,482
</TABLE>
In addition to the above schedule of non-performing assets,
Management prepares a watch list consisting of loans over $100,000
which Management has determined require closer monitoring to further
protect the Corporation against loss. The balance of loans classified
by Management as substandard due to delinquency and a change in
financial position at the end of 1994 and not included in the table
above was $1,031,000.
DEPOSITS
Primarily core deposits are used to fund interest-earning assets.
The Corporation has a lower volume of interest-free checking accounts
than its peer group which is typical for its market area. This
results in an overall higher cost of funds than peer average. The
accompanying tables show the relative composition of the Corporation's
average deposits and the change in average deposit sources during the
last three years.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS ($000s)
1994 1993 1992
<S> <C> <C> <C>
Demand $ 24,797 $ 21,093 $ 16,537
Interest bearing checking 26,764 30,895 25,674
Savings 95,655 85,865 51,528
Other time 89,431 96,045 85,012
Certificates-$100,000 and
over 10,229 10,661 11,091
Total average deposits $ 246,876 $ 244,559 $ 189,842
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF AVERAGE
DEPOSITS 1994 1993 1992
<S> <C> <C> <C>
Demand 10.04% 8.63% 8.72%
Interest bearing checking 10.84% 12.63% 13.52%
Savings 38.75% 35.11% 27.14%
Other time 36.23% 39.27% 44.78%
Certificates-$100,000 and
over 4.14% 4.36% 5.84%
Total 100.00% 100.00% 100.00%
</TABLE>
<TABLE>
<CAPTION>
CHANGE IN AVERAGE DEPOSIT 1993 to 1992 to
SOURCES ($000s) 1994 1993
<S> <C> <C>
Demand $ 3,704 $ 4,556
Interest bearing checking (4,131) 5,221
Savings 9,790 34,337
Other time (6,614) 11,033
Certificates-$100,000 and
over (432) (430)
Total $2,317 $54,717
</TABLE>
CAPITAL RESOURCES
The Corporation maintains a relatively high level of capital as a
margin of safety for its depositors and shareholders. At December 31,
1994, shareholders' equity was $20,214,000 compared to $19,355,000 at
December 31, 1993, an increase of $859,000 or 4.44%. The increase in
capital during 1994 was due to retention of earnings, but this was
partially offset by the recognition, in accordance with Financial
Accounting Standard Number 115, of Unrealized Losses on Securities
Available for Sale totalling $1,492,000 at December 31, 1994.
The following table presents dividend payout ratios for the past
three years.
1994 1993 1992
Total dividends declared
as a percentage of net income 27.18% 30.36% 39.06%
Common dividends
declared as a percentage of
earnings per common share 25.37% 28.16% 37.85%
The Federal Reserve Board's capital adequacy guidelines
require a minimum primary capital ratio of 5.5%. At December 31,
1994, the Corporation's primary capital (shareholders' equity plus
the allowance for possible loan losses) was $21,751,000 or 6.95% 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% of risk-weighted assets
and total capital of 8.0% of 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 loan losses. At December 31,
1994, the Corporation had a Tier 1 capital ratio of 12.26% and a
total capital ratio of 13.21%, well above the regulatory minimum
requirements.
National banks must maintain a total assets leverage ratio of
at least 3.0%. The total assets leverage ratio is calculated by
dividing capital less intangibles into assets, net of intangibles.
In many cases, regulators require an additional cushion of at least
1.0% to 2.0%. At December 31, 1994, the Corporation's Tier One
leverage ratio was 6.36%.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation meets its liability based needs through the
operation of Belmont National Bank's branch banking network that
gathers demand and retail time deposits. The Bank also acquires funds
through repurchase agreements and overnight federal funds that provide
additional sources of liquidity. Total deposits increased by $12.7
million, or 5.22%, from the end of 1993 to 1994. Short term
borrowings increased by $31.8 million over the same period. Average
deposits increased .95% during 1994 compared to 1993.
The Corporation also has unused lines of credit with various
correspondent banks totaling $7.7 million which may be used as an
alternative funding source.
INTEREST RATE SENSITIVITY
The Corporation's net interest revenue can be vulnerable to wide
fluctuations arising from a change in the general level of interest
rates to the degree that the average yield on assets responds
differently to such a change than does the average cost of funds. To
maintain a consistent earnings performance, the Corporation actively
manages the repricing characteristics of its assets and liabilities to
control net interest income rate sensitivity.
The mismatching of asset and liability repricing characteristics
in specific time frames is referred to as interest rate sensitivity
gaps. Mismatching or "gapping" can be profitable when the term
structure of interest rates (the yield curve) is positive, i.e. short
term yields are lower than long term yields, but gapping entails an
element of risk, particularly in volatile markets. An institution is
said to have a negative gap when its liabilities reprice in a shorter
time period than its assets. A positive gap exists when assets
reprice more quickly than liabilities. A negative gap in a period
when the general level of interest rates is declining will produce a
larger net interest income spread than would be the case if all assets
and liabilities were perfectly matched. Conversely, net interest
income will be adversely affected by a negative gap position in a
period when the general level of interest rates is rising. Gaps,
therefore, must be prudently managed.
The Corporation examines its interest rate sensitivity position
by categorizing the balance sheet into respective repricing time
periods similar to those shown on the accompanying table. Repricing
of certain assets, such as installment loans, mortgage loans and
leases, is based upon contractual amortization or repricing, although
experience indicates that they reprice more quickly due to early
payoffs. Mortgage-backed securities are included in
maturity/repricing categories based upon historical prepayment speeds.
Based upon historical deposit rate relationships, savings and interest
bearing checking are partially included in the non-rate sensitive
category since rate changes on these products are not completely
sensitive to fluctuations in the interest rate environment.
Asset/liability management encompasses both interest rate risk
and liquidity management. The resulting net cumulative gap positions
reflect the Corporation's sensitivity to interest rate changes over
time. The calculation is a static indicator and is not a net interest
income predictor of a dynamic business in a volatile environment. As
a static indicator, the gap methodology does capture major trends.
<TABLE>
<CAPTION>
Rate Sensitivity Analysis-December 31, 1994 ($000s)
Maturing or Repricing
Non-rate
Total Sensitive
31-90 91-180 181-365 1 year 1-5 & over
1-30 days days days days & under years 5 years Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earning
assets:
Loans and leases $ 44,985 $ 4,577 $ 4,461 $ 11,764 $ 65,787 $ 16,606 $ 64,703 $ 147,096
Investment securities 1,665 14,228 12,561 12,358 40,812 41,748 9,903 92,463
Securities available
for sale - - - - - 35,170 13,962 49,132
Securities in trading
account - - - - - - - -
Total interest
earning assets $ 46,650 $18,805 $ 17,022 $ 24,122 $ 106,599 $ 93,524 $ 88,568 $ 288,691
Interest bearing
liabilities:
Interest checking $ - $ - $ - $ - $ - $ - $ 26,273 $ 26,273
Savings 24,163 - - - 24,163 - 59,860 84,023
Certificates-$100,000
and over 2,136 1,561 3,073 2,182 8,952 3,036 102 12,090
Other time 6,806 10,834 30,066 18,070 65,776 36,727 3,765 106,268
Short term borrowings 35,498 - - - 35,498 - - 35,498
Total interest
bearing liabilities $ 68,603 $12,395 $ 33,139 $ 20,252 $134,389 $ 39,763 $ 90,000 $ 264,152
Rate sensitivity gap (21,953) $ 6,410 (16,117) $ 3,870 $(27,790) $ 53,761 (1,432) $ 24,539
Cumulative gap (21,953) (15,543) (31,660) (27,790) $ 25,971 $ 24,539
Cumulative gap as a
percentage of
interest earning
assets -7.60% -5.38% -10.97% -9.63% 9.00% 8.50%
</TABLE>
Interest bearing checking and savings deposits that have no
contractual maturity are scheduled in the table above according to
Management's best estimate of their repricing sensitivity to changes
in market rates. If all of these deposits had been included in the 1-
30 days category above, the cumulative gap as a percentage of earning
assets would have been negative 37.44%, 35.22%, 40.80%, 39.46%, 20.84%
and positive 8.50%, respectively, for the 1-30 days, 31-90 days, 91-
180 days, 181-365 days, 1-5 years, and greater than 5 years categories
at December 31, 1994.
FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENTS 114 AND 118
Statements of Financial Accounting Standards No. 114 (FAS 114)
"Accounting by Creditors for Impairment of a Loan" and No. 118 (FAS 118)
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures" are effective for financial statements for fiscal years
beginning after December 15, 1994. FAS 114 and 118 address the accounting
by creditors for impairment of a loan and loans that are restructured in
a troubled debt restructuring. The Corporation will adopt these standards
in the first quarter of 1995. It is estimated that such adoption will have no
material effect on the earnings or financial condition of the Corporation.
ITEM 8 - FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
The annual report of Belmont Bancorp. is hereby incorporated by
reference and appears as Exhibit 2. Management's report on their
responsibility for financial reporting is included in the
Corporation's annual report.
ITEM 9 - DISAGREEMENT OF ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in Belmont Bancorp.'s definitive proxy
statement dated March 17, 1995 (Exhibit 3) is incorporated by
reference in response to this item.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF JANUARY 1, 1994:
Name Age Position
<S> <C> <C>
J. Vincent Ciroli, Jr. 49 President and Chief Executive Officer,
Belmont Bancorp. & Belmont National Bank
William Wallace 39 Vice President, Belmont Bancorp.;
Executive Vice President & Chief
Operating Officer, Belmont National
Bank
Jane R. Marsh 33 Secretary, Belmont Bancorp.;
Senior Vice President, Controller &
Cashier, Belmont National Bank
</TABLE>
Each of the officers listed above has been an executive officer
of the Corporation or one of its subsidiaries during the past five
years.
ITEM 11 - EXECUTIVE COMPENSATION
The information appearing in Belmont Bancorp.'s definitive proxy
statement dated March 17, 1995 (Exhibit 3) is incorporated by
reference in response to this item.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information appearing in Belmont Bancorp.'s definitive proxy
statement dated March 17, 1995 (Exhibit 3) is incorporated by
reference in response to this item.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing in Belmont Bancorp.'s definitive proxy
statement dated March 17, 1995 (Exhibit 3) is incorporated by
reference in response to this item.
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 on March 21, 1995.
By John H. Goodman, II, __________________ BELMONT BANCORP
John H. Goodman, II, Chairman (Registrant)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant in the capacities and on the date indicated.
John A. Belot John A. Belot____________ Director
J. Vincent Ciroli, Jr. J. Vincent Ciroli, Jr.___ Director, President
& CEO;
Belmont Bancorp.
and Belmont
National Bank
William P. Goddard William P. Goddard_______ Director
Mary L. Holloway Haning Mary L. Holloway Haning___ Director
Charles J. Kaiser, Jr. Charles J. Kaiser, Jr.______ Director
Terrence A. Lee Terrence A. Lee__________ Director
Dana Lewis Dana Lewis_____________ Director
Jane R. Marsh Jane R. Marsh___________ Secretary, Belmont
Bancorp;
Sr. Vice President &
Controller,
& Cashier, Belmont
National Bank
James Miller James Miller_____________ Director
W. Quay Mull, II W. Quay Mull, II__________ Director
Tom Olszowy Tom Olszowy____________ Director
Keith Sommer Keith Sommer___________ Director
William Wallace William Wallace__________ Director &
Vice President;
Executive Vice
President & COO,
Belmont National Bank
Charles A. Wilson, Jr. Charles A. Wilson, Jr._____ Vice Chairman
John H. Goodman, II____________ Chairman of the Board
John H. Goodman, II Director March 21, 1995
<PAGE>
INDEX TO EXHIBITS
Exhibit 1 - Consent of Independent Certified Public Accountants
Exhibit 2 - Belmont Bancorp.'s 1994 Annual Report to Shareholders
Exhibit 3 - Belmont Bancorp.'s Proxy Statement to Shareholders, dated
March 17, 1995
Exhibit 27 - Financial Data Schedule
<PAGE>
EXHIBIT 1 - CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of Belmont Bancorp.
We consent to incorporation by reference of our report dated
January 23, 1995, relating to the consolidated balance sheets of
Belmont Bancorp. as of December 31, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity, and
statements of cash flows for each of the three years in the period
ended December 31, 1994. Said report appears as Exhibit 2 of Belmont
Bancorp.'s annual form 10-K.
s/S.R. Snodgrass A.C.
S.R. Snodgrass A.C.
Wheeling, WV
March 20, 1995
The
Belmont
Bancorp 1994 Annual Report
<PAGE>
Dedication
Daniel A. Giffin J. Harvey Goodman
The Belmont Bancorp. 1994 Annual Report is dedicated to Mr. Daniel A.
Giffin and Mr. J. Harvey Goodman. In January, 1995, Messrs. Giffin and
Goodman announced they would not stand for re-election to the Board of
Directors of Belmont Bancorp. and Belmont National Bank. With 16 years
and 32 years of distinguished service to the Corporation, respectively,
the contributions these gentlemen have made are significant and deeply
appreciated by all. Their talent and dedication will be missed.
<PAGE>
Corporate Profile
Belmont Bancorp. (the Corporation) is a $313 million bank holding
company, incorporated in Ohio. Belmont National Bank, a wholly-owned
subsidiary of the Corporation, is an FDIC-insured, federally chartered
commercial bank.
The Bank delivers a comprehensive range of financial products and
services to individuals, families, businesses and corporations through
nine full service offices and two drive-up service locations. Belmont
National Bank's primary market areas for its consumer, commercial, trust
and investment services are Belmont, Harrison, Tuscarawas and Jefferson
counties in Ohio, and Marshall and Ohio counties in West Virginia.
<TABLE>
Financial Highlights
(unaudited) (000's except per share data)
<CAPTION>
1994 1993 % change
<S> <C> <C> <C>
Net income $ 3,234 $ 2,569 25.9%
Operating Return on average assets 1.12% 0.96%
results Return on average common
equity 16.71% 14.57%
Return on average
total equity 16.27% 14.21%
Per Net income $ 2.98 $ 2.35 26.8%
common Dividend 0.76 0.66 15.2%
share Book value at year-end 18.17 17.36 4.7%
At Total assets $312,963 $267,505 17.0%
year- Total loans 147,096 125,232 17.5%
end Total deposits 255,923 243,232 5.2%
Total shareholders'
equity 20,214 19,355 4.4%
Liquidity Average common equity
and to average total assets 6.52% 6.38%
capital Average total equity
ratios to average total assets 6.87% 6.76%
Dividend payment ratio 27.18% 30.36%
</TABLE>
The 1995 Annual Report
cover charts Belmont Bancorp. asset growth over the past ten years.
<PAGE>
From Management
The year 1994 proved to be a year of accomplishment and change. We
entered the year with interest rates at all time lows and finished the
year with short-term rates nearly double those of just twelve months
earlier. At the beginning of 1994, home mortgages were being refinanced
at a record pace; by the end of the year the refinancing boom had gone
bust. But, through it all, we prevailed to have another record year.
Our accomplishments include record net income, record asset size and
record capital levels. During 1994, Belmont Bancorp. stock was listed
as a NASDAQ company under the symbol BLMT, we introduced a dividend
reinvestment plan for our shareholders and had two stock splits. During
this time, our stock increased in value by 38%, increasing from a low of
$21.00 to $29.00 at year-end. In addition, our cash dividend increased
15.2%.
Review of 1994 Results
We are very pleased with Belmont Bancorp's operating results, which
were accomplished during a time of rising interest rates.
Earnings per share for 1994 amounted to $2.98, a 26.8% increase
compared to 1993. The return on common shareholders' equity, which is
the primary way we measure our performance, totaled 16.7% for the year,
up from 14.6% during 1993. Return on assets for the year equaled 1.12%,
up from .96% in 1993.
Technology and the Future
Throughout our organization we continue to deploy the latest in
banking and financial service innovations. Through technology we are
able to compete with any size financial entity in the nation.
Technology permits us to be more productive and customer friendly at the
same time. 1995 will be another year of continuous improvement,
including many new products and services which will keep us a leader in
all the markets we serve. All of our products and services are designed
to make or save our customers money.
<PAGE>
From Management
Lines of Business
We concentrate our efforts in primarily four areas: commercial
lending and business development, residential real estate and mortgage
lending, retail banking, and trust and investment services. We want to
be recognized, in all the communities we serve, as the number one choice
for financial products, services and information.
The money we gather through our retail banking operation goes right
back into the local economies we serve in the form of business loans
that help create jobs, mortgage loans that provide shelter and comfort,
and consumer loans that make dreams come true. For a community banking
organization like Belmont Bancorp., the best investment we can make is
in our local communities.
Our "Banking on Education" partnership continues to provide our
schools and our children with desperately needed educational equipment,
and our Fortune Fifty Club continues to be one of the outstanding senior
clubs in the country.
Our People
People make organizations successful. Without the right people, great
plans fail...without the right people, nothing positive happens. At
Belmont Bancorp., we put our people first--before the customer and even
before you, our shareholder.
Through time, the only way we can earn an above average return for our
shareholders is to have satisfied customers. To have satisfied
customers, we need an enthusiastic, well-trained and appropriately
compensated staff. When this all fits together, we have a first class
organization which best describes Belmont Bancorp.
Once again we look forward to the challenges of 1995 and the future.
Thank you, our shareholder, for the confidence you have shown us through
the years. We dedicate ourselves to honoring that trust.
J. Vincent Ciroli, Jr. John H. Goodman, II
J. Vincent Ciroli, Jr. John H. Goodman, II
President & CEO Chairman
<PAGE>
Financial Statements
<PAGE>
<TABLE>
Belmont Bancorp. and Subsidiaries
Summarized Quarterly Financial Information
(Unaudited) ($000's except per share data)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
1994
<S> <C> <C> <C> <C>
Interest income $4,235 $4,688 $5,237 $5,496
Interest expense 1,887 2,039 2,331 2,550
Net interest income 2,348 2,649 2,906 2,946
Provision for possible
loan losses 250 270 85 200
Security gains (losses) 15 (3) (2) (73)
Net overhead 1,254 1,397 1,364 1,705
Income before
income taxes 859 979 1,455 968
Income taxes 218 187 320 302
Net income $ 641 $ 792 $1,135 $ 666
Net earnings
per common share $ 0.59 $ 0.73 $ 1.05 $ 0.61
1993
Interest income $4,218 $4,175 $4,308 $4,016
Interest expense 2,267 2,208 2,152 1,989
Net interest income 1,951 1,967 2,156 2,027
Provision for
possible loan losses 276 3 205 93
Security gains (losses) (87) (229) 475 784
Net overhead 1,281 1,311 1,292 1,608
Income before
income taxes 307 424 1,134 1,110
Income taxes 6 92 9 299
Net income $ 301 $ 332 $1,125 $ 811
Net earnings
per common share $ 0.27 $ 0.29 $ 1.04 $ 0.75
1992
Net income $ 453 $ 365 $ 913 $ 107
Net earnings
per common share $ 0.43 $ 0.35 $ 0.86 $ 0.07
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Five Year Summary of Operations
For the Years Ending December 31, 1994, 1993, 1992, 1991, 1990
(Unaudited) ($000's except per share data)
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Interest income $ 19,656 $ 16,717 $ 14,671 $ 16,151 $ 15,772
Interest expense 8,807 8,616 8,082 10,091 9,921
Net interest income 10,849 8,101 6,589 6,060 5,851
Provision for
possible loan losses 805 577 405 125 225
Net interest income
after provision
for possible
loan losses 10,044 7,524 6,184 5,935 5,626
Securities and
trading gains (losses) (63) 943 323 44 (184)
Other operating
income 1,349 1,265 1,012 962 869
Operating expenses 7,069 6,757 5,107 4,629 4,390
Income before
income taxes 4,261 2,975 2,412 2,312 1,921
Income taxes 1,027 406 574 528 338
Income before
extraordinary item 3,234 2,569 1,838 1,784 1,583
Extraordinary item _ _ _ _ 289
Net income $ 3,234 $ 2,569 $ 1,838 $ 1,784 $ 1,872
Earnings per
common share (1):
Earnings before
extraordinary item $ 2.98 $ 2.35 $ 1.71 $ 1.69 $ 1.50
Extraordinary item _ _ _ _ 0.27
Net earnings
per common share $ 2.98 $ 2.35 $ 1.71 $ 1.69 $ 1.77
Cash dividend declared
per share $ 0.76 $ 0.66 $ 0.65 $ 0.64 $ 0.64
Book value
per common share $ 18.17 $ 17.37 $ 15.67 $ 14.61 $ 13.06
Total loans $ 147,096 $125,232 $113,977 $ 78,055 $ 89,510
Total assets $ 312,963 $267,505 $267,332 $197,015 $188,418
Total deposits $ 255,923 $243,232 $245,743 $176,859 $168,034
Total shareholders'
equity $ 20,214 $ 19,355 $ 17,565 $ 15,445 $ 13,812
<F1>(1) Restated for stock dividends paid during 1994.
<PAGE>
</TABLE>
<TABLE>
Belmont Bancorp. and Subsidiaries
Consolidated Balance Sheets
For the Years Ended December 31, 1994 and 1993
<CAPTION>
Assets 1994 1993
<S> <C> <C>
Cash and due from banks $ 11,770,000 $ 8,049,000
Federal funds sold _ 1,260,000
Securities available
for sale (at market
value in 1994;
market value in 1993 - $4,076,000) 49,132,000 3,976,000
Securities in trading account _ 518,000
Securities held to maturity
(market value of $86,828,000 -
1994 and $116,239,000 -1993) 92,463,000 116,065,000
Loans 147,096,000 125,232,000
Less allowance for
possible loan losses (1,537,000) (1,617,000)
Net loans 145,559,000 123,615,000
Premises and equipment, net 4,648,000 4,460,000
Other real estate owned 586,000 69,000
Accrued income receivable 2,133,000 1,713,000
Other assets 6,672,000 7,780,000
Total Assets $312,963,000 $267,505,000
Liabilities and
Shareholders' Equity
Liabilities
1994 1993
Non-interest bearing deposits:
Demand $ 27,269,000 $ 24,051,000
Interest bearing deposits:
Demand 26,273,000 27,854,000
Savings 84,023,000 99,988,000
Time 118,358,000 91,339,000
Total deposits 255,923,000 243,232,000
Short-term borrowings 35,498,000 3,709,000
Accrued interest on deposits
and other borrowings 590,000 453,000
Other liabilities 738,000 756,000
Total liabilities $292,749,000 $248,150,000
Shareholders' Equity 1994 1993
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 1,000,000 1,000,000
Common stock - $3.57 par value,
1,750,000 shares
authorized; 1,057,738 issued
in 1994 and 1993 3,777,000 2,749,000
Surplus 5,061,000 3,647,000
Treasury stock (424 shares in 1994
and 728 shares in 1993) (8,000) (13,000)
Retained earnings:
Unappropriated 11,026,000 11,122,000
Appropriated for contingencies 850,000 850,000
Net unrealized loss on securities
available for sale (1,492,000) _
Total shareholders' equity 20,214,000 19,355,000
Total Liabilities and
Shareholders' Equity $312,963,000 $267,505,000
</TABLE>
The accompanying notes are an integral part of
the financial statements.
<PAGE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Income
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
Interest Income 1994 1993 1992
<S> <C> <C> <C>
Loans and lease financing:
Taxable $11,440,000 $10,436,000 $8,830,000
Tax-exempt 190,000 167,000 208,000
Investment securities:
Taxable 6,809,000 5,113,000 4,582,000
Tax-exempt 1,209,000 643,000 412,000
Dividends 3,000 188,000 258,000
Interest on trading securities 1,000 45,000 61,000
Interest on federal funds sold 4,000 125,000 320,000
Total interest income 19,656,000 16,717,000 14,671,000
Interest Expense
Deposits 7,865,000 8,525,000 7,953,000
Short-term borrowings 942,000 91,000 129,000
Total interest expense 8,807,000 8,616,000 8,082,000
Net interest income 10,849,000 8,101,000 6,589,000
Provision for Possible
Loan Losses 805,000 577,000 405,000
Net interest income
after provision
for possible loan losses 10,044,000 7,524,000 6,184,000
Non-lnterest Income
Trust fees 341,000 274,000 269,000
Service charges on deposit
and loan accounts 586,000 546,000 457,000
Other operating income 422,000 445,000 286,000
Investment securities gains (losses) (64,000) 1,059,000 390,000
Trading gains (losses) 1,000 (116,000) (67,000)
Total non-interest income 1,286,000 2,208,000 1,335,000
Non-lnterest Expense
Salary and employee benefits 2,946,000 2,808,000 2,148,000
Net occupancy expense of premises 533,000 541,000 421,000
Equipment expenses 618,000 491,000 452,000
Other operating expenses 2,972,000 2,917,000 2,086,000
Total non-interest expense 7,069,000 6,757,000 5,107,000
Income before income taxes 4,261,000 2,975,000 2,412,000
Income Taxes 1,027,000 406,000 574,000
Net income $ 3,234,000 $ 2,569,000 $1,838,000
Weighted - Average Number
of Shares Outstanding 1,057,262 1,057,010 1,056,970
Earnings Per Common Share $ 2.98 $ 2.35 $ 1.71
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
Unrealized
Loss On
Retained Earnings Securities
Preferred Common Unappro- Appro- Treasury Available
Stock Stock Surplus priated priated Stock for Sale
<S> <C> <C> <C> <C> <C> <C> <C>
Balance
December 31, 1991 $ _ $2,749,000 $3,647,000 $ 8,213,000 $850,000 $(14,000) $ _
1992 Net income _ _ _ 1,838,000 _ _ _
Dividend declared:
Preferred Stock (33,000)
Common Stock
($.65 per
share) _ _ _ (685,000) - _
Preferred stock
issued 1,000,000 _ _ _ _ _ _
Balance,
December 31, 1992 1,000,000 2,749,000 3,647,000 9,333,000 850,000 (14,000) _
1993 Net income _ _ _ 2,569,000 _ _ _
Dividends declared:
Preferred stock _ _ _ (80,000) _ _ _
Common stock ($.66
per share) _ _ _ (700,000) _ _ _
Sale of treasury
stock _ _ _ _ _ 1,000 _
Balance,
December 31,1993 1,000,000 2,749,000 3,647,000 11,122,000 850,000 (13,000) _
Effect of adopting
SFAS 115 _ _ _ _ _ _ 6,000
10% Common stock
dividend at fair
market value _ 274,000 1,413,000 (1,687,000) _ _ _
25% Common stock
dividend
at par value _ 754,000 _ (754,000) _ _ _
1994 Net income _ _ _ 3,234,000 _ _ _
Cash dividends
declared:
Preferred stock _ _ _ (80,000) _ _ _
Common stock
($.76 per share) _ _ _ (799,000) _ _ _
Cash paid in
lieu-stock
dividends _ _ _ (10,000) _ _ _
Change in
unrealized
loss - securities
available
for sale _ _ _ _ _ _ (1,498,000)
Sale of
treasury stock _ _ 1,000 _ _ 5,000 _
Balance,
December 31,1994 $1,000,000 $3,777,000 $5,061,000 $11,026,000 $850,000 $ (8,000) $(1,492,000)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Operating Activities
Net income $ 3,234,000 $ 2,569,000 $ 1,838,000
Adjustments to
reconcile net
income to net cash flows
provided (used) by
operating activities:
Provision for loan losses 805,000 577,000 405,000
Depreciation and
amortization expense 519,000 446,000 393,000
Amortization of investment
security premiums 1,877,000 3,025,000 2,133,000
Accretion of investment
security discounts and
interest recorded on
zero-coupon securities (403,000) (601,000) (986,000)
Investment securities
(gains) losses 10,000 205,000 (493,000)
Trading (gains) losses (1,000) 116,000 103,000
(Gains) losses on
securities available for sale 55,000 (1,264,000) 67,000
Proceeds from sale of
securities held in
trading account 1,517,000 11,196,000 25,738,000
Purchase of securities
for trading account (1,516,000) (13,346,000) (25,804,000)
Loss (gain) on sale
of fixed assets 2,000 (29,000) (35,000)
Gain on sale of loans (23,000) (67,000) _
Gain on sale of other
real estate owned (1,000) _ _
(Increase) decrease in
interest receivable (420,000) 38,000 (511,000)
Increase (decrease)
in interest payable 137,000 (265,000) (471,000)
Purchase of life
insurance contracts _ (194,000) (1,835,000)
Others, net 1,859,000 (734,000) (3,591,000)
Net cash provided (used)
by operating activities $ 7,651,000 $ 1,672,000 $ (3,049,000)
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION> 1994 1993 1992
<S> <C> <C> <C>
Investing Activities
Proceeds from sales
of investment
securities _ 21,558,000 32,073,000
Proceeds from maturities
and calls of investment
securities 3,207,000 899,000 1,374,000
Proceeds from sales
of equity securities _ _ 8,138,000
Purchase of securities
available for sale (26,052,000) (78,448,000) (33,417,000)
Purchase of
investment securities (47,621,000) (85,103,000) (102,464,000)
Proceeds on sale of
securities available
for sale 16,198,000 104,137,000 14,516,000
Principal collected
on mortgage-backed
securities 29,434,000 50,537,000 37,353,000
Net (increase) decrease
in loans and leases,
net of charge-offs (25,486,000) (15,002,000) (4,686,000)
Proceeds on sale
of loans 2,104,000 3,841,000 _
Loans purchased _ (185,000) (31,790,000)
Recoveries on loans
previously charged-off 55,000 50,000 39,000
Proceeds from sale
of other real
estate owned 84,000 210,000 148,000
Purchase of premises
and equipment (711,000) (842,000) (2,343,000)
Proceeds from sale
of fixed assets 1,000 29,000 71,000
Net cash used
by investing activities (48,787,000) 1,681,000 (80,988,000)
Financing Activities
Net increase
(decrease) in deposits 12,691,000 (2,511,000) 68,884,000
Net increase
(decrease) in short-
term borrowings 31,789,000 716,000 (174,000)
Dividends paid on
common and
preferred stock (889,000) (780,000) (718,000)
Sale of treasury
stock 6,000 1,000 _
Issuance of
preferred stock _ _ 1,000,000
Net cash provided
(used) by financing
activities 43,597,000 (2,574,000) 68,992,000
Increase (Decrease)
in Cash and
Cash Equivalents 2,461,000 779,000 (15,045,000)
Cash and
Cash Equivalents
at Beginning
of Year 9,309,000 8,530,000 23,575,000
Cash and Cash
Equivalents at
End of Year $11,770,000 $ 9,309,000 $ 8,530,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992
1. Summary of Significant Accounting Policies
The accounting and reporting policies and practices of the Corporation
are in accordance with generally accepted accounting principles and
conform to general practices within the banking industry. The more
significant of these policies and practices are summarized below.
Principles of Consolidation: The consolidated financial statements
include the accounts of Belmont Bancorp. and its wholly-owned
subsidiaries, Belmont National Bank and Belmont Financial Network, Inc.
Material intercompany accounts and transactions have been eliminated.
Held to Maturity Securities: These securities are purchased with the
original intent to hold to maturity and events which may be reasonably
anticipated are considered when determining the Corporation's intent and
ability to hold to maturity. Securities meeting such criteria at date
of purchase and as of the balance sheet date are carried at cost,
adjusted for amortization of premiums and accretion of discounts.
Available for Sale Securities: Debt and equity securities to be held
for indefinite periods of time and not intended to be held to maturity
are classified as available for sale and carried at market value with
net unrealized gains and losses, net of tax, reflected as a component of
shareholders' equity until realized. Securities held for indefinite
periods of time include securities that may be sold to meet liquidity
needs or in response to significant changes in interest rates or
prepayment risks as part of the Corporation's overall asset/liability
management strategy. Prior to December 31, 1993, marketable equity
securities were carried at the lower of aggregate cost or market value
with net unrealized gains and losses being reflected as adjustments to
retained earnings. Market value depreciation below cost on debt
securities held for sale prior to December 31, 1993, was required in
current period earnings.
Trading Securities: Trading securities are held for resale within a
short period of time and are stated at market value. Trading gains and
losses include the net realized gain or loss and market value
adjustments of the trading account portfolio.
Income Recognition: Income earned by the Corporation and its
subsidiaries is recognized principally on the accrual basis of
accounting. Certain fees, principally service, are recognized as income
when billed. The subsidiary bank suspends the accrual of interest when,
in Management's opinion, the collection of all or a portion of interest
has become doubtful. Generally, when a loan is placed on non-accrual,
the bank charges all previously accrued and unpaid interest against
income. In future periods, interest will be included in income to the
extent received only if complete principal recovery is reasonably
assured.
The Corporation defers and amortizes loan fees and related origination
costs. These fees and costs are amortized into interest or other income
over the estimated life of the loan using a method which approximates
the interest method.
Direct Financing Leases: The leasing operation of the Corporation
consists of the leasing of various types of equipment under leases
classified as direct financing leases. Interest and service charges,
net of initial direct costs, are deferred and reported as income in
decreasing amounts over the term of the lease so as to provide an
approximate constant yield on the outstanding principal balance.
Allowance For Loan Losses: The allowance for loan losses is established
through a provision for loan losses charged to expenses. The allowance
represents an amount which, in Management's judgment, will be adequate
to absorb probable losses on existing loans that may become
uncollectible.
Management's judgment in determining the adequacy of the allowance is
based on an evaluation of the collectibility of loans. These
evaluations take into consideration such factors as changes in the
nature and volume of the loan portfolio, current economic conditions,
overall portfolio quality, and review of problem loans.
Premises and Equipment: Premises and equipment are stated at cost, less
accumulated depreciation and amortization. Provisions for depreciation
and amortization are computed generally using the straight line method
over the estimated useful lives of the assets. Leasehold improvements
are amortized on the straight line basis over the lease period.
When units of property are disposed of, the premises and equipment
accounts are relieved of the cost and the accumulated depreciation
related to such units. Any resulting gains or losses are credited to or
charged against income. Costs of repairs and maintenance are charged to
expense as incurred. Major renewals and betterments are capitalized at
cost.
Other Real Estate: Real estate acquired in satisfaction of indebtedness
is recorded at the lower of estimated fair market value or loan amount.
At the date of acquisition, any excess of the loan amount over the fair
market value is charged against the allowance for loan losses.
Earnings Per Common Share: Earnings per common share are calculated
based on net income after preferred dividend requirements and the
weighted average number of shares of common stock outstanding during the
year.
Stock Dividends: On February 2, 1994, the Corporation distributed
76,672 shares of common stock in connection with a 10% stock dividend.
On July 22, 1994, the Corporation distributed 211,275 shares of common
stock in connection with a 25% stock dividend. All references in the
accompanying financial statements to the number of common shares and per-
share amounts for 1993 and 1992 have been restated to reflect the stock
dividend.
Excess of Cost Over Net Assets Acquired: The excess of cost over net
assets of branches purchased in 1991 is being amortized on the straight
line method over ten years. The excess of cost over net assets of
branches purchased in 1992 is being amortized on the straight line
method over a five to eight year period for the portion allocated to the
core deposit base and ten years for the remaining excess. The
unamortized balances at December 31, 1994 and 1993, were $1,923,000
and $2,338,000, respectively. Amortization charged to expense was
$415,000 in 1994 and $416,000 in 1993, and $148,000 in 1992.
Disclosures About the Fair Values of Financial Instruments:
Cash and Cash Equivalents: For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
1. Summary of Significant Accounting Policies (continued)
Disclosures About the Fair Values of Financial Instruments:
Investment Securities and Securities Available for Sale: For debt
securities, derivative instruments and marketable equity securities held
for investment purposes and for sale, fair values are based on quoted
market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market price for similar
securities.
Loans: For certain homogeneous categories of loans, such as some
residential mortgages, fair value is estimated using the quoted market
prices for securities backed by similar loans. The fair value of other
types of loans is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
Deposit Liabilities: The fair value of demand deposits, savings
accounts, and certain money market deposits is the amount payable on
demand at the reporting date. The fair value of fixed-maturity
certificates of deposit is estimated using the rates currently offered
for deposits of similar remaining maturities.
Short-Term Borrowings: These liabilities represent primary overnight
borrowings and debt maturing within ninety days of issuance with
interest rates adjusted weekly Accordingly, the carrying amount is a
reasonable estimate of fair value.
Reclassifications: Certain prior year amounts have been reclassified to
conform with current year presentation.
2. Changes in Accounting Policies
On January 1, 1994, the Corporation adopted Financial Accounting
Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in
Debt and Equity Securities." SFAS No. 115 requires entities to classify
debt and equity securities as either held to maturity, available for
sale, or trading securities. Under SFAS No. 115, held to maturity
securities are recorded at amortized cost; whereas available for sale
securities and trading securities are carried at market value. SFAS No.
115 further requires that unrealized gains and losses on available for
sale securities be reported, net of tax, as a separate component of
shareholders' equity. Adoption of SFAS No. 115 had no effect on current
year earnings.
In 1993, the Corporation adopted Financial Accounting Standards No. 109
(SFAS No. 109), "Accounting for Income Taxes." SFAS No. 109 requires an
asset and liability approach which recognizes the amount of taxes
payable or refundable in the current year and deferred tax consequences
of events that have been recognized previously in financial statements
or tax returns. The impact on tax expense in 1993 due to adoption of
SFAS No. 109 was a consolidated benefit of $28,109 recorded as of
January 1, 1993.
In 1993, the Corporation adopted Financial Accounting Standards No. 106,
"Employers Accounting for Post-retirement Benefits Other Than Pensions."
The effect of this change was to decrease net income for 1993 by
$138,000 ($ .13 per share).
<TABLE>
3. Investment Securities
The amortized cost and estimated market values of investment securities at
December 31 are as follows:
<CAPTION>
1994 1993
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held
to maturity:
U.S. Treasury
securities and
obligations of
U.S. Government
Corporations
and agencies $ 4,248 $22 $ 312 $ 3,958 $ 4,462 $ 74 $ 47 $ 4,489
Obligations
of states and
political
subdivisions 24,244 51 1,615 22,680 13,281 409 8 13,682
Mortgage
derivative
securities 12,695 _ 836 11,859 14,970 8 198 14,780
Mortgage-
backed securities 51,276 7 2,952 48,331 81,569 441 505 81,505
Other securities _ _ _ _ 1,783 _ _ 1,783
Total held to
maturity $92,463 $80 $5,715 $86,828 $116,065 $932 $758 $116,239
Securities
available
for sale:
U.S. Treasury
securities and
obligations of
U.S. Government
Corporations
and agencies $ 6,388 $ _ $ 128 $ 6,260 $ 2,181 $ _ $ _ $ 2,181
Obligations of
states and
political
subdivisions _ _ _ _ 1,631 93 _ 1,724
Mortgage
derivative
securities 938 _ 87 851 164 7 _ 171
Mortgage-backed
securities 42,000 3 2,048 39,955 _ _ _ _
Total Debt
Securities 49,326 3 2,263 47,066 3,976 100 _ 4,076
Equity Securities 2,066 _ _ 2,066 _ _ _ _
Total available
for sale $51,392 $ 3 $2,263 $49,132 $ 3,976 $100 $ _ $ 4,076
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
3. Investment Securities (continued)
The amortized cost and estimated market value of investment securities at
December 31, 1994, by contractual maturity, follow. Expected maturities will
differ from contractual maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Securities Securities
Held to Maturity Available for Sale
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one
year or less $ 1,108 $ 1,104 $ _ $ _
Due after one
year through
five years 1,893 1,894 4,863 4,744
Due after
five years
through
ten years 6,216 5,655 1,525 1,516
Due after
ten years 19,275 17,985 _ _
28,492 26,638 6,388 6,260
Mortgage-backed
securities 51,276 48,330 42,000 39,955
Mortgage
derivative
securities 12,695 11,860 938 851
Equity
securities _ _ 2,066 2,066
Total $92,463 $86,828 $51,392 $49,132
</TABLE>
At December 31,1994 and 1993, the mortgage derivative securities consist solely
of collateralized mortgage obligations. At December 31, 1994, securities held to
maturity include U.S. Government Agency Structured Notes with a carrying value
of $1,974,000 and an estimated market value of $1,947,000; securities available
for sale include a U.S. Government Agency Structured Note with a carrying value
and estimated market value of $953,000.
Sales and write-downs of investment securities resulted in the following:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Proceeds from sales $16,198 $21,558 $40,211
Gross gains 31 790 896
Gross losses (86) (191) (183)
Realized losses
on market declines _ (804) (220)
Losses on
securities called (9) _ _
</TABLE>
In 1994, all securities sold were classified as available for sale at the time
of sale. There were no transfers of securities between classifications.
Assets carried at $36,538,000 and $26,043,000 at December 31, 1994 and 1993,
respectively, were pledged to secure United States Government and other public
funds, and for other purposes as required or permitted by law.
4. Loans and Allowance for Possible Loan Losses
<TABLE>
Loans outstanding at December 31 are as follows:
<CAPTION>
1994 1993
<S> <C> <C>
Real estate-construction $ 1,801 $ 2,081
Real estate-mortgage 78,573 74,986
Real estate-secured by nonfarm,
nonresidential property 21,222 16,526
Commercial, financial and
agricultural 35,036 23,263
Obligations of
political subdivisions in the U.S. 3,947 2,054
Installment and
credit card loans
to individuals 6,512 6,313
Direct finance leases 5 9
Loans receivable $147,096 $125,232
</TABLE>
The bank discontinues accruing interest income on loans and leases when, in the
opinion of management, the collectibility of such interest appears doubtful.
Non-accruing loans and leases amounted to $478,000 and $2,358,000 at December
31, 1994, and 1993, respectively. The after-tax effect of the interest that
would have been accrued on these loans was $38,000 in 1994 and $148,000 in 1993.
The estimated fair value of loans outstanding at December 31 1994, as
determined by using the valuation method described in Note 1, amounted to
$143,300,000.
<TABLE>
The following is an analysis of loan activity to directors, executive officers,
and their associates (see Note 12):
<CAPTION>
1994 1993
<S> <C> <C>
Balance previously reported $2,775 $3,096
New loans during the year 3,716 497
Total 6,491 3,593
Less repayments during the year 1,587 818
Balance, December 31 $4,904 $2,775
</TABLE>
<TABLE>
Activity in the allowance for loan losses is summarized as follows:
<CAPTION>
December 31
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning of year $1,617 $1,024 $1,013
Additions charged to
operating expense 805 577 405
Recoveries on loans
previously charged-off 55 50 39
Total 2,477 1,651 1,457
Loans charged-off 940 34 433
Balance at end of year $1,537 $1,617 $1,024
</TABLE>
The entire allowance represents a valuation reserve which is available for
future charge-offs.
5. Premises and Equipment
<TABLE>
Premises and equipment are stated at cost, less accumulated depreciation and
amortization, as follows:
<CAPTION>
Original
December 31 Useful Life
1994 1993 Years
<S> <C> <C> <C>
Land and land improvements $ 734 $ 659
Buildings 3,138 3,131 30 - 50
Furniture, fixtures
and equipment 3,971 3,369 5 - 12
Leasehold improvements 406 406 5 - 20
Total 8,249 7,565
Less accumulated depreciation
and amortization 3,601 3,105
Premises and equipment, net $ 4,648 $4,460
</TABLE>
Charges to operations for depreciation and amortization approximate $519,000,
$446,000, and $393,000 for 1994, 1993, and 1992, respectively.
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
6. Deposits
The distribution of the bank's deposits at December 31, 1994 and 1993, are as
follows:
<TABLE>
1994 1993
Non- Non-
interest interest
Bearing Interest Bearing Bearing Interest Bearing
Demand Demand Savings Time Demand Demand Savings Time
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individuals,
partnerships
and
Corporations $16,978 $26,273 $84,023 $113,319 $19,267 $27,854 $99,988 $83,080
U.S. Govern
ment 197 - - - 321 - _ _
States and
political
subdivisions 7,460 - - 5,039 2,712 - _ 8,259
Other
depository
institutions
in the U.S. - - - - - - _ -
Certified,
officers'
checks,
travelers
cheques, etc. 2,634 - - - 1,751 - _ -
Total $27,269 $26,273 $84,023 $118,358 $24,051 $27,854 $99,988 $91,339
</TABLE>
Time deposits include certificates of deposit issued in denominations of
$100,000 or more which amounted to $12,090,000 at December 31, 1994, and
$9,770,000 at December 31, 1993. A maturity distribution of time certificates
of deposit of $100,000 or more follows:
<TABLE>
1994 1993
<S> <C> <C>
Due in three
months or less $ 3,697 $7,113
Due after three
months through
six months 3,073 500
Due after six
months through
twelve months 2,182 1,311
Due after one
year through five
years 3,036 746
Due after five
years 102 100
Total $12,090 $9,770
</TABLE>
The estimated fair value of the Corporation's deposit liabilities
determined under the criteria set forth in Note 1 totaled $257,123,000
at December 31, 1994.
7. Short-Term Borrowings
Short term borrowings consist of advances from the Federal Home Loan
Bank of Cincinnati, federal funds purchased and securities sold under
agreement to repurchase.
Federal funds purchased and securities sold under agreements to
repurchase represent primarily overnight borrowings. Information
related to these borrowings is summarized below:
<TABLE>
1994 1993 1992
<S> <C> <C> <C>
Securities sold under
repurchase agreements:
Balance at year end $8,736 $3,709 $2,993
Average during the
year $8,210 $3,581 $3,947
Maximum month-
end balance $9,653 $4,319 $4,245
Weighted average
rate during the year 3.56% 2.25% 3.30%
Rate at December 31 4.93% 2.75% 2.75%
Federal funds
purchased
Balance at year end $4,500 N/A N/A
Average during the
year $ 397 N/A N/A
Maximum month-
end balance $4,500 N/A N/A
Weighted average
rate during the year 4.43% N/A N/A
Rate at December 31 6.25% N/A N/A
</TABLE>
Advances from The Federal Home Loan Bank of Cincinnati are made under a
blanket agreement which allows for maximum borrowings of $30,000,000. Each
advance is for a ninety day term and bears interest at a variable rate, adjusted
daily. At December 31, 1994, the balance of advances due was $22,262,000
at an interest rate of 7%. Collateral for the advances consists of
residential mortgage loans in the amount of $33,393,000 and 17,238 shares of
The Federal Home Loan Bank of Cincinnati, with a carrying value of
$1,723,800.
8. Income Tax
As discussed in Note 1, the Corporation adopted the Financial Accounting
Standards Board Statement 109 as of January 1, 1993. The cumulative effect of
the change in accounting for income tax of $(28,109) is determined as of January
1, 1993. The effect on the Statement of Income is considered immaterial ($ .03
per share), and the total is included in the income tax expense for 1993.
The components of applicable income taxes are as follows:
<TABLE>
Year Ended December 31
1994 1993 1992
<S> <C> <C> <C>
Currently
payable $ 880 $ 775 $ 779
Deferred 147 (369) (205)
Income
tax $1,027 $ 406 $ 574
</TABLE>
For the year ended December 31, 1992, the amounts for deferred income tax
resulted from differences in the timing of recognition of revenue and expenses
for tax and financial reporting purposes. This amount, by source, follows:
<TABLE>
Year Ended 1992
<S> <C>
Provision for
loan losses-
book provisions
over tax $(115)
Allowance for
decline in market
value-
securities
held for sale (10)
Unrealized losses
on investments _
Deferred loan
origination fees (11)
Depreciation (25)
Lease income (20)
Interest-
nonaccrual loans (24)
Total $(205)
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
8. Income Tax (continued)
The following temporary differences gave rise to the deferred tax asset at
December 31, 1994 and 1993:
<TABLE>
1994 1993
<S> <C> <C>
Allowance for
loan losses $ 373 $ 395
Interest on
non-accrual
loans 20 76
Unrealized losses
on investments 805 71
Deferred loan
origination fees 25 40
Deferred compen-
sation and liability
for future
employees
benefits 78 76
Intangible assets 150 83
Premises and
equipment due
to differences
in depreciation (101) (42)
Direct finance
leases (102) (105)
Federal Home
Loan Bank stock
dividends (44) (11)
Total deferred
tax assets $1,204 $ 583
</TABLE>
A reconciliation between the amount of reported income tax expense and the
amount computed by applying the statutory federal income tax rate to income
before income taxes is as follows:
<TABLE>
1994 1993 1992
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Tax at
statutory rate $1,449 34.0 $1,011 34.0 $820 34.0
Reductions
in taxes
resulting from:
Tax exempt
interest
on investments
and loans (476) (11.2) (275) (9.2) (211) (8.8)
Non-taxable
portion-
dividends _ _ (45) (1.5) (59) (2.4)
Excess of tax
loss over
book gains
on investment
securities _ _ (161) (5.4) (45) (1.9)
Utilization of
capital loss
carrybacks _ _ (112) (3.8) _ _
Earnings on
life insurance
policies (18) (0.4) (20) (.7) _ _
Non-
deductible
interest
expense 64 1.5 50 1.7 60 2.5
Others - net 8 .2 (14) (.5) 9 .4
Cumulative
effect of
adoption of
FASB 109 _ _ (28) (1.0) _ _
Actual tax
expense $1,027 24.1 $ 406 13.6 $574 23.8
</TABLE>
The bank has available $623,000 in capital loss carry forwards. This amount will
expire in 1998.
9. Employee Benefit Plans
The Corporation has a profit-sharing retirement plan which includes all full-
time employees who have reached the age of twenty-one and have completed a least
one year of service. Each participant can elect to contribute to the plan an
amount not to exceed 10% of their salary. The plan provides for an employer
matching contribution on the first 4% of the participant's elective
contribution. In addition to the matching contribution, the plan provides for a
discretionary contribution to be determined by the bank's board of directors.
Total pension expense for 1994, 1993, and 1992 was $180,000, $105,000, and
$67,000, respectively.
In addition to providing the profit-sharing plan, Belmont Bancorp. sponsors two
defined benefit post-retirement plans that cover both salaried and nonsalaried
employees. Employees must be fifty-five years old and have ten years of service
to qualify for both plans. One plan provides medical and dental benefits, and
the other provides life insurance benefits. The post-retirement health care
plan is contributory, with retiree contributions adjusted annually; the life
insurance plan is noncontributory. On January 1, 1993, Belmont Bancorp. adopted
Statement of Financial Accounting Standards ("SFAS") No. 106, "Employer's
Accounting for Post-retirement Benefits Other than Pensions." The statement
requires the accrual of the expected cost of providing post-retirement benefits
to employees and certain dependents during the years that an employee renders
service.
The following table sets forth the plan's combined funded status reconciled with
the amount shown in the Corporation's balance sheet at December 31:
<TABLE>
1994 1993
<S> <C> <C>
Accumulated post-
retirement benefit
obligation:
Retirees $ 40 $ 45
Fully eligible
active plan
participants 46 53
Other active
plan
participants 35 51
121 149
Plan assets at
fair value _ _
Accumulated
post-retirement
benefit obligation
in excess of plan
assets 121 149
Unrecognized net
gain (loss) from
past experience
different from
that assumed
and from changes
in assumptions (14) (60)
Prior service
cost not yet
recognized
in expense 51 63
Unrecognized
transition obligation (13) (14)
Accrued post-
retirement benefit
cost in the balance
sheet $145 $138
</TABLE>
The Corporation's post-retirement health care plan is underfunded at December
31, 1994; the accumulated post-retirement benefit obligation and plan assets for
that plan are $121,000 and $-0-, respectively.
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
9. Employee Benefit Plans (continued)
Post-retirement expense includes the following components:
<TABLE>
1994 1993
<S> <C> <C>
Service cost $ 6 $ 43
Interest cost
on accumlated
post-retirement
benefit obligation 10 64
Actual return
on plan assets _ _
Net amortization
and deferral (5) 47
Benefit payments _ (16)
Post-retirement
expense $11 $138
</TABLE>
The annual assumed rate of increase in the per capita cost of covered benefits
for 1995 is 12% for medical benefits and 9% for dental benefits (compared to
12.5% and 9.5% for 1994 for the respective benefits). The rates are assumed to
decrease gradually to 6% (for medical 2007 and for dental in 2001), and remain
at that level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. Increasing the assumed health care
trend rates by one percentage point in each year would increase the accumulated
post-retirement benefit obligation as of December 31, 1994, by $5,000, and the
aggregate of the service and interest cost components of net periodic post-
retirement benefit cost for 1994 by $1,000. The weighted-average discount rate
used in determining the accumulated post-retirement benefit obligation was 8.5%
at December 31, 1994, and 7% at December 31, 1993. The long-term inflation rate
assumed was 4% for both years.
Prior to the adoption of SFAS No.106, Belmont Bancorp. recognized benefit
expense related to post-retirement benefits on a cash basis. The expense of
providing such benefits in 1992 did not differ materially from the amount
expensed in 1994 and 1993.
10. Leases
The subsidiary bank utilized certain bank premises and equipment under long-term
leases expiring at various dates. In certain cases, these leases contain
renewal options and generally provide that the Corporation will pay for
insurance, taxes and maintenance.
As of December 31, 1994, the future minimum rental payments required under
noncancelable operating leases with initial terms in excess of one year are as
follows:
<TABLE>
Operating Leases
<S> <C>
Year ending
December 31,
1995 $ 91
1996 80
1997 70
1998 17
Later years _
Total minimum
lease payments $ 258
</TABLE>
Rental expense under operating leases approximated $83,000 in 1994,
$82,000 in 1993, and $75,000 in 1992.
11. Acquisitions
Effective October 2, 1992, the Corporation's subsidiary bank acquired
the premises and equipment and approximately $15,000,000 in loans and
assumed all deposit liabilities of three branch offices of Diamond
Savings and Loan Corporation located in Tuscarawas County, Ohio in a
cash transaction. The office locations are being operated as branches
of Belmont National Bank. The excess of cost over the net assets
acquired was $2,403,000.
12. Related Party Transactions
Certain directors and executive officers and their associates were
customers of, and had other transactions with, the subsidiary bank in
the ordinary course of business in 1994 and 1993. The outstanding
balance of all loans to the related parties was $4,904,000 and
$2,775,000 at December 31, 1994 and 1993, respectively. 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 others and did not involve
more than the normal risk of collectibility or present other unfavorable
features.
13. Financial Instruments with Off-Balance-Sheet Risk
The subsidiary bank is a party to financial instruments with off-balance-
sheet risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments to
extend credit and standby letters of credit. These instruments involve,
to varying degrees, elements of credit risk in excess of the amount
recognized in the balance sheet. The contract amounts of those
instruments reflect the extent of involvement the Corporation has in
particular classes of financial instruments.
The Corporation's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual
amount of those instruments. The Corporation uses the same credit
policies in making commitments and conditional obligations as it does
for on-balance-sheet instruments.
The following represents financial instruments whose contract amounts
represent credit risk at December 31, 1994:
<TABLE>
Contract Amount
<S> <C>
Commitments to
extend credit $14,210,000
Standby letters
of credit 1,307,000
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
13. Financial Instruments with Off-Balance-Sheet Risk (continued)
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Corporation upon extension of credit, is based on
management's credit evaluation of the counterparty. Collateral held varies but
may include accounts receivable, inventory, property, plant, and equipment, and
income-producing properties.
Standby letters of credit are conditional commitments issued by the Corporation
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements. Of
the standby letters of credit, $915,000 expire in 1995, while the remaining
$392,000 expire prior to year end 1998. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers.
14. Concentration of Credit Risk
The subsidiary bank extends commercial, consumer, and real estate loans to
customers primarily located in Belmont, Harrison, and Tuscarawas Counties in
Ohio and Ohio County, West Virginia. While the loan portfolios are diversified,
the ability of the borrowers to meet their contractual obligations partially
depends upon the general economic condition of Southeastern Ohio and the
Northern Panhandle of West Virginia.
15. Limitation on Dividends
The approval of the Comptroller of the Currency is required to pay dividends if
the total of all dividends declared by a national bank in any calendar year
exceeds the total of its retained net profits of the preceding two years. Under
this formula, the bank can declare dividends in 1995 without approval of the
Comptroller of the Currency of approximately $4,500,000 plus an additional
amount equal to the bank's net profit for 1995 up to the date of any such
dividend declaration. The subsidiary bank is the primary source of funds to pay
dividends to the shareholders of Belmont Bancorp.
16. Other Operating Expenses
Other operating expenses include the following:
<TABLE>
1994 1993 1992
<S> <C> <C> <C>
Taxes other
than payroll
and real
estate $ 228 $ 267 $ 233
Supplies and
printing 262 249 195
Insurance,
including
Federal
Deposit
Insurance 616 581 512
Data
processing 281 303 145
Other
(individually
less than
1% of total
interest
income) $1,585 $1,517 $1,001
Total $2,972 $2,917 $2,086
</TABLE>
17. Restrictions on Cash
The subsidiary bank is required to maintain an average reserve balance with the
Federal Reserve Bank. The average amounts of the reserve balance for the years
ended December 31, 1994 and 1993, were $1,734,000 and $1,763,000, respectively.
18. Cash Flows Information
The Corporation's policy is to include cash on hand, amounts due from banks and
federal funds sold in the definition of cash and cash equivalents.
Cash payments for interest in 1994,1993, and 1992 were $8,670,000, $8,880,000,
and $8,553,000, respectively. Cash payments for income taxes for 1994, 1993, and
1992 were $1,030,000, $462,000, and $902,000, respectively.
19. Preferred Stock
On October 2, 1992, the Corporation issued 10,000 shares of $100 par value, non-
voting, senior cumulative preferred stock. Dividends are payable quarterly in
an amount equal to $8 per annum. The shares are subject to a dividend
adjustment feature at January 1, 2000, which provides for an increase in the
dividend rate based on the prime rate of interest. The stock has a liquidation
preference of $100 per share and a stated redemption value of $100 per share.
The shares also contain conversion rights, effective January 1, 2000, permitting
shareholders after that date to convert one share of preferred stock for 4.04
shares of the Corporation's common stock.
<PAGE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992 (000's)
20. Condensed Parent Corporation Financial Statements
Presented below are the condensed balance sheets, statements of income, and
statements of cash flows for Belmont Bancorp.
<TABLE>
Balance Sheets
1994 1993
<S> <C> <C>
Assets
Cash $ 377 $ 172
Investment
in subsidiaries
(at equity in net
assets) 19,504 18,625
Equity securities 60 60
Advances to
subsidiaries net 145 684
Prepaid taxes 148 -
Total Assets $20,234 $19,541
Liabilities
Accrued dividends $ 20 $ 20
Accrued expenses _ 166
Total liabilities 20 186
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
Common stock-
$3.57 par value,
1,750,000 shares
authorized;
1,057,738 shares
issued in 1994
& 1993 3,777 2,749
Capital surplus 5,061 3,647
Treasury stock-
424 shares in
1994 and 728
shares in 1993 (8) (13)
Retained earnings-
appropriated 850 850
Retained earnings-
unappropriated 11,026 11,122
Net unrealized
loss on securities
available for sale (1,492) _
Total shareholders'
equity 20,214 19,355
Total Liabilities
and Shareholders'
Equity $20,234 $19,541
Statement of Income
1994 1993 1992
Operating Income
Dividends from
subsidiaries $ 879 $ 780 $ 704
Other income 10 9 18
Total income 889 789 722
Operating Expense (33) (30) (27)
Nonoperating Income _ 1 194
Income before
income tax and
equity in
undistributed
income of
subsidiaries 856 760 889
Income Tax (credit) (8) (8) 63
Equity in
Undistributed Income
of Subsidiaries 2,370 1,801 1,012
Net Income $3,234 $2,569 $1,838
Statement of
Cash Flows
1994 1993 1992
Operating Activities
Net income $3,234 $2,569 $1,838
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Undistributed
earnings of
affiliates (2,370) (1,801) (1,012)
Investment
securities gains _ (1) (194)
Changes in
operating assets
and liabilities:
Other assets _ _ 1
Prepaid taxes (148) 121 (76)
Accrued dividends _ _ 20
Accrued expenses (166) 166 _
Net cash provided
by operating
activities 550 1,054 577
Investment Activities
Payment (to) from
subsidiaries 539 (464) 144
Proceeds from
sales of equity
securities _ 1 339
Investment
in subsidiary _ _ (1,000)
Net cash provided
(used) by investing
activities 539 (463) (517)
Financing Activities
Cash paid for
fractional shares (10) _ _
Issuance of preferred
stock _ _ 1,000
Sale of treasury
stock 5 1 _
Dividends (879) (780) (718)
Net cash used by
financing
activities (884) (779) 282
Increase(Decrease) in
Cash & Cash
Equivalents 205 (188) 342
Cash and Cash
Equivalents at
Beginning of Year 172 360 18
Cash and Cash
Equivalents
at End of Year $ 377 $ 172 $ 360
</TABLE>
Supplemental disclosure:
The Corporation made income tax payments of $1,030,000, $462,000 and $902,000 in
1994, 1993, and 1992, respectively. These payments represented income tax
payments for the Corporation and its consolidated subsidiaries.
The Corporation incurred no interest expense in 1994, 1993 or 1992.
<PAGE>
Belmont Bancorp. and Subsidiaries
Opinion of Independent Certified Public Accountants
Board of Directors
Belmont Bancorp.
St. Clairsville, Ohio
We have audited the accompanying consolidated balance sheets of Belmont Bancorp.
and subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows, for each
of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Belmont Bancorp.
and subsidiaries at December 31, 1994 and 1993, and the consolidated results of
its operations, changes in shareholders' equity, and cash flows, for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the Consolidated Financial Statements, in 1994,
Belmont Bancorp. changed its method of accounting for debt and equity securities
and, in 1993, changed its methods of accounting for income taxes and post
retirement benefits other than pensions.
S.R. SNODGRASS A.C.
S. R. Snodgrass A. C.
Wheeling, West Virginia
January 23, 1995
<PAGE>
Belmont Bancorp. and Subsidiaries
Report on Management's Responsibilities
Management of Belmont Bancorp. is responsible for the accurate and objective
preparation of the consolidated financial statements and the estimates and
judgements upon which certain financial statements are based. Management is
also responsible for preparing the other financial information included in this
annual report. In our opinion, the financial statements on the preceding pages
have been prepared in conformity with generally accepted accounting principles
and other financial information in this annual report is consistent with the
financial statements.
Management is also responsible for establishing and maintaining an adequate
internal control system which encompasses policies, procedures and controls
directly related to, and designed to provide reasonable assurance as to the
integrity and reliability of the financial reporting process and the financial
statements generated therefrom. The concept of reasonable assurance is based on
the recognition that there are inherent limitations in all systems of internal
control, and that the cost of such systems should not exceed the benefits to be
derived therefrom.
The systems and controls and compliance therewith are reviewed by an extensive
program of internal audits and by our independent auditors. Their activities
are coordinated to obtain maximum audit coverage with a minimum of duplicate
effort and cost. The independent auditors have access to all internal audit
work papers. Management believes the systems of internal control effectively
meets its objectives of reliable financial reporting.
The Board of Directors pursues its responsibility for the quality of the
Corporation's financial reporting primarily through its Audit Committee which is
comprised solely of outside directors. The Audit Committee meets regularly with
Management, the internal auditor and independent auditors to ensure that each is
meeting its responsibilities and to discuss matters concerning internal
controls, accounting and financial reporting. The internal auditor and
independent auditors have full and free access to the Audit Committee.
J.VINCENT CIROLI, JR.
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
Belmont Bancorp.
Belmont National Bank
WILLIAM WALLACE JANE R. MARSH
William Wallace Jane R. Marsh
Vice President, Belmont Bancorp. Secretary, Belmont Bancorp.
Executive Vice President and Senior Vice President
Chief Operating Officer Controller and Cashier
Belmont National Bank Belmont National Bank
<PAGE>
Belmont Bancorp. and Subsidiaries
Consolidated Average Balance Sheets
For the Years Ended December 31, 1994, 1993 and 1992 (Fully Taxable Equivalent
Basis) (000's)
<TABLE>
1994 1993 1992
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 $134,952 $11,719 8.68% $120,218 $10,681 8.88% $ 95,489 $ 9,133 9.56%
Securities
Taxable 113,608 6,810 5.99% 111,760 5,169 4.63% 86,434 4,657 5.39%
Exempt
from
income
tax 21,866 1,746 7.98% 12,474 1,104 8.85% 8,790 819 9.32%
Trading
account
assets 138 1 0.72% 831 45 5.42% 804 61 7.59%
Federal
funds
sold 130 4 3.08% 4,147 125 3.01% 9,457 320 3.38%
Interest
bearing
deposits _ _ _ 98 2 2.04% 104 3 2.88%
Total
interest
earning
assets $270,694 $20,280 7.49% $249,528 $17,126 6.86% $201,078 $14,993 7.46%
Cash and
due from
banks 8,275 7,823 6,088
Other
assets 12,014 11,568 5,880
Allowance
for
possible
loan loss (1,427) (1,328) (997)
Total
Assets $289,556 $267,591 $212,049
Liabilities
Interest
bearing
liabilities
Interest
checking $ 26,764 $ 581 2.17% $ 30,895 $ 745 2.41% $ 25,674 $ 838 3.26%
Savings 95,655 2,850 2.98% 85,865 2,788 3.25% 51,528 1,836 3.56%
Other
time
deposits 99,660 4,434 4.45% 106,706 4,992 4.68% 96,103 5,279 5.49%
Short term
borrowings 21,217 942 4.44% 3,675 91 2.48% 4,133 129 3.12%
Total
interest
bearing
liabilities 243,296 8,807 3.62% 227,141 8,616 3.79% 177,438 8,082 4.55%
Demand
deposits 24,797 21,093 16,537
Other
liabilities 1,583 1,272 1,846
Total
liabilities 269,676 249,506 195,821
Share-
holders'
Equity 19,880 18,085 16,228
Total
Liabilities
and
Share
holders'
Equity 289,556 $267,591 $212,049
Net
interest
income
margin
on a
taxable
equiva-
lent
basis 11,473 4.24% 8,510 3.41% 6,911 3.44%
Net
interest
rate
spread 3.87% 3.07% 2.90%
Interest
bearing
liabilities
to interest
earning
assets 89.88% 91.03% 88.24%
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
Consolidated Average Balance Sheets
For the Years Ended December 31, 1994, 1993 and 1992 (Fully Taxable Equivalent
Basis) (000's)
<TABLE>
1994 Compared to 1993 1993 Compared to 1992
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase(decrease)
in interest income
Loans and lease $1,309 $ (241) $(29) $1,039 $2,365 $ (649) $(168) $1,548
Securities Taxable 85 1,530 25 1,640 1,365 (659) (194) 512
Exempt from
income tax 831 (108) (81) 642 343 (41) (17) 285
Trading account
assets (38) (39) 33 (44) 2 (17) (1) (16)
Federal funds sold (121) 3 (3) (121) (180) (35) 20 (195)
Interest bearing
deposits (2) (2) 2 (2) _ (1) _ (1)
Total interest
income change 2,064 1,143 (53) 3,154 3,895 (1,402) (360) 2,133
Increase(decrease)
in interest expense
Interest checking (100) (74) 10 (164) 170 (219) (43) (92)
Savings 318 (230) (26) 62 1,223 (163) (109) 951
Other time
deposits (330) (245) 17 (558) 582 (783) (86) (287)
Short-term
borrowings 434 72 345 851 (14) (27) 3 (38)
Total interest
expense change 322 (477) 346 191 1,961 (1,192) (235) 534
Increase(decrease)
in net interest
income on a
taxable equivalent
basis $1,742 $1,620 $ (399) $2,963 $1,934 $ (210) $(125) $1,599
(Increase)decrease
in taxable
equivalent
adjustment (215) (87)
Net interest
income change $2,748 $1,512
</TABLE>
<PAGE>
Belmont Bancorp. and Subsidiaries
Financial Information, continued
For the Years Ended December 31, 1994, 1993, 1992, 1991 and 1990
Notice of Form 10-K
Upon written request of any shareholder on record on December 31, 1994, the
Corporation will provide, without charge, a copy of its 1994 Annual Report on
Form 10-K, including financial statements and schedules, as required to be filed
with the Securities and Exchange Commission. To obtain a copy of Form 10-K,
contact Ms. Cheryl Rusiecki, Administrative Officer, Belmont Bancorp., 325 Main
Street, Bridgeport, OH 43912.
<PAGE>
Sharing The Vision: A Commitment to Community
"We want to be recognized in all the communities we serve as the #1 choice for
financial products, services and information." These important words, and those
that follow, are excerpts from our Corporate Vision Statement which we provide
to every employee.
Belmont National Bank is a rapidly growing diversified financial information
company with approximately 120 employees and ten offices in three Ohio counties.
We have over 600 shareholders, many of whom are customers, friends, neighbors,
family members and fellow employees. We are a financial intermediary, which
means we take in and safeguard deposits in the communities we serve, and in turn
lend these deposits back out into the same communities--making loans to
individuals and families, loans to help new businesses become established or old
businesses expand.
Our role here is vital. It means jobs and continued prosperity for our
communities and all of us. We help families finance homes, cars, boats,
education and much more. We also provide our customers a wide selection of non-
traditional bank products such as stocks, bonds and mutual funds. In fact, we
offer most, if not all, of the products and services that bigger competitors
offer. What separates us from them are two things: the "value added" design of
our products and services, and our people.
The mission of Belmont National Bank and Belmont Bancorp. is to provide the
highest quality financial services possible and to promote economic growth
within all the communities we serve while earning a desirable return.
Our goals are fairly simple...we have financial goals and customer goals. Our
long term financial goals are to (1) have above average asset quality and risk
based capital levels when compared to peers, (2) maintain a diverse business
loan portfolio both by industry and geography, (3) achieve earnings per share
growth of at least ten percent per year, and (4) have a return on equity in
excess of 15%.
<PAGE>
Sharing The Vision: A Commitment to Community
We have two customer goals. First, we want all our customers to view us as
their first choice for their next financial product need. Second, we want to
achieve levels of service which exceed the customer's expectation.
We use technology to improve customer service. Technology is essential in
providing the right products and services, at the right price, while controlling
cost. Technology enables us to compete against much larger institutions.
Technology, however, is useless without the knowledge and creativity of our
employees.
Our Corporation's hierarchy does not indicate who is more important, more
knowledgeable or more appreciated. The most important people at Belmont
National Bank are those that meet and serve our customers on a daily basis.
Everyone else's job is to help our customer service people. In reality, all
Belmont National Bank employees are in the customer service business. We strive
to attract the very best support staff we can find because it is their expertise
that makes better customer service possible.
We ask each and every employee to take personal responsibility for what
happens with our customers. The key to winning more customers and satisfying
our present customers is taking action and finding quick solutions to questions
and problems. Belmont National Bank people must have a very strong sense of
urgency in all that they do. We encourage our employees to buy shares of
Belmont Bancorp. stock, for it is the best way for them to "think and act like
owners."
During 1995, we will continue to bring new technology and financial services
to our customers. We will communicate our values and vision in actions, not
just words. We will do more for our customers and our communities than is
expected.
<PAGE>
Belmont Bancorp. Directors
John A. Belot
Vice President,
Premier Concrete Products, Inc.
J. Vincent Ciroli, Jr.
President and Chief Executive Officer,
Belmont Bancorp. and Belmont National Bank
Daniel A. Giffin
Retired President, Giffin Aluminum Supply, Co.
William P. Goddard
Director
J. Harvey Goodman
Realtor, Chairman, Goodman Group, Inc.
John H. Goodman, II
Chairman
Belmont Bancorp. and Belmont National Bank
Realtor, President, Goodman Group, Inc.
Mary L. Holloway Haning
Director of Admissions
Wheeling Country Day School
Charles J. Kaiser, Jr.
Attorney-at-Law, Partner,
Phillips, Gardill, Kaiser and Altmeyer
Terrence A. Lee
CPA, Partner, Lee, O'Connor & Associates
Dana J. Lewis
President, Zanco Enterprises, Inc.
W. Quay Mull, II
Chairman, Mull Machine Co.
Tom Olszowy
Independent Insurance Agent,
Tom Olszowy Insurance
William Wallace
Vice President, Belmont Bancorp.;
Executive Vice President and
Chief Operating Officer
Belmont National Bank
Charles A. Wilson, Jr.
Vice Chairman
Belmont Bancorp. and Belmont National Bank
President, Wilson Funeral & Furniture Co.
Belmont Bancorp. Officers
John H. Goodman, II
Chairman
Charles A. Wilson, Jr.
Vice Chairman
J. Vincent Ciroli, Jr.
President & Chief Executive Officer
William Wallace
Vice President
Jane R. Marsh
Secretary
Belmont National Bank Officers
John H. Goodman, II
Chairman
Charles A. Wilson, Jr.
Vice Chairman
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
William Wallace
Executive Vice President and
Chief Operating Officer
Richard E. Dolan
Senior Vice President and Trust Officer
Jane R. Marsh
Senior Vice President, Controller
and Cashier
Robert A. Brown
Vice President, Marketing and
Product Development Manager
Gerald J. Elliott
Vice President, Credit Administration
Larry G. Gibbs
Vice President, Trust Officer
John L. Kloss
Vice President, Real Estate Lending
J. Douglas Cash
Assistant Vice President, Commercial Loan Officer
M. Annette Curtis
Assistant Vice President Loan Administration Officer
Roxie M. Ferda
Personal Banking Officer, Branch Manager
Linda L. Merritt
Personal Banking Officer, Branch Manager
Nancy J. Mroczkowski
Assistant Vice President, Manager of Branch Administration
Nell L. Murrell
Assistant Vice President, Human Resources Officer
Patricia A. Myers
Personal Banking Officer, Branch Manager
Trent B. Troyer
Assistant Vice President, Lending
Madelyn P. Witsberger
Assistant Vice President, Trust Officer
Linda L. Boyers
Personal Banking Officer, Branch Supervisor
Carol L. DeBonis
Operations Officer
Donald E. Duff
Personal Banking Officer
Dorothy A. Ellis
Personal Banking Officer, Branch Supervisor
Debba A. Janiszewski
Personal Banking Officer, Branch Supervisor
Michele L. Larkin
Residential Loan Officer
Robert A. Mroczkowski
Internal Audit Manager
Cheryl A. Rusiecki
Administrative Officer
Darlene K. Smith
Personal Banking Officer, Branch Manager
Sheila M. Stevens
Personal Banking Officer, Branch Supervisor
Teri L. Walters
Administrative Officer
Jo Ann Widmor
Personal Banking Officer
Belmont Financial Network, Inc.
J. Vincent Ciroli, Jr.
Chairman and President
Jane R. Marsh
Secretary and Treasurer
Belmont Investment and Financial
Services, Inc.
Frank McDonnell
Manager, Investment Services
<PAGE>
Belmont National Bank Locations
Bridgeport Office
325 Main Street
Bridgeport, OH 43912
(614) 635-1142
Cadiz Office
657 Lincoln Avenue
Cadiz, OH 43907
(614) 942-4664
Jewett Office
318 East Main Street
Jewett, OH 43986
(614) 946-2411
Lansing Office
55160 National Road
Lansing, OH 43934
(614) 635-1454
New Philadelphia Office
152 North Broadway
New Philadelphia, OH 44663
(216) 343-5518
Ohio Valley Mall Office
Ohio Valley Mall
St. Clairsville, OH 43950
(614) 695-9926
St. Clairsville Office
154 West Main Street
St. Clairsville, OH 43950
(614) 695-3323
Schoenbrunn Office
2300 East High Avenue
New Philadelphia, OH 44663
(216) 339-9200
Shadyside Office
4105 Central Avenue
Shadyside, OH 43947
(614) 671-9346
Wabash Avenue Drive-In Office
525 Wabash Avenue
New Philadelphia, OH 44663
<PAGE>
Belmont Bancorp.
325 Main Street
Bridgeport, OH 43912
(614) 695-3323
PROXY
BELMONT BANCORP., BRIDGEPORT, OHIO
ANNUAL MEETING OF SHAREHOLDERS
APRIL 18, 1995
KNOW ALL MEN BY THESE PRESENT that I the undersigned
Shareholder of BELMONT BANCORP. do hereby nominate,
constitute and appoint David L. Barnes and Kelley Archer, or
either of them, my true and lawful attorney with full power
of substitution, for me and in my name, place and stead to
vote all of the Common Stock of said Corporation standing in
my name at the Annual Meeting of its Shareholders to be held
at Belmont National Bank, 150 West Main Street, St.
Clairsville, Ohio, on April 18, 1995, at 11:00 A.M., or at
any adjournments thereof with all the powers the undersigned
would possess if personally present as follows:
1. For the election to the Board of Directors, except as
otherwise specified below, of the following nominees, or any
one or more of them to serve a three-year term expiring at
the annual shareholders' meeting in 1998:
J. Vincent Ciroli, Jr. James R.Miller
John H. Goodman, II Keith A. Sommer
with full authority to cumulate the votes represented by
such shares and to distribute the same among the nominees in
such manner and numbers as said proxies in their discretion
may determine.
THE AUTHORITY TO VOTE FOR THE ELECTION OF ANY OF THE
NOMINEES LISTED ABOVE MAY BE WITHHELD BY LINING THROUGH OR
OTHERWISE STRIKING OUT THE NAME OF THE NOMINEE.
For ___ 2. To Consider and act upon the proposed Amendment to
Against ___ the Articles of Incorporation to increase the number of
Abstain ___ authorized shares of capital stock from 1,850,000 to
9,000,000 shares.
For ___ 3. To consider and act upon the proposed Amendment to the
Against ___ Articles of Incorporation to reduce the par value of the
Abstain ___ Corporation's Common Stock from $3.57 to $0.50 per share.
For ___ 4. To consider and ratify the proposed Amendment to the
Against ___ Corporation's Automatic Dividend Reinvestment Plan
Abstain ___ to allow the Agent to purchase authorized but unissued
shares of Common Stock from the Corporation.
For ___ 5. To consider and ratify the appointment of S.R.
Against ___ Snodgrass A.C. as independent auditors for the year ending
Abstain ___ December 31, 1995.
For ___ 6. In accordance with the judgement of the said proxies to
Against ___ vote upon such other matters as may be presented for
Abstain ___ consideration and action.
DATED _________________ ________________________________________________
________________________________________________
Signature(s)
When signing in a fiduciary capacity, please give
full title. All joint owners should sign.
Please sign, date and return your Proxy promptly in the
enclosed envelope to BELMONT NATIONAL BANK, 154 West Main
Street, St. Clairsville, Ohio 43950.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" ALL OF THE ABOVE ITEMS.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
BELMONT BANCORP.
April 18, 1995
To the Shareholders of BELMONT BANCORP.:
The Annual Meeting of Shareholders of BELMONT BANCORP. will be held in
the Belmont National Bank conference room on the second floor at Belmont
National Bank, 150 West Main Street, St. Clairsville, Ohio, on Tuesday,
April 18, 1995, at 11:00 a.m. for the following purposes:
1. To elect four (4) persons as Directors to serve for a three-year
term expiring at the annual shareholders' meeting in 1998.
2. To consider and act upon the proposed Amendment to the Articles of
Incorporation to increase the number of authorized shares of capital
stock from 1,850,000 to 9,000,000 shares.
3. To consider and act upon the proposed Amendment to the Articles
of Incorporation to reduce the par value of the Corporation's Common Stock
from $3.57 per share to $0.50 per share.
4. To consider and ratify the proposed Amendment to the Corporation's
Dividend Reinvestment Plan to allow the Agent to purchase authorized but
unissued shares of Common Stock from the Corporation.
5. To consider and act upon a proposal to ratify the appointment of
S. R. Snodgrass A.C. as independent auditors for the year ending
December 31, 1995.
6. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 28,
1995, are entitled to notice of and to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
PROXIES MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING THEREOF. THUS,
IF YOU ARE PRESENT AT THE MEETING AND SO REQUEST YOUR PROXY WILL NOT BE
USED.
BY ORDER OF THE BOARD OF DIRECTORS.
JANE R. MARSH, Secretary
Bridgeport, Ohio
March 17, 1995
<PAGE>
PROXY STATEMENT
OF
BELMONT BANCORP.
325 Main Street
Bridgeport, Ohio 43912
ANNUAL MEETING OF SHAREHOLDERS
April 18, 1995
This Proxy Statement is furnished to the shareholders of Belmont
Bancorp. in connection with the solicitation by the Board of Directors
of Belmont Bancorp. (the Corporation) of proxies for the annual
Meeting of Shareholders of the Corporation to be held on April 18, 1995,
in the conference room of Belmont National Bank, 150 West Main Street,
St. Clairsville, Ohio, and any adjournment thereof. Shares represented
by properly executed proxies received at the time of the meeting that
have not been revoked will be voted at the meeting in the manner
described in the proxies. Any proxy may be revoked any time before it
is exercised.
This Proxy Statement and the accompanying Proxy are being mailed to
shareholders on March 17, 1995.
The Board of Directors has fixed the close of business on February 28,
1995, as the record date for the determination of shareholders entitled
to notice of and to vote at the Annual Meeting. On the record date
1,057,322 shares of Common Stock of the Corporation were outstanding
and entitled to be voted at the meeting. Each share of Common Stock is
entitled to one vote except in the election of Directors where
shareholders are entitled to cumulate their votes. Cumulative voting
permits each shareholder as many votes as shall equal the number of his
shares of Common Stock multiplied by the number of Directors to be
elected, and he may cast all of such votes for a single Director or he
may distribute them among the number to be voted for, as he may see fit.
The proxies are solicited by the Board of Directors of the
Corporation, and the cost thereof is being borne by the Corporation.
Proxies may be revoked by the shareholders who execute them at any time
prior to the exercise thereof, by written notice to the Corporation or
by announcement at the Shareholders' Meeting. Unless so revoked, the
shares represented by all proxies will be voted by the persons named in
the proxies at the Shareholders' Meeting and at all adjournments
thereof, in accordance with the specifications set forth therein, or,
absent such specifications, in accordance with the judgment of the
holders of such proxies.
<PAGE>
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS
The Board of Directors of the Corporation by resolution at its meeting
on January 17, 1995, set the number of Directors at fourteen (14)
members with four (4) members to be elected to the class which expires
at the annual meeting in 1998. All nominees are currently Directors of
the Corporation and its principal subsidiary, Belmont National Bank.
Except for James R. Miller, each nominee has continuously served in his
principal occupation for the past five years.
The following persons have been nominated for election to the Board of
Directors to serve for a three-year term expiring at the annual
shareholders' meeting in 1998:
Common Stock
Name And Year First %of
Principal Occupation Age Elected Amount Total
J. Vincent Ciroli, Jr. 49 1984 4,655 *
President & Chief
Executive Officer,
Belmont Bancorp. and
Belmont National Bank
John H. Goodman, II
Chairman, Belmont Bancorp 50 1974 19,315 (1) 1.83
and Belmont National Bank;
Realtor, President
Goodman Group, Inc.
Keith A. Sommer (2) 54 1995 1,167 *
Attorney, Partner, Sommer,
Sollovan, Liberati
& Shaheen
James R. Miller (3) 52 1995 100 *
Vice President & General
Manager Joy Technologies
Inc., April 1, 1992 to
present; Specialty Opera-
tions Manager, Westing-
house Electric, 1970-92
Footnotes
1. This amount includes 1,427 shares held in the name of Marylouise
Goodman IRA, and 61 shares held in the name of Marylouise Goodman, wife
of John H. Goodman, II, to which Mr. Goodman disclaims any beneficial
interest. This amount also includes 10,541 shares held in the name of
John H. Goodman, II and Terrence A. Lee, Trustees under a trust dated
February 2, 1991, to which Mr. Goodman disclaims any beneficial
interest.
2. Keith A. Sommer was appointed to the Board on January 17, 1995, to
serve out the remainder of the term of J. Harvey Goodman who retired.
<PAGE>
3. James R. Miller was appointed to the Board on February 21, 1995, to
serve out the remainder of the term of Daniel A. Giffin who retired.
*Denotes less than a 1% interest.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE ABOVE
NOMINEES TO THE BOARD OF DIRECTORS OF BELMONT BANCORP.
In addition to the foregoing nominees, the following persons are
presently serving as members of the Board of Directors:
Directors Whose Term of Office Will Expire at the Annual Shareholders'
Meeting in 1996
Common Stock
Name And Year First %of
Principal Occupation Age Elected Amount Total
William P. Goddard 61 1977 2,791 *
Retired, former President of
Central Division North
American Coal Co.
Mary L. Holloway Haning 39 1993 775 (4) *
Director of Admissions,
Wheeling Country Day School
Charles J. Kaiser, Jr. 45 1979 4,474 (5) *
Attorney, Partner, Phillips,
Gardill, Kaiser & Altmeyer
Thomas Olszowy 48 1993 6,983 (6) *
Independent Insurance Agent,
Tom Olszowy Insurance Agency
Charles A. Wilson, Jr. 52 1973 4,238 (7) *
President,
Wilson Funeral & Furniture Co.
Footnotes
4. This amount includes 512 shares held for the benefit of Mary L.
Holloway Haning in trust in which Wesbanco Bank Wheeling is trustee.
5. This amount includes 36 shares held in the name of Deborah P.
Kaiser, IRA, wife of Charles J. Kaiser, Jr., to which Mr. Kaiser
disclaims any beneficial interest and 300 shares held in the name of
Marchak Investment Co., a partnership, in which Mr. Kaiser is a general
partner and holds a substantial beneficial interest.
<PAGE>
6. This amount includes 5,941 shares held in the names of Tom and
Diana Olszowy joint tenants with right of survivorship in which Mr.
Olszowy shares voting and investment power. This amount also includes
151 shares held in the name of Tom Olszowy, custodian for Dana Paul
Olszowy, and 151 shares held in the name of Tom Olszowy, custodian for
Jonathan T. Olszowy, to which Mr. Olszowy disclaims any beneficial
interest.
7. This amount includes 1,561 shares held in the name of Wilson Funeral
and Furniture Company of which Mr. Wilson is President, holds a
substantial stock interest and has voting power.
Directors Whose Term of Office Will Expire at the Annual Shareholders'
Meeting in 1997
Common Stock
Name And Year First %of
Principal Occupation Age Elected Amount Total
John A. Belot 52 1979 10,578 (8) 1.0
Vice President,
Premier Concrete Products, Inc.
Terrence A. Lee, CPA 45 1987 840 (9) *
Partner, Lee, O'Connor &
Associates
Dana J. Lewis 51 1994 2,256 *
President, Zanco
Enterprises, Inc.
New Philadelphia, Ohio;
Owner/ Operator of McDonalds
restaurants
W. Quay Mull, II 52 1984 6,216 (10)*
Chairman of the Board
Mull Industries, Inc.
William Wallace 39 1991 4,663 (11)*
Executive Vice President &
Chief Operating Officer,
Belmont National Bank;
Vice President,
Belmont Bancorp.
Footnotes
8. This amount includes 3,162 shares held jointly by Terry L. Belot,
wife of John A. Belot, and Jason Michael Belot, son of John A. Belot;
3,162 shares held jointly by Terry L. Belot and John A. Belot, Jr., son
of John A. Belot; 2,750 shares held in the name of Jason Michael Belot;
and 322 shares held in the name of John A. Belot, Jr. Mr. John A. Belot
has retained voting rights with respect to these shares. This amount
also includes 440 shares held in the name of Terry L. Belot IRA, to
which Mr. Belot disclaims any beneficial interest.
<PAGE>
9. This amount includes 6 shares held in the name of Terrence A. Lee,
Custodian for Katherine M. Lee, UOTMA; 6 shares held in the name of
Terrence A. Lee, Custodian for Natalie A. Lee, UOTMA; and 6 shares held
in the name of Terrence A. Lee, Custodian for Tara N. Lee, UOTMA; Mr.
Lee's minor daughters. This amount does not include 10,541 shares held
in the name of John H. Goodman, II and Terrence A. Lee, Trustees for a
trust dated February 2, 1991, to which Mr. Lee disclaims any beneficial
interest.
10. This amount includes 3,968 shares held in the name of Mull Machine
Company of which Mr. Mull is President and holds a substantial ownership
interest.
11. This amount includes 693 shares held jointly with Christine
Wallace, Mr. Wallace's wife, in which he shares voting and investment
power; 676 shares held in the name of Christine Wallace IRA, to which
Mr. Wallace disclaims any beneficial interest; 217 shares held in the
name of William Wallace as Custodian for Joseph J. Wallace, UWVTMA; 217
shares held in the name of William Wallace as Custodian for Lauren C.
Wallace, UWVTMA; 201 shares held in the name of William Wallace as
Custodian for Adrienne C. Wallace, UWVTMA; and 186 shares held in the
name of William Wallace as Custodian for William J. Wallace, UWVTMA; Mr.
Wallace's minor children.
As of February 28, 1995, the Directors and Officers of the Corporation
as a group beneficially owned 69,351 shares or 6.56 percent of the
outstanding common stock of the Corporation.
PROPOSAL NUMBER 2:
AMENDMENT TO THE CORPORATION'S AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK
Subparagraph (1) of Article FOURTH of the Corporation's Amended
Articles of Incorporation currently provides the authority to issue
1,850,000 shares of capital stock of which 1,750,000 shares shall be
common shares with a par value of $3.57 and 100,000 shares shall be
preferred shares without par value. Subparagraph (2) of Article FOURTH
of the Corporation's Amended Articles of Incorporation grants to the
Board of Directors the authority to designate the powers, rights,
preferences and other matters related to the Preferred Stock, and the
Board of Directors by resolution dated October 2, 1992 has designated
10,000 shares of Senior Cumulative Preferred Stock with a $100 par value
per share (the "Preferred Stock"). There are 90,000
preferred shares which remain undesignated and unissued. There are
1,057,738 shares of $3.57 par value Common Stock (the "Common Stock")
presently issued.
On February 21, 1995, the Corporation's Board of Directors adopted
resolutions recommending that the shareholders adopt Amendments to the
<PAGE>
Articles of Incorporation to increase the number of authorized shares of
capital stock from 1,850,000 shares to 9,000,000 shares and to reduce
the par value of the Corporation's Common Stock from $3.57 per share to
$0.50 per share. These amendments, if approved by a majority of the
shareholders, would amend the Articles of Incorporation to increase the
number of authorized shares of capital stock of the Corporation and
reduce the par value of the Corporation's common stock. Specifically,
if adopted the amendments would delete subparagraph (1) of Article
FOURTH of the Amended Articles of Incorporation and substitute the
following:
(1) The total number of shares of stock which the Corporation
shall have the authority to issue is 9,000,000 shares which shall be
divided into 8,900,000 shares of Common Stock with a par value of
$0.50 per share, 10,000 shares of Senior Cumulative Preferred Stock
with a $100 par value per share and 90,000 shares of preferred stock
without par value which shall be subject to the provisions of
subparagraph (2) below.
As described in the preceding paragraphs above, the Corporation's
Amended Articles of Incorporation currently provides for 1,850,000
shares of capital stock comprised of 1,750,000 shares of common stock
and 100,000 shares of preferred stock.On February 21, 1995, the
Corporation's Board of Directors adopted a resolution recommending that
the shareholders adopt an Amendment to the Amended Articles of
Incorporation to increase the number of authorized shares of capital
stock, and if the Amendment is adopted, to issue a 2 for 1 split on its
Common Stock payable in the form of a one hundred percent (100%) stock
dividend payable on May 8, 1995, to shareholders of record on May 1,
1995 (the "Stock Dividend").
In addition to providing the number of shares necessary to issue the
Stock Dividend, increasing the number of authorized but unissued shares
will afford the Corporation flexibility to issue new shares in order to
raise additional capital, to acquire other financial institutions, and
for other corporate purposes. Apart from the issuance of the 100% Stock
Dividend and the registration of shares for the Dividend Reinvestment
Plan, the CORPORATION CURRENTLY HAS NO PRESENT PLAN OR AGREEMENT FOR THE
ADDITIONAL AUTHORIZED SHARES OF COMMON STOCK.
If adopted by the shareholders, the increase in the number of
authorized shares of Common stock will become effective on the date on
which the Amendment is accepted for filing by the Secretary of State of
Ohio. Management presently expects that the Amendment will be filed on
April 19, 1995 (the "Effective Date"). Under the terms of the Stock
Dividend, holders of record of the Corporation's Common Stock on May 1,
1995 (the "Record Date") will be entitled to receive one additional
share of Common Stock for each share of Common Stock held as of the
Record Date. Certificates for the additional shares of Common Stock
will be distributed on or about May 8, 1995. THE STOCK DIVIDEND WILL
NOT AFFECT THE VALIDITY OF CERTIFICATES REPRESENTING SHARES OF COMMON STOCK,
AND ACCORDINGLY, IT WILL NOT BE NECESSARY FOR ANY SHAREHOLDER TO EXCHANGE
CERTIFICATES REPRESENTING CURRENTLY OUTSTANDING SHARES.
<PAGE>
The Corporation has been advised by its independent accountants, S.R.
Snodgrass, A.C., that no taxable gain or loss under current federal
income tax laws would result from the Stock Dividend. However, the
basis of each shareholder's stock must be adjusted to take into account
the additional shares. The holding period of the additional shares will
be deemed to be the holding period for the original shares.
Shareholders are cautioned that this information is only general in
nature and not intended as a substitute for tax advice. Each
shareholder is urged to contact his own tax advisors for specific
information regarding the impact of applicable federal or state laws.
The Board of Directors believes that the increase in the number of
outstanding shares of common stock will make it easier for our
shareholders to acquire stock, will cause a broader market, and enhance
investor interest, thereby creating additional liquidity and trading
volume.
Adoption of this Amendment requires the affirmative vote of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting. The Board of Directors unanimously recommends a vote FOR
Proposal Number 2. Proxies not otherwise specified will be voted in
favor of Proposal Number 2 (Increasing the Authorized Stock).
PROPOSAL NUMBER 3:
AMENDMENT OF THE CORPORATION'S AMENDED
ARTICLES OF INCORPORATION TO DECREASE THE PAR VALUE
OF COMMON STOCK FROM $3.57 to $0.50 PER SHARE
As described in the paragraphs above, the Corporation's Amended
Articles of Incorporation currently provides for shares of Common Stock
with a par value of $3.57 per share. On February 21, 1995, the
Corporation's Board of Directors adopted a resolution, subject to the
approval of the shareholders, reducing the par value of the
Corporation's Common Stock from $3.57 per share to $0.50 per share.
Under Ohio law, a corporation is required to maintain stated capital
equal to the amount of shares outstanding times the par value of each
share. While the Corporation recognizes the need to retain significant
capital, the Corporation will have significantly more flexibility by
maintaining that capital in a capital surplus account or a retained
earnings account. As of December 31, 1994, the Corporation had
$3,777,000 in its common stock account (stated capital), $5,061,000 in
the surplus account, and $11,026,000 in the unappropriated retained
earnings account. If the Corporation issued a 100% Stock Dividend
without modifying the par value, it would be required to transfer
$3,775,000 from the retained earnings account to the stock account where
this amount would be unavailable for other uses. By reducing the par
value of the common stock to $0.50 per share, after the 100% Stock Dividend is
issued the common stock account (stated capital) will be $1,057,000, the
surplus account will be $11,556,000, and the retained earnings account will be
$7,251,000 based upon balances as of December 31, 1994.
<PAGE>
Cash dividends are available for payment only from unappropriated
retained earnings. Consequently, if this amendment is adopted, future
stock dividends, if any, will have less of an impact on the
unappropriated retained earnings account and, therefore, make more funds
available for cash dividends.
If this amendment is adopted by the shareholders, the change in the
par value of Common Stock will become effective on the date on which the
Amendment is accepted for filing by the Secretary of the State of Ohio.
Management presently expects that the Amendment will be filed on April
19, 1995 (the "Effective Date"). The change in the par value of the
Common Stock will not affect the certificates representing shares of
Common Stock, as all Common Stock outstanding will be deemed to have a
par value of $0.50 per share, and, accordingly, it will not be necessary
for any shareholder to exchange certificates representing currently
outstanding shares.
Adoption of the Amendment Reducing the Par Value of the Common Stock
will require the affirmative vote of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting. The
Board of Directors unanimously recommends a vote FOR the Amendment
Reducing the Par Value. Proxies not otherwise specified will be voted
in favor of the Amendment Reducing the Par Value of the Common Stock.
PROPOSAL NUMBER 4:
AMENDMENT OF THE CORPORATION'S AUTOMATIC
DIVIDEND REINVESTMENT PLAN TO ALLOW THE AGENT
TO PURCHASE AUTHORIZED BUT UNISSUED SHARES OF
COMMON STOCK FROM THE CORPORATION.
The Corporation's Automatic Dividend Reinvestment Plan (the "Plan")
currently permits its Agent, KeyCorp Shareholder Services, Inc., to
purchase shares of the Corporation's Common Stock on any exchange where
the Common Shares are traded, in the over-the-counter market or in
negotiated transactions to meet the demand for shares by participants
in the Plan. On October 19, 1994 the Corporation's Common Stock was
listed on the Nasdaq SmallCap Market. On February 21, 1995, the Board
of Directors adopted a resolution amending the Plan, subject to ratification
by the shareholders to allow the Agent to purchase authorized but
unissued shares from the Corporation in addition to the existing methods
of purchasing Common Stock for the Plan. The price of the stock
purchased from the Corporation will be the average of the high and low
sales price on the Nasdaq SmallCap Market for the last five days on
which such shares traded prior to the dividend payment date. A complete
copy of the Amended Dividend Reinvestment and Stock Purchase Plan is attached
as Exhibit A.
If this Proposal is ratified by a majority of shareholders, the
Corporation must file a registration statement with the Securities and
Exchange Commission to register authorized shares of the Corporation's
Common Stock for sale to the Corporation's Automatic Dividend
<PAGE>
Reinvestment Plan. Until this registration is effective, the Agent will
continue to rely upon stock purchased on the Nasdaq SmallCap Market, in
the over-the-counter market or in negotiated transactions to meet the
demand for shares in the Plan.
Based upon the present participation in the Plan, approximately 1,500
(3,000 after implementation of proposed 100% stock dividend) shares are
necessary each quarter to satisfy the requirements of the Plan.
Accordingly, not more than fifty thousand (50,000) shares will be
registered for this purpose. If all of the shares registered for this
purpose are sold by the Corporation, there will be a slight ownership
dilution (less than 2.5%) to the present shareholders who choose not
to participate in the Plan. The Corporation intends to apply such proceeds
as are received for general corporate purposes. Shares purchased in
market or negotiated transactions will provide no proceeds to the Corporation.
Adoption of Proposal Number 4 will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at
the Annual Meeting. The Board of Directors unanimously recommends a
vote FOR the Proposal to Amend the Dividend Reinvestment Plan. Proxies
not otherwise specified will be voted in favor of Proposal Number 4 to
Amend the Dividend Reinvestment Plan.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Certain Directors and Executive Officers and their associates were
customers of and had transactions with the Bank in the ordinary course
of the Bank's business during 1994. From time to time the law firm of
Phillips, Gardill, Kaiser & Altmeyer, of which Charles J. Kaiser, Jr., a
director of both the Corporation and the Bank, is a partner, has
rendered legal services to the Corporation and the Bank. It is
contemplated that this firm will be retained to perform legal services
during the current year.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES AND COMPENSATION OF
MEMBERS
The Board of Directors of the Corporation met eight (8 ) times during
the year 1994. Each member of the Board of Directors of the Corporation
attended seventy-five percent (75%) or more of the total number of
meetings of the Board and its committees of which they were members.
The Board of Directors of Belmont National Bank met twelve (12 ) times
during 1994. The Directors of the Corporation and the Bank are the
same.
The Board of Directors elects an Executive Committee annually.
Messrs. Ciroli, Goodman, Kaiser, Lee, Mull, Olszowy and Wilson are
members of the Executive Committee of both the Corporation and the Bank.
Meetings of the Executive Committee are called to consider Corporation
or Bank business which may arise between normally scheduled meetings or
to consider in depth policies and make recommendations to the Board of
Directors. The Executive Committee of the Bank met four (4) times during
1994.
<PAGE>
The Executive Committee of the Corporation also serves as a
Nominating Committee. As such, the Committee seeks and recommends
individuals for nomination as directors. The Nominating Committee will
consider as prospective directors persons suggested to them by any
shareholder.
Messrs. Kaiser, Lee, Mull, Olszowy and Wilson are members of the Audit
Committee of the Bank and the Corporation. The Audit Committee reviews
the reports of the Bank's internal auditor, the reports of the
Corporation's independent Certified Public Accountants, the adequacy of
internal controls and procedures, and reports to the Board of Directors
of the Corporation and the Bank. This Committee met four (4) times
during 1994.
The Bank also has a Trust Committee that met four (4) times in 1994
whose members are Messrs. Belot, Dolan, Giffin, Goddard, Goodman,
Haning, Lewis and Wallace. The Trust Committee of the Bank approves the
operations of the Trust Department and reports to the Board of
Directors.
Directors who are not employees of the Corporation or the Bank receive
an annual retainer fee of Two Thousand Dollars, payable quarterly in
arrears, plus an attendance fee of Two Hundred Dollars for each Board or
Committee Meeting attended. When Corporation and Bank meetings meet
concurrently, only one attendance fee is paid. During 1994, a total of
$62,885.23 was paid to Directors.
In addition to the fees paid to Directors, Mr. Richard G. Anderson and
Mr. Wilbur L. Terhune, each of whom is a retired Chairman of the Board,
received payments under a Deferred Compensation Plan adopted by the
Board of Directors on December 15, 1983. Mr. Anderson received
$2,975.04 and Mr. Terhune received $5,567.04 during 1994 under this
plan. The Deferred Compensation Plan provided an early retirement
benefit to covered individuals equal to eighty percent (80%) of a factor
corresponding to the number of years the employee's early retirement
date preceded his normal retirement date, multiplied by the employee's
average compensation as defined under the Bank's retirement plan, minus
the employee's monthly accrued benefit under the Bank's retirement plan
on a straight life annuity basis. This amount is further reduced by the
employee's primary social security benefit. Mr. Terhune's benefit is
further reduced by a pension which he receives from a plan unrelated to
the Corporation or the Bank.
EXECUTIVE COMPENSATION
The Executive Committee without the executive officers serves as the
Compensation Committee for Belmont National Bank. The officers of the
Corporation are currently serving without compensation from Belmont
Bancorp. They are, however, compensated by Belmont National Bank for
services rendered as officers of the Bank. This Committee is
<PAGE>
responsible for setting compensation levels for the President and CEO,
J. Vincent Ciroli, Jr.; the Executive Vice President,
William Wallace; and the Senior Vice President, Controller and Cashier,
Jane R. Marsh. The Committee also consults with senior officers with
respect to the compensation and benefits of other officers and employees
of the Corporation.
COMPENSATION PHILOSOPHY
The Corporation bases different portions of its executive compensation
program on differing measures of corporate performance. As a result,
the Corporation's compensation program currently reflects the following
themes:
A material portion of compensation should be meaningfully related
to corporate performance.
Since the Corporation has chosen a senior executive team to manage
the operations of the Corporation, bonus compensation for these senior
executives should be based on team effort and performance of the
Corporation as a whole.
Bonus compensation should be related to the return on shareholders'
equity and should be payable only if the shareholders have received a
reasonable return on the equity.
Compensation should play a critical role in attracting and
retaining executives whom the Corporation deems most able to further
its goals and, therefore, should be comparable to compensation paid by
comparable peer organizations.
SUMMARY COMPENSATION TABLE
For the year ended December 31, 1994, J. Vincent Ciroli, Jr. and
William Wallace were the only officers compensated in excess of
$100,000. Their compensation is summarized in the following table:
Name and All Other
Principal Position Salary Bonus Compensation
J. Vincent Ciroli, Jr. 1994 $129,900.06 $88,181.00 $9,439.38
President & 1993 $126,600.00 $41,143.00 $8,488.62
Chief Executive 1992 $118,938.59 .00 $6,361.80
Officer Belmont
and Belmont National
Bank
William Wallace 1994 $94,734.91 $64,303.00 $6,685.09
Vice President, 1993 $92,365.56 $30,021.00 $5,703.84
Belmont Bancorp. 1992 $87,023.86 .00 $4,539.41
and Executive Vice
President & Chief
Operating Officer,
Belmont National Bank
<PAGE>
PAY MIX AND MEASUREMENT
The Corporation's executive compensation program is based on three
components, each of which is intended to serve the overall compensation
philosophy.
BASE SALARY is targeted at the competitive median for peer banking
organizations. In order to determine these amounts, the Committee
utilizes the Sheshunoff tables, the Executive Studies Group (a division
of Ben S. Cole Financial, Inc.), and the Bank Wage-Hour & Personnel
Service. Salaries for the executive officers named in the Summary
Compensation Table are reviewed by the Committee on an annual basis and
may be increased or decreased at that time based on the Committee's
agreement of how the management team and the respective individual
contributes to the Corporation, as well as increases in median
competitive pay levels.
ANNUAL BONUS INCENTIVES for executive officers
are intended to reflect the Corporation's belief that management's
contribution to corporate performance comes, in part, from maximizing
the Corporation's return on common shareholders' equity. Accordingly,
the Board of Directors adopted an Executive Incentive Compensation Plan
in 1989 to provide incentive compensation based upon the earnings of
Belmont National Bank. Amounts paid under the Plan are included in the
"Bonus" column in the Summary Compensation Table above. The individuals
covered by the Plan are J. Vincent Ciroli, Jr., William Wallace and
Jane R. Marsh, Senior Vice President, Controller and Cashier of Belmont
National Bank. Since 1990, the formula for calculating the Executive
Incentive Compensation Plan bonus was based upon the return on equity
(ROE) achieved by Belmont National Bank. Twenty percent (20%) of
earnings in excess of a selected rate of return on shareholders' equity
as of the beginning of each year comprised the bonus pool. The selected
rate of return on shareholders' equity is established annually by the
Board of Directors. The bonus pool is allocated among the executive
officers based upon the ratio of the participant's salary to total
participants' salaries. The selected rates of return on beginning
shareholders' equity was thirteen percent (13.00%) for 1994, 1993 and
1992. The Committee believes that this program provides an appropriate link
between the Corporation's performance and the incentives paid to the
executive officers. The return on equity goal is established by the
Committee annually.
OTHER COMPENSATION is provided so that the Corporation's overall benefits
are comparable with other similar organizations so as to attract and
retain competent management.
The Bank has a Defined Contribution 401(k) Savings Plan which allows
employees who work over 1,000 hours per year to defer up to 10% of their
pre-tax salary to the Plan. The Bank matches fifty percent (50%) of
the first four percent (4%) deferred. The Bank may also make voluntary
contributions to the Plan. In 1994, the Bank paid $31,586.60 in
matching funds and made a voluntary contribution of $80,397.35, or five
percent (5%) of annual salary. In 1994, the profit sharing contribution
attributed to Mr. Ciroli was $6,330.00; the matching funds contribution
was $2,598.09. The profit sharing contribution paid for Mr. Wallace was
$4,618.28; the matching funds contribution was $1,894.73. This
compensation is included in the "All Other Compensation" column in the
Summary Compensation Table above.
<PAGE>
The Bank provides reimbursement for club fees, membership dues and
entertainment expenses for business use by Mr. Ciroli and Mr. Wallace.
The Bank also provides Mr. Ciroli and Mr. Wallace with the use of a
company car. Personal benefits from such expenditures are less than 10%
of salary and bonus and, therefore, have been excluded from the Summary
Compensation Table above.
The Bank maintains a split-dollar life insurance plan for several of
its officers. Under the plan, the Bank maintains ownership of all cash
value in the insurance policies and a portion of the death benefits.
The participant's named beneficiary is entitled to three times the
participant's annual salary at his death. Annually, the participant
recognizes taxable income to the extent of the assumed term cost of the
coverage. At the death of the participant, the Bank's share of the
death benefit will be sufficient to recover all costs associated with
the plan. For 1994, the amount of income attributable for a split-
dollar insurance plan was $511.29 and $172.08 for Mr. Ciroli and Mr.
Wallace respectively. These amounts are included in the "All Other
Compensation" column in the Summary Compensation Table above.
The Corporation adopted a Supplemental Retirement Plan for the three
executive officers at its meeting on January 18, 1994, in order to
augment the retirement benefits payable to these officers and make them
more comparable to the benefits provided under the deferred benefit plan
which was terminated in 1990. The persons covered under the plan are J.
Vincent Ciroli, Jr., President and Chief Executive Officer; William
Wallace, Vice President of the Corporation and Executive Vice President
and Chief Operating Officer of the Bank; and Jane R. Marsh, Secretary of
the Corporation and Senior Vice President, Controller and Cashier of the
Bank. Under the Plan the Corporation will credit the sum of $14,000 to
a book reserve account for the benefit of Mr. Ciroli, the sum of $5,000
for Mr. Wallace and the sum of $1,500 for Ms. Marsh and may, if approved
by the Board of Directors, deposit like amounts during the years 1995,
1996, 1997, and 1998. The balance in the book reserve account will be
invested as directed by the Board and distributed to the officer over a
ten (10) year period following retirement. The officer will bear the
risk of earnings in the book reserve account. Under the Plan the
maximum amount that can be paid to Mr. Ciroli is $43,000 per annum; to
Mr. Wallace $40,000 per annum; and to Ms. Marsh $11,250 per annum. The
supplemental retirement benefits may be forfeited if the employee is
terminated for cause.
COMPENSATION COMMITTEE
John H. Goodman, II Thomas Olszowy
Charles J. Kaiser, Jr. W. Quay Mull, II
Terrence A. Lee Charles A. Wilson, Jr.
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares for each of the last five years ending
December 31 the cumulative total return of the Corporation's Common
Stock, All Nasdaq US Stocks Index and SNL Securities' Index of Banks
with Assets Size less than $500 million. The cumulative total return of
the Corporation's Common Stock assumes $100 invested on December 31,
1989 and assumes reinvestment of dividends.
<TABLE>
BELMONT BANCORP.
STOCK PRICE PERFORMANCE
<CAPTION>
SNL SECURITIES'
INDEX OF BANKS WITH ALL NASDAQ U.S.
BELMONT BANCORP. ASSETS LESS THAN $500M STOCKS
MEASUREMENT PERIOD
<S> <C> <C> <C>
MEASUREMENT POINT-
12/31/89 $100.00 $100.00 $100.00
YEAR ENDED 12/31/90 $120.97 $ 55.00 $ 84.92
YEAR ENDED 12/31/91 $126.65 $ 77.36 $136.28
YEAR ENDED 12/31/92 $138.77 $112.70 $158.58
YEAR ENDED 12/31/93 $151.72 $138.53 $180.93
YEAR ENDED 12/31/94 $284.60 $146.52 $176.92
</TABLE>
PROPOSAL NUMBER 5: SELECTION OF AUDITORS
The Board of Directors has retained S.R. Snodgrass A.C. as independent
auditors for both the Corporation and the Bank for the year ending
December 31, 1995. There will be presented to the shareholders at the
Annual Meeting a proposal that this selection be ratified by the
shareholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THIS
SELECTION BE SO RATIFIED. The services rendered by S.R. Snodgrass A.C.
during the year 1994 involved auditing services primarily and consisted
of the examination of the financial statements of the Corporation and
its subsidiaries, principally the Bank. It is expected that a
representative of the accounting firm will be present at the
shareholders' meeting. Such representative will be given the
opportunity to make a statement if he desires to do so, and will be
available to respond to appropriate questions from the shareholders who
are present.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers, and persons who own more
than 10% of a registered class of the Corporation's equity securities to
file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock of the
Corporation. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file. To the Corporation's knowledge, based
solely on a review of the copies of such reports furnished to the
Corporation and written representations that no other reports were
required, during the two fiscal years ended December 31, 1994, all
section 16(a) filing requirements applicable to the Corporation's
officers, directors, and greater than 10% beneficial owners were
complied with except Dana J. Lewis and Charles A. Wilson, Jr. both of
whom filed a late Form 4 report on March 6, 1995.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors and
Management were unaware of any matters not referred to in this proxy
statement for action at the meeting. If any other business comes before
the meeting, the persons named in the proxy will have the authority to
vote the shares represented by them in accordance with their best
judgement.
METHOD AND COST OF SOLICITATION
The solicitation of proxies will be made primarily by mail. Proxies
may also be solicited personally and by telephone by regular employees
and Directors of the Corporation and the Bank without any additional
remuneration and at minimal cost. Management intends to request banks,
brokerage houses, custodians, nominees, and fiduciaries to obtain
authorization for the execution of proxies. The Corporation will bear
the entire cost of soliciting proxies.
SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Proposals which shareholders intend to present at next year's annual
meeting, now scheduled to be held on April 19, 1996, will be eligible
for inclusion in the Corporation's proxy material for that meeting if
they are submitted to the Corporation in writing no later than November
10, 1995. A proponent may submit a maximum of two proposals of not more
than 300 words each for inclusion in the proxy material. At the time of
the submission of the proposal, a shareholder may also submit a written
statement of not more than 200 words in support thereof for inclusion in
the proxy material for the meeting, if requested by the proponent, in
the event that the proposal is opposed by the Corporation. When
submitted to the Corporation, a proposal should be accompanied by a
written notice of the proponent's intention to appear personally at the
meeting for the purpose of presenting the proposal for action.
BY ORDER OF THE BOARD OF DIRECTORS
J. VINCENT CIROLI, JR., PRESIDENT & CEO
Bridgeport, Ohio
March 17, 1995
<PAGE>
EXHIBIT A
AMENDED DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
Purchase Belmont Bancorp. Common Shares
at market price without fees of any kind
by reinvesting dividends, and at your
election, voluntary cash payments.
<PAGE>
BELMONT BANCORP. AMENDED DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Amended Dividend Reinvestment and Stock Purchase Plan (the "Plan")
of Belmont Bancorp. ("Belmont") described herein provides holders of
record of Belmont Common Stock ("Common Stock") with a simple and
convenient method of investing all or part of their cash dividends and
voluntary cash payments in additional shares of Common Stock without
payment of any brokerage commission or service charge. The Plan will be
administered by KeyCorp Shareholder Services, Inc., Cleveland, Ohio.
The price per share will be the weighted average of the per share
price paid for all the Common Stock purchased by the Plan Administrator
during the month in which the purchase is made. (See "DESCRIPTION OF THE
PLAN - 8. WHAT WILL BE THE PRICE OF THE STOCK?"). The Plan does not
constitute a guarantee of future dividends, which will depend on
earnings, financial requirements and other factors.
DESCRIPTION OF THE PLAN
The Plan, approved by Belmont Bancorp's Board of Directors, consists
of the following numbered questions and answers:
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide holders of record of Belmont
Common stock with a simple and convenient method of investing all or
part of their cash dividends and voluntary cash payments in additional
Common Stock without payment of any direct brokerage commission or
service charge (See "6. WHAT ARE THE INVESTMENT OPTIONS?").
2. WHO ADMINISTERS THE PLAN?
KEYCORP SHAREHOLDER SERVICES, INC. (the "Administrator") administers
the Plan for participants, makes purchases of shares of Common Stock for
the participants and handles all communications concerning the Plan
including administrative functions such as record-keeping, preparation
of statements of account for participants, and other clerical duties
relating to the Plan. In accordance with each stockholder's
authorization, the Administrator will:
(a) Apply all or part of the cash dividends on the shares of Belmont
Common Stock held by the participant, and on any shares acquired by the
participant under the Plan, to purchase shares of Belmont Common Stock
for such participant, and/or
(b) Apply all voluntary cash payments of $25 to $1,500 per quarter
received from the participant, who is a holder of one or more shares of
Belmont Common Stock, together with cash dividends of shares acquired
for such participant under the plan, to the purchase of shares of
Belmont Common Stock for the participant's account.
(c) The number of shares that will be purchased for a
participant's account will depend on the amount of any dividend,
voluntary cash payments, if any, and the applicable purchase price of
the Common Stock. Your account will be credited with the number of
shares (including any fractional share computed to three decimal places)
that results from dividing the amount of your dividends and voluntary
cash payments by the weighted average price of the shares purchased for
all participants. The amount of your dividends for purposes of this
computation will include cash dividends payable on all shares which you
have elected to have participate in the plan, and shares in your plan
account.
The Administrator shall not be liable under the Plan for any act done
in good faith or for any good faith omission to act including, without
limitation, any claims for liability (1) arising out of failure to
terminate a participant's participation in the Plan upon the
participant's death prior to receipt of notice in writing of such death,
and (2) with respect to the prices at which shares are purchased for
participant accounts, and the time when such purchases are made.
All correspondence regarding the Plan should refer to Belmont, and be
addressed to Belmont Bancorp. Dividend Reinvestment Plan, c/o KeyCorp
Shareholder Services, Inc., Corporate Trust Division, Dividend
Reinvestment, Box 6477, Cleveland, OH 44114-1306
3. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
Any holder of record of Belmont Common Stock is eligible to
participate in the Plan.
4. WHEN MAY, AND HOW DOES, AN ELIGIBLE STOCKHOLDER PARTICIPATE?
Any eligible stockholder may join the Plan at any time by completing
the Authorization Form and returning it to KeyCorp Shareholder Services,
Inc.
5. WHEN WILL PURCHASES OF SHARES BE MADE?
The date on which dividends and voluntary cash payments will begin to
be invested (the "Investment Date") will be the payment date of the
quarterly dividend of Belmont. Dividend payment dates for Belmont
Common Stock are expected to be the last Friday in March, June,
September and December.
For the purpose of making purchases, the Administrator will commingle
each participant's funds with those of other holders of Belmont Common
Stock who are participant's in the Plan. The Administrator will make every
effort to invest dividends and voluntary
cash payments promptly beginning on each Investment Date and in no event
later than thirty days from such date, except where necessary under any
applicable federal securities laws. No interest will be paid on funds
held by the Administrator prior to investment. All voluntary cash
payments (as above limited) shall be invested within thirty (30) days of
such date or returned to the participant if insufficient stock is
available.
Any voluntary cash payment will be refunded if the participant's
written request for a refund is received by the Administrator not less
than 48 hours before the next succeeding Investment Date.
Authorization Forms for the reinvestment of dividends received by the
Administrator on or prior to the record date for a dividend payment will
cause dividends to begin to be reinvested with that dividend payment.
6. WHAT ARE THE INVESTMENT OPTIONS?
The Authorization Form provides for the purchase of additional Common
Stock through the following investment options:
OPTION 1. Reinvest dividends on all of the shares of Belmont Common
Stock registered in shareholder's name.
OPTION 2. Reinvest dividends on part of the shares of Belmont
Common Stock registered in shareholder's name.
OPTION 3. Invest voluntary cash payments participant's may choose
to make of not less than $25 nor more than $1,500 per quarter.
Under all options, dividends on all shares credited to the participant's
account and held by the Plan Administrator shall be automatically
reinvested.
7. WHAT ARE THE LIMITS ON VOLUNTARY CASH PAYMENTS?
Voluntary cash payments are limited to a minimum of $25 and a maximum
of $1,500 per quarter. No interest will be paid on voluntary cash
payments held by the Administrator prior to their investment. No such
payments may be made prior to the record date of the next quarterly
dividend, nor subsequent to the payment date for such quarterly
dividend.
8. WHAT WILL BE THE PRICE OF THE STOCK?
Shares of authorized but previously unissued shares of Common Stock
purchased from Belmont will be at a price equal to the average of the
high and low sales price on The Nasdaq SmallCap Market for the last five
days on which such shares traded prior to the dividend payment date.
Shares of Belmont Common Stock may be purchased in the over-the-
counter market or by negotiated transactions, and may be subject to such
terms and conditions with respect to price, delivery, etc., as the
Administrator may require. Neither Belmont nor any shareholder shall
have any authority or power to direct the time or price at which shares
may be purchased, or the selection of the broker or dealer through or
from whom purchases are to be made. The price per share purchased for
each participant's account in any month shall be the weighted average
price of all such shares purchased that month, computed to three decimal
places. (See Question "20. WHAT IS THE TAX STATUS OF REINVESTED CASH
DIVIDENDS AND SHARES OF STOCK ACQUIRED THROUGH THE PLAN?").
9. HOW MANY SHARES OF COMMON STOCK WILL BE CREDITED TO
PARTICIPANTS?
Each participant's account will be credited with that number of Common
Stock equal to the amounts to be invested on behalf of the participant
divided by the applicable purchase price computed to three decimal
places. In the case of foreign shareholders, and those shareholders
subject to backup withholding, any amounts required to be withheld for
tax purposes will be deducted prior to reinvestment.
10. ARE THERE ANY FEES OR EXPENSES INCURRED BY PARTICIPANTS IN
THE PLAN?
A participant will incur no brokerage commissions or service charges
for purchases made under the Plan. Certain charges as described in the
answer to Question 13 may be incurred upon withdrawal from the Plan or
upon termination of the Plan.
11. WILL CERTIFICATES BE ISSUED FOR COMMON STOCK PURCHASED?
Common Stock purchased under the Plan will be held by the
Administrator and registered in the name of the nominee of the
Administrator as agent for participants in the Plan. Certificates for
shares of such stock will not be issued to participants unless and until
requested. The number of shares credited to an account under the Plan
will be shown on the participant's periodic statement of account.
Neither the Administrator nor its nominee will have any responsibility
for the value per share of the stock after it is purchased.
Certificates for any number of whole shares credited to an account
under the Plan will be issued without charge to a participant after
receipt of a written request from a participant who wishes to remain in
the Plan. This request should be mailed to the Plan Administrator. Any
remaining shares will continue to be credited to the participant's
account. Certificates for fractional shares will not be issued under
any circumstances. Participants may also deposit Belmont Common Stock
certificates registered in their names for credit as Common Stock held
in their account under the Plan ("credited"). There is no charge for
such deposits. Because you bear the risk of loss in sending stock
certificates to the Administrator, it is recommended that your
certificates be sent by registered mail, return receipt requested, and
properly insured. Certificates should not be
endorsed. Whenever certificates are issued to you either upon your
request or upon termination of your participation, new differently
numbered certificates will be issued.
When a certificate is issued by the Administrator in the name of a
participant in the Plan, the automatic dividend reinvestment feature of
the Plan with respect to the shares of Common Stock represented by such
certificates will continue only if the reinvestment of dividends on all
shares has been elected on the Authorization Form or if the participant
authorizes the reinvestment of the dividends on the shares represented
by that certificate by submitting a new Authorization Form.
Shares credited to the account of a participant under the Plan may not
be pledged. A participant who wishes to pledge such shares must request
that certificates for such shares be issued in the participant's name.
Certificates for fractions of shares will not be issued under any
circumstances. In the event a participant elects to terminate
participation in the plan, the Administrator will liquidate to cash all
fractional shares based on the market value of Common Stock on the date
the termination of the participant's account becomes effective, all as
determined by the Administrator in its sole discretion.
12. IN WHOSE NAME WILL CERTIFICATES BE REGISTERED WHEN ISSUED TO
PARTICIPANTS?
Accounts under the Plan are maintained in the names in which
certificates of the participants were registered at the time they
entered the Plan. Consequently, certificates for shares of Common Stock
will be similarly registered when issued to participants.
13. HOW DOES A PARTICIPANT WITHDRAW FROM THE PLAN?
A participant may withdraw from the Plan at any time by notifying the
plan Administrator in writing. To be effective on any given dividend
payment date, the notice must be received by the Plan Administrator
before the record date for that payment. In the event of withdrawal, or
in the event of termination of the Plan, certificates for whole shares
of Common Stock credited to a participant's account under the Plan will
be delivered to the participant. Any fractional share credited to the
participant's account will be distributed by the Administrator through a
cash payment based on the market value of Common Stock on the date the
withdrawal of the participant's account becomes effective, all as
determined by the Administrator in its sole discretion.
Alternatively, a participant may request the Administrator to sell all
shares, or part of the shares credited to the participant's account
under the Plan. In that case, the sale will be made as promptly as
practicable after receipt by the Administrator of the request. If a
participant elects to sell all full shares credited to the participant's
account, any remaining fractional shares will automatically be
distributed as an additional cash payment as above described. The
participant will receive the proceeds of the sale less any related
brokerage commissions, and deductions for backup withholding, if
applicable.
14. WHAT HAPPENS WHEN A PORTION OF A PARTICIPANT'S STOCK IS SOLD
OR TRANSFERRED?
If a participant disposes of a part of Belmont Common Stock registered
in participant's name, dividends on the remaining shares, to the extent
authorized, including all shares credited under the Plan, will continue
to be reinvested.
15. WHAT HAPPENS IF BELMONT ISSUES A STOCK DIVIDEND, DECLARES A STOCK
SPLIT, OR HAS A RIGHTS OFFERING?
Any shares of Common Stock distributed by Belmont as a stock dividend
on shares of Belmont Common Stock credited to an account under the Plan,
or upon any split of such stock, will be credited to the account. Stock
dividends or splits distributed on all other shares held by a
participant and registered in a participant's own name will be mailed
directly to the participant. In the event that Belmont makes available
to its holders of Common Stock rights to subscribe to additional shares,
debentures, or other securities, the shares credited to an account under
the Plan will be added to other shares held by the participant in
calculating the number of rights to be issued to such participant.
16. HOW WILL A PARTICIPANT'S STOCK BE VOTED AT MEETINGS OF
SHAREHOLDERS?
Each participant will have the sole right to vote shares purchased for
such participant which are held by the Administrator under the Plan on
the record date for a vote. Participants under the Plan who are
registered holders of Belmont Common Stock will receive only one proxy
which will include any shares credited to an account under the Plan.
17. WHAT REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
A statement describing any dividends invested, the number of shares of
Common Stock purchased, the price per share, and the total shares of
Common Stock accumulated under the Plan will be mailed to each
participant by the Plan Administrator as soon as practicable after
completion of each investment for a participant's account. Dividends
paid on the accumulated shares, and fees and brokerage commissions paid
on each participant's behalf by Belmont, will be included in the Form
1099 DIV information return to the Internal Revenue Service. A separate
Form 1099 DIV will be sent for each class of stock covered in the Plan.
Presently, only Belmont Common Stock is covered by the Plan.
In addition, each participant will receive a copy of each
communication sent generally to holders of Common Stock.
18. WHO INTERPRETS AND REGULATES THE PLAN?
The Administrator and Belmont Bancorp. The terms, conditions, and
operations of the Plan are governed by the laws of the State of Ohio.
19. MAY THE PLAN BE MODIFIED OR TERMINATED?
The Administrator and Belmont may agree from time to time to
amendments and modifications of the Plan.
The Administrator, for whatever reason, at any time as it may
determine in its sole discretion, may terminate a participant's
participation in the Plan (and will terminate the Plan upon request by
Belmont) after mailing a notice of intention to terminate to the
participant affected at the address appearing on the Administrator's
records. Upon termination, participants will receive a check for the
cash value of any fractional share and certificates for the full shares
of Common Stock in the participant's account unless the sale of all or
part of such shares is requested by the participant. Such sale will be
made as set forth in answer to Question 13 with respect to withdrawal
from the Plan.
20. WHAT IS THE TAX STATUS OF REINVESTED CASH DIVIDENDS AND SHARES OF
STOCK ACQUIRED THROUGH THE PLAN?
ACQUISITION OF COMMON STOCK UNDER THE PLAN: For federal income tax
purposes, participants who have their cash dividends reinvested in
Common Stock under the Plan will be treated the same as nonparticipants
with respect to dividends on their shares. Participants will be treated
as having received on each dividend payment date, the full amount of the
cash dividends for that dividend payment date, even though the dividends
are not actually received in cash but instead are applied to the
purchase of shares for their accounts.
Each participant's tax basis in the shares of Common Stock purchased
will be equal to the amount of the cash dividends applied to the
purchases of such shares.
The Internal Revenue Service has ruled that brokerage commissions and
service charges paid by a corporation on a participant's behalf in
connection with stock purchased in the open market, as under this plan,
will be treated as distributions subject to federal income tax in the
same manner as dividends. However, these rulings further provide that
the amount paid to cover service charges may be deductible by a
participant who itemizes deductions on his federal income tax return and
the amount paid for brokerage commissions will be added to a
participant's tax basis for the shares purchased.
DISPOSITIONS OF COMMON STOCK UNDER THE PLAN: No taxable income will
be realized upon a participant's receipt of certificates for whole
shares of Common Stock acquired under the Plan. Gain or loss may be
recognized by a participant when shares are sold or otherwise disposed
of in a taxable exchange, whether by the Administrator on behalf of the
participant, or by the participant upon withdrawal from or termination
of the Plan. The amount of such gain or loss will be the difference
between the amount the participant receives for the shares and his tax
basis in such shares. A participant must also recognize gain or loss
upon receipt of a cash payment for a fractional share equivalent
credited to the participant's account upon termination of participation
in, or termination of, the Plan. The amount of gain or loss will be the
difference between the amount that the participant received for the
fractional share equivalent, and the tax basis thereof.
Participants are advised to consult with their own tax advisers to
determine the particular tax consequences that may result from their
participation in the Plan and the subsequent sale or other disposition
of Common Stock acquired under the Plan. Participants should also
consult their own tax advisers to determine the effect of state, local
and foreign tax laws on their participation in the Plan.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT AND FORM 10-K OF BELMONT BANCORP. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 11770
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 49132
<INVESTMENTS-CARRYING> 92463
<INVESTMENTS-MARKET> 86828
<LOANS> 147096
<ALLOWANCE> 1537
<TOTAL-ASSETS> 312963
<DEPOSITS> 255923
<SHORT-TERM> 35498
<LIABILITIES-OTHER> 1328
<LONG-TERM> 0
<COMMON> 3777
0
1000
<OTHER-SE> 15437
<TOTAL-LIABILITIES-AND-EQUITY> 312963
<INTEREST-LOAN> 11630
<INTEREST-INVEST> 8025
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 19656
<INTEREST-DEPOSIT> 7865
<INTEREST-EXPENSE> 8807
<INTEREST-INCOME-NET> 10849
<LOAN-LOSSES> 805
<SECURITIES-GAINS> (64)
<EXPENSE-OTHER> 7069
<INCOME-PRETAX> 4261
<INCOME-PRE-EXTRAORDINARY> 4261
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3234
<EPS-PRIMARY> 2.98
<EPS-DILUTED> 2.98
<YIELD-ACTUAL> 4.24
<LOANS-NON> 478
<LOANS-PAST> 11
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1031
<ALLOWANCE-OPEN> 1617
<CHARGE-OFFS> 940
<RECOVERIES> 55
<ALLOWANCE-CLOSE> 1537
<ALLOWANCE-DOMESTIC> 1537
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1200
</TABLE>
