U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended September 30, 1995
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________________ to
__________________
Commission file number 0-12724
Belmont Bancorp.
An Ohio Corporation
IRS Employer ID number - 34-1376776
325 Main Street
Bridgeport, Ohio 43912
Telephone (614) 695-3323
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
The number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $0.50 par value,
2,114,644 shares outstanding
as of October 11, 1995
FORM 10-QSB
BELMONT BANCORP.
Quarter Ending September 30,1995
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - September 30, 1995,
December 31, 1994, and September 30, 1994
Consolidated Statements of Income-Three Months and
Nine Months Ended September 30, 1995 and
September 30, 1994
Condolidated Statements of Income-Nine Months
Ended September 30, 1995 and September 30, 1994
Consolidated Statements of Cash Flows-Nine Months
Ended September 30, 1995 and September 30, 1994
Consolidated Statements of Changes in Shareholders' Equity
Nine Months Ended September 30, 1995 and Year Ended
December 31, 1994
Notes to the Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operation
Part II - Other Information
Legal Proceedings
Changes in Securities
Defaults upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Signature page
<TABLE>
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
<CAPTION>
September 30 1995 1994 %Change
<S> <C> <C> <C>
Earnings and Dividends ($000's)
Net Income 3,324 2,568 29.4
Operating Earnings (1) 4,253 3,283 29.5
Cash Dividends Declared on Common
Shares 729 577 26.3
Per Common Share (2):
Net Income $ 1.54 $ 1.19 29.4
Cash Dividends Declared 0.345 0.273 26.4
Book Value 10.89 9.26 17.7
Market Price for the Quarter:
High 25.00 10.30 142.7
Low 18.50 8.00 131.3
At Quarter-End ($000's)
Assets $321,386 $305,781 5.1
Loans and Leases 157,975 139,298 13.4
Deposits 245,977 249,134 (1.3)
Stockholders' Equity 24,030 20,570 16.8
Return on Average Assets 1.43% 1.21% 18.2
Return on Average Common
Shareholders' Equity 20.48% 17.88% 14.5
Net Interest Margin 4.58% 4.25% 7.8
Weighted Avg. Number of Shares
Outstanding (2) 2,114,641 2,114,492 0.0
Number of Full Time Equivalent
Employees 111.0 104.0 6.7
Total Assets per FTE Employee $ 2,895 $ 2,940 (1.5)
<FN>
<F1> (1) Operating earnings are defined as earnings before income taxes
minus securities and trading gains or plus securities and trading
losses.
<F2> (2) Per common share amounts have been adjusted to reflect
the effect of a 25% common stock dividend paid in July 1994
and a 100% common stock dividend paid in May 1995.
</TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The following consolidated financial statements and
related notes of Belmont Bancorp. and subsidiaries were
prepared by management which has the primary responsibility
for the integrity of the financial information. The
statements are prepared in conformity with generally
accepted accounting principles appropriate in the
circumstances, and include amounts that are based on
management's best estimates and judgments. Financial
information elsewhere in the quarterly report is prepared on
a basis consistent with that in the financial statements.
In meeting its responsibility for the accuracy of the
financial statements, management relies on the Corporation's
comprehensive system of internal accounting controls. This
system provides reasonable assurance that assets are
safeguarded and transactions are recorded to permit the
preparation of appropriate financial information. The
system of internal controls is characterized by an effective
control oriented environment within the Corporation which is
augmented by written policies and procedures, internal
audits and the careful selection and training of qualified
personnel.
The functioning of the accounting system and related
internal accounting controls is under the general oversight
of the Audit Committee of the Board of Directors which is
comprised of five outside directors. The accounting system
and related controls are reviewed by a program of internal
audits and by the Corporations' independent accountants.
The Audit Committee meets regularly with the internal
auditor and the independent public accountants to review the
work of each and ensure that each group is properly
discharging its responsibilities. In addition, the
Committee reviews and approves the scope and timing of the
internal and external audits and any findings with respect
to the system of internal controls. Reports of examinations
conducted by federal regulatory agencies are also reviewed
by the Committee.
The annual consolidated financial statements of Belmont
Bancorp. and subsidiaries will be examined by S.R. Snodgrass
A.C., the Corporation's independent certified public
accountants. Their examination will be conducted in
accordance with generally accepted auditing standards and
will include a review of internal controls and a test of
transactions in sufficient detail to allow them to report on
the fair presentation of the consolidated operating results
and financial condition of Belmont Bancorp. and
subsidiaries.
BASIS OF PRESENTATION
The consolidated financial statements include the
accounts of Belmont Bancorp. and its subsidiaries, Belmont
National Bank and Belmont Financial Network.
<TABLE>
Consolidated Condensed Balance Sheet
(Unaudited) ($000s except per share amounts)
<CAPTION> September 30 December 31 September 30
1995 1994 1994
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 9,458 $ 11,770 $ 8,390
Securities available for sale at
market value 58,456 49,132 51,519
Securities held to maturity (1) 83,931 92,463 94,800
Loans 157,975 147,096 139,298
Less allowance for possible loan
losses 2,464 1,537 1,343
Net loans 155,511 145,559 137,955
Premises and equipment, net 4,881 4,648 4,291
Other real estate owned 579 586 26
Accrued income receivable 2,392 2,133 2,097
Other assets 6,178 6,672 6,703
Total Assets $321,386 $312,963 $305,781
LIABILITIES
Non-interest bearing deposits
Demand 25,703 27,269 24,006
Interest-bearing deposits:
Demand 25,986 26,273 25,969
Savings 77,264 84,023 89,141
Time 117,024 118,358 110,018
Total deposits 245,977 255,923 249,134
Short-term borrowings 50,097 35,498 34,784
Accrued interest on deposits
and other borrowings 736 590 664
Other liabilities 546 738 629
Total liabilities 297,356 292,749 285,211
SHAREHOLDERS' EQUITY
Preferred stock - authorized
90,000 shares with
no par value; issued and
outstanding, none - - -
Senior cumulative preferred
stock - authorized, issued
and outstanding 10,000
shares with a $100 par value 1,000 1,000 1,000
Common stock - $0.50 par
value, 8,900,000 shares
authorized; 2,115,476
issued in 1995 and 1994 1,057 3,777 3,777
Surplus 7,781 5,061 5,061
Treasury stock (832 shares in
1995 and 856 shares in 1994) (8) (8) (8)
Retained earnings:
Unappropriated 13,561 11,026 10,601
Appropriated for
contingencies 850 850 850
Net unrealized loss on
securities available for sale (211) (1,492) (711)
Total shareholders' equity 24,030 20,214 20,570
Total liabilities and
shareholders' equity 321,386 312,963 305,781
<FN>
<F1> (1) Market value at September 30, 1995, $83,148; December 31, 1994,
$86,828; September 30, 1994, $91,044.
</TABLE>
<TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
Three months ended
September 30, Increase
1995 1994 (Decrease)
INTEREST INCOME
<S> <C> <C> <C>
Loans and lease financing
Taxable 3,565 2,956 609
Tax-exempt 80 50 30
Investment securities:
Taxable 1,913 1,837 76
Tax-exempt 380 406 (26)
Dividends 1 1 -
Interest on fed funds sold 16 - 16
Total interest income 5,955 5,250 705
INTEREST EXPENSE
Deposits 2,203 1,999 204
Short-term borrowings 588 332 256
Total interest expense 2,791 2,331 460
Net interest income 3,164 2,919 245
Provision for possible loan
losses 200 85 115
Net interest income after
provision for possible
loan losses 2,964 2,834 130
NON-INTEREST INCOME
Trust fees 54 77 (23)
Service charges on deposits 135 136 (1)
Other operating income 128 109 19
Investment securities gains
(losses) (23) (3) (20)
Trading profits (losses) - - -
Gains (losses) on securities
available for sale 41 1 40
Total non-interest income 335 320 15
NON-INTEREST EXPENSE
Salary and employee benefits 701 710 (9)
Net occupancy expense of
premises 140 136 4
Equipment expenses 186 149 37
Other operating expenses 667 704 (37)
Total non-interest
expense 1,694 1,699 (5)
Income before income
taxes 1,605 1,455 150
INCOME TAXES 385 320 65
Net income $ 1,220 $ 1,135 $ 85
PER COMMON SHARE DATA
Net income per share $ 0.57 $ 0.53 $ 0.04
</TABLE>
<TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
Nine Months Ended
September 30, Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
INTEREST INCOME
Loans and lease financing
Taxable $ 10,357 $ 8,364 $ 1,993
Tax-exempt 212 137 75
Investment securities:
Taxable 5,925 4,761 1,164
Tax-exempt 1,073 935 138
Dividends 3 2 1
Interest on fed funds sold 46 3 43
Total interest income 17,616 14,202 3,414
INTEREST EXPENSE
Deposits 6,791 5,726 1,065
Short-term borrowings 1,394 531 863
Total interest expense 8,185 6,257 1,928
Net interest income 9,431 7,945 1,486
Provision for possible loan
losses 900 605 295
Net interest income after
provision for possible
loan losses 8,531 7,340 1,191
NON-INTEREST INCOME
Trust fees 350 287 63
Service charges on deposits 409 394 15
Other operating income 354 332 22
Investment securities gains
(losses) (22) (8) (14)
Trading profits (losses) - 1 (1)
Gains (losses) on securities
available for sale 204 17 187
Total non-interest
income 1,295 1,023 272
NON-INTEREST EXPENSE
Salary and employee benefits 2,206 2,013 193
Net occupancy expense of
premises 414 410 4
Equipment expenses 563 444 119
Other operating expenses 2,208 2,203 5
Total non-interest
expense 5,391 5,070 321
Income before income
taxes 4,435 3,293 1,142
INCOME TAXES 1,111 725 386
Net income 3,324 2,568 756
PER COMMON SHARE DATA
Net income per share $ 1.54 $ 1.19 $ 0.36
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30
(Unaudited) ($ expressed in 000s)
BELMONT BANCORP.
1995 1994
<S> <C> <C>
Operating Activities:
Net income 3,324 2,568
Adjustments to reconcile net income
to net cash flows provided by
operating activities:
Provision for loan losses 900 605
Depreciation expense 450 375
Amortization of investment security
premiums 774 1,486
Accretion of investment security
discounts (249) (211)
Investment and trading securities
(gains) losses (182) (10)
Proceeds on sale of securities
available for sale 60,759 13,274
Procceds on sale of securities held
in trading account 0 1,517
Purchase of securities available
for sale (77,444) (22,177)
Purchase of securities for
trading account 0 (1,516)
Loss (Gain) on sale of
fixed assets 23 3
Gain on sale of loans (90) 0
(Increase) decrease in
interest receivable (259) (384)
Increase (decrease) in
interest payable 146 211
Others, net (359) 1,315
Net cash provided by
operating activities (12,207) (2,944)
Investing Activities:
Proceeds from maturities and
calls of investment securities 6,322 3,111
Purchases of investment securities (2,321) (47,130)
Principal collected on mortgage-
backed securities 13,492 24,819
Net (increase) decrease in loans
and leases, net of charge offs (17,021) (16,925)
Proceeds on loans sold 6,298 1,929
Loans purchased (94) 0
Recoveries on loans previously
charged off 62 30
Proceeds on sale of other
real estate owned 0 64
Purchases of fixed assets (711) (209)
Proceeds on sale of
fixed assets 4 1
Net cash used by
investing activities 6,031 (34,310)
Financing Activities:
Net increase (decrease)
in deposits (9,946) 5,902
Net increase (decrease) in
short-term borrowings 14,599 31,075
Dividends paid on common
and preferred stock (789) (648)
Sale of treasury stock 0 6
Net cash provided by financing 3,864 36,335
activities
Increase (decrease) in cash and
cash equivalents (2,312) (919)
Cash and equivalents, beginning 11,770 9,309
Cash and equivalents, ending 9,458 8,390
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
($000s)
BELMONT BANCORP.
<CAPTION>
Year Ended December 31, 1994 and
Nine Months Ended September 30, 1995
Unrealized
Stock Loss on
Retained Earnings Dividend Securities
Preferred Common Unappro- Appro- to be Treasury Available
Stock Stock Surplus priated priated Distributed Stock for Sale
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1993 1,000 2,749 3,647 11,122 850 0 (13) 0
Effect of adopting 6
SFAS 115
10% Common stock
dividend at fair
market value 274 1,413 (1,687)
25% Common stock
dividend at par value 754 (754)
1994 Net income 3,234
Cash dividends
declared:
Preferred stock (80)
Common stock
($0.3780 per share) (799)
Cash paid in
lieu-stock
dividends (10)
Change in unrealized
loss-securities
available for sale (1,498)
Sale of treasury
stock 1 5
Balance,
December 31, 1994 1,000 3,777 5,061 11,026 850 (8) (1,492)
100% Common stock
dividend
distributed at
par value (3,775) 3,775
1995 Net income 3,324
Cash dividends
declared:
Preferred stock (60)
Common stock (729)
($0.215 per share)
Change in
unrealized loss-
Securities
available-for- 1,281
sale
Sale of treasury
stock
Change in par value (2,720) 6,495 (3,775)
Balance,
September 30
1995 1,000 1,057 7,781 13,561 850 0 (8) (211)
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The foregoing financial statements are unaudited,
however, in the opinion of Management, all adjustments
necessary for a fair presentation of the financial
statements have been included. A summary of the
Corporation's significant accounting policies is set forth
in Note 1 to the Consolidated Financial Statements in the
Corporation's Annual Report on Form 10-KSB for 1994.
Related party transactions - The Corporation's and it
Subsidiaries' directors and officers and their associates
were customers of, and had other transactions with, the
subsidiary bank in the ordinary course of business during
1995. All loans and commitments included in such
transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons
and did not involve more than the normal risk of
collectibility.
Per share data has been restated in previous periods
for a 25% common stock dividend paid in July 1994 and a 100%
common stock dividend paid in May 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The net income of Belmont Bancorp. for the third quarter
of 1995 increased 8.9% to $1,220,000, compared to $1,135,000
in the third quarter of 1994. Earnings per common share
increased to $0.57 in the third quarter of 1995, compared to
$0.53 in the third quarter of 1994.
For the nine months ended September 30, 1995, net
income increased 29.6% to $3,324,000, compared to $2,568,000
for the first nine months of 1994. Earnings per common
share were $1.54 for the first nine months of 1995, compared
to $1.19 for the corresponding period last year, an increase
of 29.4%.
Operating earnings increased to $4,253,000 for the nine
months ended September 30, 1995, up 29.6% from $3,283,000
for the same period last year. For the third quarter of
1995, operating earnings were $1,587,000, up 8.9% from
$1,457,000 during the year ago quarter.
<TABLE>
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1995 and 1994.
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
($000s) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Return on
average assets 1.55% 1.52% 1.43% 1.21%
Return on
shareholders' equity 20.78% 22.50% 19.92% 17.38%
Return on average
common equity 21.34% 23.25% 20.48% 17.88%
Average assets $314,108 $298,451 $310,811 $283,716
Average shareholders'
equity $23,489 $20,179 $22,249 $19,698
</TABLE>
Average assets increased $27.1 million during the nine
months ended September 30, 1995 compared to the same period
during 1994. Average shareholders' equity increased $2.6
million for the same period.
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Tables 1 and 3, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the nine months and three
months ended September 30, 1995, 1994, and 1993. The tables
contain net interest income, net interest margin and net
interest rate spread for each period. All three of these
measures are reported on a taxable equivalent basis.
The taxable equivalent yield on interest earning assets
increased from 7.40% during the first nine months of 1994 to
8.32% in 1995, an increase of 92 basis points. (A basis
point (bp) is equivalent to .01%.) The cost of interest
bearing liabilities increased 67 basis points from 3.51%
during the first half of 1994 to 4.18% in 1995. The net
interest margin (net interest income divided by interest
earning assets) improved from 4.25% to 4.58% during the
comparative year-to-date periods.
The taxable equivalent yield on interest earning assets
increased from 7.70% during the third quarter of 1994 to
8.27% in 1995, an increase of 57 basis points. The cost of
interest bearing liabilities rose 54 basis points from 3.67%
during the third quarter of 1994 to 4.21% in 1995. The net
interest margin increased from 4.40% to 4.53% during the
comparative quarters.
Tables 2 and 4, Analysis of Net Interest Income
Changes, separates the dollar change in the Corporation's
net interest income into three components: changes caused
by (1) an increase or decrease in the average asset and
liability balances outstanding (volume); (2) the changes in
average yields on interest earning assets and average rates
for interest bearing liabilities (yield/rate); and (3)
combined volume and yield/rate effects (mix).
<TABLE>
TABLE 1. -
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
<CAPTION>
Nine Months Ended September 30,
1995 1994 1993
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/ Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning
assets
Loans and leases $151,005 $10,668 9.45% $132,316 $ 8,551 8.64% $118,607 $ 8,063 9.09%
Securities
Taxable 114,616 5,926 6.91% 110,310 4,761 5.77% 112,684 4,023 4.77%
Exempt from
income tax 25,757 1,554 8.07% 22,750 1,392 8.18% 12,283 856 9.32%
Trading account
assets 0 0 0.00% 184 1 0.73% 544 25 6.14%
Federal funds
sold 1,054 46 5.84% 166 3 2.42% 4,702 106 3.01%
Interest
bearing deposits 0 0 0.00% 0 0 0.00% 101 2 2.65%
Total interest
earning assets 292,432 18,194 8.32% 265,726 14,708 7.40% 248,921 13,075 7.02%
Cash and due
from banks 8,424 8,153 7,611
Other assets 12,926 11,906 11,533
Valuation
allowance-
available for
sale securities (955) (642)
Allowance for
possible loan loss (2,016) (1,427) (1,261)
Total assets 310,811 283,716 266,804
Liabilities
Interest bearing
liabilities
Interest
checking 25,570 450 2.35% 27,014 435 2.15% 31,001 578 2.49%
Savings 79,067 1,771 2.99% 98,573 2,198 2.98% 81,940 2,025 3.30%
Other time
deposits 123,089 4,570 4.96% 94,954 3,093 4.36% 110,872 3,957 4.77%
Short term
borrowings 33,840 1,393 5.50% 17,574 531 4.04% 3,546 67 2.53%
Total interest
bearing liabilities 261,566 8,184 4.18% 238,115 6,257 3.51% 227,359 6,627 3.90%
Demand deposits 25,377 24,390 20,351
Other liabilities 1,619 1,513 1,281
Total liabilities 288,562 264,018 248,991
Shareholders'
equity 22,249 19,698 17,813
Liabilities &
shareholders'
equity 310,811 283,716 266,804
Net interest
income margin
on a taxable
equivalent basis 10,010 4.58% 8,451 4.25% 6,448 3.46%
Net interest
rate spread 4.14% 3.89% 3.13%
Interest bearing
liabilities
to interest
earning assets 89.45% 89.61% 91.34%
</TABLE>
<TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
<CAPTION>
Nine Months Ended September 30,
1995 Compared to 1994 1994 Compared to 1993
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease)
in Interest Income
Loans and Leases $1,208 $ 797 $113 $2,188 $932 ($398) ($46) $488
Securities
Taxable 186 942 37 1,165 (85) 840 (18) 737
Exempt from
Income Taxes 184 (19) (3) 162 729 (104) (89) 536
Trading Account
Assets (1) (1) 0 (2) (17) (22) 15 (24)
Federal Funds Sold 16 4 23 43 (102) (21) 20 (103)
Interest Bearing
Deposits 0 0 0 0 (2) (2) 2 (2)
Total Interest
Income Change 1,593 1,723 170 3,486 1,455 293 (116) 1,632
Increase (Decrease)
in Interest Expense
Interest Checking (23) 40 (2) 15 (74) (79) 10 (143)
Savings (435) 10 (2) (427) 411 (198) (40) 173
Other Time Deposits 916 432 129 1,477 (568) (345) 49 (864)
Short Term
Borrowings 491 192 180 863 265 40 159 464
Total Interest
Expense Change 949 674 305 1,928 34 (582) 178 (370)
Increase (Decrease)
in Net Interest
Income on a Taxable
Equivalent Basis $ 644 $1,049 ($135) $1,558 $1,421 $875 ($294) $2,002
(Increase) Decrease
in Taxable Equivalent
Adjustment (72) (193)
Net Interest
Income Change $1,486 $1,809
</TABLE>
<TABLE>
TABLE 3. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET
INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
<CAPTION>
Three Months Ended September 30,
1995 1994 1993
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/ Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest
earning assets
Loans and
Leases $155,384 $ 3,682 9.40% $135,934 $ 3,016 8.80% $122,486 $ 2,740 8.88%
Securities
Taxable 111,329 1,914 6.82% 118,511 1,837 6.15% 112,457 1,335 4.71%
Exempt from
income tax 27,588 550 7.91% 26,138 593 9.00% 12,004 302 9.98%
Trading
account assets 0 0 0.00% 0 0 0.00% 945 22 9.24%
Federal funds
sold 1,158 16 5.48% 5 0 0.00% 5,345 41 3.04%
Interest
bearing deposits 0 0 0.00% 0 0 0.00% 101 1 3.93%
Total interest
earning assets 295,459 6,162 8.27% 280,588 5,446 7.70% 253,338 4,441 6.95%
Cash and due
from banks 8,575 8,139 7,881
Other assets 12,808 11,950 11,673
Valuation
allowance-
available for
sale securities (416) (911) 0
Allowance for
possible
loan loss (2,318) (1,315) (1,328)
Total assets 314,108 298,451 271,564
Liabilities
Interest
bearing
liabilities
Interest
checking 25,618 153 2.37% 26,363 146 2.20% 31,117 184 2.35%
Savings 79,033 598 3.00% 94,612 709 2.97% 91,457 737 3.20%
Other time
deposits 115,916 1,452 4.97% 101,732 1,144 4.46% 103,671 1,208 4.62%
Short term
borrowings 42,522 587 5.48% 29,235 332 4.51% 3,886 23 2.35%
Total interest
bearing liabilities 263,089 2,790 4.21% 251,942 2,331 3.67% 230,131 2,152 3.71%
Demand deposits 26,082 24,737 22,138
Other
liabilities 1,448 1,593 1,293
Total
liabilities 290,619 278,272 253,562
Shareholders'
equity 23,489 20,179 18,002
Liabilities
& Shareholders'
equity 314,108 298,451 271,564
Net interest
income Margin on
a taxable
equivalent basis 3,372 4.53% 3,115 4.40% 2,289 3.58%
Net interest
rate spread 4.07% 4.03% 3.24%
Interest bearing
liabilities
to interest
earning assets 89.04% 89.79% 90.84%
</TABLE>
<TABLE>
TABLE 4. -
ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis)
($000's)
<CAPTION>
Three Months Ended September 30,
1995 Compared to 1994 1994 Compared to 1993
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in
Interest Income
Loans and Leases $ 432 $ 205 $ 29 $ 666 $ 301 ($22) ($2) $ 277
Securities
Taxable (111) 200 (12) 77 72 408 22 502
Exempt from
Income Taxes 33 (72) (4) (43) 356 (30) (35) 291
Trading Account
Assets 0 0 0 0 (22) (22) 22 (22)
Federal Funds
Sold 0 0 16 16 (41) (41) 41 (41)
Interest Bearing
Deposits 0 0 0 0 (1) (1) 0 (2)
Total Interest
Income Change 354 333 29 716 665 292 48 1,005
Increase
(Decrease) in
Interest Expense
Interest
Checking (4) 11 0 7 (28) (12) 2 (38)
Savings (117) 7 (1) (111) 25 (52) (2) (29)
Other Time
Deposits 160 130 18 308 (23) (42) 2 (63)
Short Term
Borrowings 151 72 33 256 150 21 138 309
Total Interest
Expense Change 190 220 50 460 124 (85) 140 179
Increase
(Decrease) in Net
Interest
Income on a
Taxable Equivalent
Basis $ 164 $ 113 ($21) $ 256 $ 541 $377 ($92) $826
(Increase)
Decrease in
Taxable Equivalent
Adjustment (11) (81)
Net Interest
Income Change $245 $745
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 9.9%, or $100,000, and totaled $1,113,000
for the first nine months of 1995, compared to $1,013,000
for the respective period last year. Changes in various
categories of other income are depicted in the table below.
<TABLE>
<CAPTION>
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
($000s) 1995 1994 %Change 1995 1994 % Change
<S> <C> <C> <C> <C> <C> <C>
Trust fees 54 77 -29.9% $ 350 $ 287 22.0%
Service charges
on deposits 135 136 -0.7% 409 394 3.8%
Other income 128 109 17.4% 354 332 6.6%
Subtotal 317 322 -1.6% 1,113 1,013 9.9%
Security gains
(losses) (23) (3) -666.7% (22) (8) -175.0%
Trading gains
(losses) 0 0 0.0% 0 1 -100.0%
Gains (losses)
securities
available
for Sale 41 1 4000.0% 204 17 1100.0%
sale
Total $335 $320 4.7% $1,295 $1,023 26.6%
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated market values of securities held to
maturity at September 30, 1995 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
U.S. Treasury securities and
obligations of
U.S. Government
Corporations and Agencies $ 3,248 $35 $ 139 $ 3,144
Obligations of states and
Political Subdivisions 23,081 284 329 23,036
Mortgage-backed securities 45,696 158 626 45,228
Mortgage derivatives 11,906 35 201 11,740
Total $83,931 $512 $1,295 $ 83,148
Included above in U.S. Government corporations and agencies is a
structured note with a book value of $2,270,000 and a market value of
$2,131,000 which matures in the year 2000. The amortized cost and estimated
market values of securities available for sale at September 30, 1995 are as
follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
U.S. Treasury securities
and obligations of
U.S. Government
Corporations and Agencies $ 9,583 $ 31 $ 4 $ 9,610
Obligations of states and
political subdivisions 6,417 1 99 6,319
Mortgage-backed securities 38,265 151 340 38,076
Mortgage derivatives 2,327 2 61 2,268
Marketable equity securities 2,183 2,183
Total $58,775 $185 $504 $58,456
Included above in U.S. Government corporations and agencies is a
structured note with a book value of $952,000 and a market value of $948,000.
The mortgage derivatives are comprised solely of collateralized
mortgage obligations. Market factors and prepayment speeds can have
an impact on the yield and average lives of mortgage-backed securities
including mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically,
when comparing the Corporation to various peer groups, the
overhead costs of the Corporation have been significantly
lower than peer. The following table shows the dollar
amounts and growth in various components of operating
expenses.
Three Months Ended Nine Months Ended
September 30, September 30,
($000s) 1995 1994 %Change 1995 1994 %Change
Salaries and
Wages $ 552 $ 564 -2.1% $1,665 $1,556 7.0%
Employee 149 146 2.1% 541 457 18.4%
benefits
Net occupancy 140 136 2.9% 414 410 1.0%
expense
Equipment 186 149 24.8% 563 444 26.8%
expense
Other operating 667 704 -5.3% 2,208 2,203 0.2%
expenses
Total $1,694 $1,699 -0.3% $5,391 $5,070 6.3%
Equipment expense increased 26.8% during the first nine
months of 1995 compared to last year. This resulted from
the purchase of automated platform and network equipment
installed during the first quarter of 1995. Management
believes the implementation of these systems will improve
operating efficiencies throughout the organization and will
enhance the marketing capabilities of customer service
personnel. The data processing operations of the Bank were
also brought "in house" resulting in higher equipment
expense which has been more than offset by reductions in
data processing expense previously included in other
operating expense.
The Bank also received a refund of $113,000 from the
Bank Insurance Fund for FDIC premiums previously paid during
1995 which reduced other operating expense during the third
quarter of 1995. In addition, the Bank looks forward to
ongoing savings on FDIC premiums since the premium rates
have been reduced from $0.21 per $100 in deposits to $.04
per $100 in deposits.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of
Income. Actual losses on loans and leases are charged
against the allowance built up on the Consolidated Balance
Sheet through the allowance for possible loan losses. The
amount of loans and leases actually removed as assets from
the Consolidated Balance Sheets is referred to as charge-
offs and, after netting out recoveries previously charged-
off assets, becomes net charge-offs.
For the nine months of 1995, $900,000 was added to the
allowance and charged to expense compared to $605,000 in
1994. At September 30, 1995, the allowance for possible
loan losses to total loans and leases was 1.56% compared to
.96% last year. The ratio of the Allowance for Possible
Loan Losses to underperforming assets increased to 338.0% at
September 30, 1995. The following table details the
Allowance for Possible Loan Losses and also includes various
loan charge off statistics for 1995 and 1994.
Three Months Ended Nine Months Ended
September 30, September 30,
($000s) 1995 1994 1995 1994
Balance,
beginning of period $ 2,228 $ 1,352 $ 1,537 $ 1,617
Provision for possible
loan losses 200 85 900 605
Loans charged-off 14 95 35 909
Recoveries on loans
previously charged-off 50 1 62 30
Net charge offs (36) 94 (27) 879
Balance, end of period $ 2,464 $ 1,343 $ 2,464 $ 1,343
Loans and leases
outstanding at period $157,975 $139,298
Average loans and leases $155,384 $135,934 $151,005 $132,316
Annualized net charge offs
as a percent of:
Average loans and leases -0.09% 0.28% -0.02% 0.89%
Total loans at
end of period -0.02% 0.84%
Reserve for possible
loan losses -5.84% 28.00% -1.46% 87.27%
Reserve for possible loan
losses to:
Average loans and leases 1.59% 0.99% 1.63% 1.01%
Total loans at end of
period 1.56% 0.96%
Under-performing assets 338.00% 112.86%
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at September 30 follows:
Under-performing assets September 30,
($000s) 1995 1994
Non-accrual loans and
leases $133 $1,023
Ninety days past due loans
and leases still accruing
interest 17 141
Other real estate owned 579 26
Total $729 $1,190
Restructured loans and
leases included in above
totals $0 $0
Restructured loans and
leases in compliance
with modifed terms 107 107
Asset quality has improved since the year ago period.
Total under-performing assets declined from $1.2 million at
September 30, 1994 to $0.7 million at September 30, 1995.
CAPITAL RESOURCES
At September 30, 1995, shareholders' equity was
$24,030,000 compared to $20,214,000 at December 31, 1994 and
$20,570,000 at September 30, 1994. The following table
presents various capital ratios as of September 30:
September 30, 1995 1994
Average shareholder's
equity to :
Average assets 7.2% 6.9%
Average deposits 8.8% 7.5%
Average loans
and leases 14.7% 14.9%
Primary capital 8.2% 7.2%
Risk-based capital
ratio:
Tier 1 12.6% 12.6%
Total 14.0% 13.5%
Leverage ratio 7.1% 6.3%
The Federal Reserve Board's capital adequacy guidelines
require a minimum primary capital ratio of 5.5%. At
September 30, 1995, the Corporation's primary capital
(shareholders' equity plus the allowance for possible loan
loans) was $26,494,000 or 8.2% of total assets.
The Federal Reserve Board has adopted risk-based
capital guidelines that assign risk weightings to assets and
off-balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% or risk-weighted assets and total capital of 8.0% or
risk-weighted assets. Tier 1 capital consists principally
of shareholders' equity less goodwill, while total capital
consists of core capital, certain debt instruments and a
portion of the reserve for possible loan losses. At
September 30, 1995, the Corporation had a Tier 1 capital
ratio of 12.6% and a total capital ratio of 14.0%, well
above regulatory minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total
assets, referred to as a total assets leverage ratio. At
September 30, 1995, the Corporation's leverage ratio was
7.1%.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security
shareholders
None
Item 5. Other information
None
Item 6. Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Belmont Bancorp.
(Registrant)
October 21, 1995 s/ J. Vincent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 9458
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 58456
<INVESTMENTS-CARRYING> 83931
<INVESTMENTS-MARKET> 83148
<LOANS> 157975
<ALLOWANCE> 2464
<TOTAL-ASSETS> 321386
<DEPOSITS> 245977
<SHORT-TERM> 50097
<LIABILITIES-OTHER> 1282
<LONG-TERM> 0
<COMMON> 1057
0
1000
<OTHER-SE> 21973
<TOTAL-LIABILITIES-AND-EQUITY> 321386
<INTEREST-LOAN> 3645
<INTEREST-INVEST> 2310
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5955
<INTEREST-DEPOSIT> 2203
<INTEREST-EXPENSE> 2791
<INTEREST-INCOME-NET> 3164
<LOAN-LOSSES> 200
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 1694
<INCOME-PRETAX> 1605
<INCOME-PRE-EXTRAORDINARY> 1605
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1220
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 4.53
<LOANS-NON> 133
<LOANS-PAST> 17
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 584
<ALLOWANCE-OPEN> 2228
<CHARGE-OFFS> 14
<RECOVERIES> 50
<ALLOWANCE-CLOSE> 2464
<ALLOWANCE-DOMESTIC> 2464
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2083
</TABLE>
