U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended March 31, 1996
[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 April 30, 1996
FORM 10-Q
BELMONT BANCORP.
Quarter Ending March 31, 1996
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - March 31, 1996,
December 31, 1995, and March 31, 1995
Consolidated Statements of Income-Three Months
Ended March 31, 1996 and March 31, 1995
Consolidated Statements of Cash Flows-Three Months
Ended March 31, 1996 and March 31, 1995
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended March 31, 1996 and Year Ended
December 31, 1995
Notes to the Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - Other Information
Legal Proceedings
Changes in Securities
Defaults upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Signature page
<TABLE>
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
<CAPTION>
March 31 1996 1995 %
Change
<S> <C> <C> <C>
Earnings and dividends ($000's)
Net income $ 1,409 $ 1,006 40.1
Operating earnings (1) 1,728 1,242 39.1
Cash dividends declared on common stock 275 222 23.9
Per common share (2):
Net income $0.66 $0.47 40.4
Cash dividends declared 0.130 0.105 23.8
Book value 11.66 9.86 18.2
Market price :
High 27.50 18.00 52.8
Low 25.00 15.00 66.7
At quarter-end ($000's)
Assets $323,141 $309,532 4.4
Loans and leases 167,563 146,908 14.1
Deposits 260,558 258,774 0.7
Stockholders' equity 25,664 21,860 17.4
Key Ratios
Return on average assets 1.74% 1.28% 36.1
Return on average common shareholders' 22.35% 19.87% 12.5
equity
Net interest margin (TE) 4.66% 4.58% 0.7
Number of shares (2) 2,114,644 2,114,634 0.0
Number of full time equivalent 112.5 112.0 0.4
employees
Total assets per FTE employee $2,872 $ 2,764 3.9
</TABLE)
(1) Operating earnings are defined as
earnings before income taxes minus
securities and trading gains or plus
securities and trading losses.
(2) Per common share amounts have been
restated for the effect of a 100% common
stock dividend paid May 8, 1995.
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The following consolidated financial statements and related
notes of Belmont Bancorp. and subsidiaries were prepared by
management which has the primary responsibility for the integrity
of the financial information. The statements are prepared in
conformity with generally accepted accounting principles
appropriate in the circumstances, and include amounts that are
based on management's best estimates and judgments. Financial
information elsewhere in the quarterly report is prepared on a
basis consistent with that in the financial statements.
In meeting its responsibility for the accuracy of the
financial statements, management relies on the Corporation's
comprehensive system of internal accounting controls. This system
provides reasonable assurance that assets are safeguarded and
transactions are recorded to permit the preparation of appropriate
financial information. The system of internal controls is
characterized by an effective control oriented environment within
the Corporation which is augmented by written policies and
procedures, internal audits and the careful selection and training
of qualified personnel.
The functioning of the accounting system and related internal
accounting controls is under the general oversight of the Audit
Committee of the Board of Directors which is comprised of five
outside directors. The accounting system and related controls are
reviewed by a program of internal audits and by the Corporations'
independent accountants. The Audit Committee meets regularly with
the conttact 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>
<TABLE>
Consolidated Condensed Balance Sheet
(Unaudited) ($000s except per share amounts)
<CAPTION>
March December March
31, 31, 31
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 9,283 $ 10,175 $ 7,885
Federal funds sold - - -
Securities available for sale at market value
111,827 112,109 53,088
Securities in trading account - - -
Securities held to maturity (1) 22,912 23,726 90,104
Loans 167,563 159,957 146,908
Less allowance for possible loan losses 2,853 2,703 1,931
Net loans 164,710 157,254 144,977
Premises and equipment, net 5,290 5,090 4,894
Other real estate owned 579 579 586
Accrued income receivable 2,430 2,150 2,065
Other assets 6,110 6,196 5,933
Total Assets $323,141 $317,279 $309,532
LIABILITIES
Non-interest bearing deposits
Demand $ 25,309 $ 26,494 $ 24,420
Interest-bearing deposits:
Demand 41,468 27,193 24,861
Savings 79,379 78,883 77,627
Time 114,402 114,280 131,866
Total deposits 260,558 246,850 258,774
Short-term borrowings 20,432 38,665 27,386
Long-term debt 14,772 4,802 -
Accrued interest on deposits and other
borrowings 706 661 771
Other liabilities 1,009 1,137 741
Total liabilities $297,477 $292,115 $287,672
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 1996
and at December 31,1995; $3.57 par value,
1,750,000 shares authorized, 1,057,738
issued March 31,1995 1,057 1,057 529
Surplus 7,781 7,781 7,781
Treasury stock (832 shares in 1996 and 1995) (8) (8) (8)
Retained earnings:
Unappropriated 15,262 14,148 11,790
Appropriated for contingencies 850 850 850
Stock dividend to be distributed - - 529
Net unrealized gain (loss) on securities
avail.for sale (278) 336 (611)
Total shareholders' equity $ 25,664 $ 25,164 $ 21,860
Total liabilities and shareholders' equity $323,141 $317,279 $309,532
</TABLE>
(1) Market value, March 31, 1996, $22,789;
December 31, 1995, $23,758; March 31, 1994, $87,500.
(2) Per share data has been restated for a 100%
common stock dividend paid in May 1995.
(3) Performance ratios are presented on an annualized basis.
Net interest margins are presented on a fully taxable equivalent basis.
<TABLE>
<CAPTION>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
Three Months Ended March 31,
1996 1995
<S> <C> <C>
INTEREST INCOME
Loans and lease financing
Taxable $ 3,669 $ 3,368
Tax-exempt 78 58
Investment securities:
Taxable 2,039 2,071
Tax-exempt 321 355
Dividends 37 29
Interest on trading securities - -
Interest on fed funds sold 6 17
Total interest income 6,150 5,898
INTEREST EXPENSE
Deposits 2,282 2,249
Borrowings 567 497
Total interest expense 2,849 2,746
Net interest income 3,301 3,152
Provision for possible loan losses 150 400
Net interest income after
provision for possible loan losses 3,151 2,752
NON-INTEREST INCOME
Trust fees 160 183
Service charges on deposits 156 131
Other operating income 154 116
Investment securities gains (losses) (1) 1
Trading profits (losses) - -
Gains (losses) on securities 230 126
available for sale
Total non-interest income 699 557
NON-INTEREST EXPENSE
Salary and employee benefits 826 805
Net occupancy expense of premises 170 147
Equipment expenses 182 177
Other operating expenses 715 811
Total non-interest expense 1,893 1,940
Income before income taxes 1,957 1,369
INCOME TAXES 548 363
Net income $ 1,409 $ 1,006
PER COMMON SHARE DATA (2)
Net income per share $ 0.66 $ 0.47
Cash dividend per share $ 0.130 $ 0.105
Book value per share $ 11.66 $ 9.86
Weighted average shares 2,114,644 2,114,634
outstanding
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) ($ expressed in 000s)
BELMONT BANCORP.
<CAPTION>
Year Ended December 31,1995 and
Three Months Ended March 31, 1996
Unrealized
Loss On
Retained Earnings Securities
Preferred Common Unappro- Appro- Treas. Available-
Stock Stock Surplus priated priated Stock for-Sale
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,000 3,777 5,061 11,026 850 (8) (1,492)
Transfer to surplus resulting
from change in par value
of common stock (3,248) 3,248
2 for 1 stock split 528 (528)
1995 Net income 4,206
Cash dividends declared:
Preferred stock (80)
Common stock ($475 per (1,004)
share)
Change in unrealized loss- 1,828
securities available for sale
Balance, December 31, 1995 1,000 1,057 7,781 14,148 850 (8) 336
Year to date 1995 Net 1,409
income
Cash dividends declared:
Preferred stock (20)
Common stock ($.13 per (275)
share)
Change in unrealized loss- (614)
Securities available-for-
sale
Balance, March 31, 1996 1,000 1,057 7,781 15,262 850 (8) (278)
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1996
(Unaudited)
BELMONT BANCORP.
<CAPTION>
1996 1995
<S> <C> <C>
Operating Activities
Net income $ 1,409 $ 1,006
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Provision for possible loan losses 150 400
Depreciation and amortization expense 155 149
Amortization of investment security
premiums 301 242
Accretion of investment security discounts and
interest recorded on zero-coupon securities (50) (127)
Investment securities (gains) losses 1 (128)
(Gains) losses on securities available for sale (230) 27,113
Purchase of securities for trading account - (31,555)
Loss (gain) on sale of fixed assets - 4
Gain on sale of loans - (10)
(Increase) decrease in interest receivable (280) 68
Increase (decrease) in interest payable 45 181
Others, net 273 290
Net cash provided (used) by operating activities 1,774 (2,367)
Investing Activities
Proceeds from sales of investment securities - 981
Proceeds on sale of securities available for sale 42,197 -
Proceeds from maturities and calls of investment 1,065 -
securities
Purchases of investment securities - (762)
Purchase of securities available for sale (48,463) -
Principal collected on mortgage-backed
securities 5,345 3,973
Net (increase) decrease in loans and
leases, net of charge offs (10,037) (1,459)
Proceeds on sale of loans 2,427 1,740
Loans purchased - (94)
Recoveries on loans previously charged off 4 6
Purchases of premises and equipment (355) (404)
Proceeds on sale of fixed assets - 4
Net cash provided (used) by investing activities (7,817) 3,985
Financing Activities
Net increase (decrease) in deposits 13,708 2,851
Net increase (decrease) in short-term borrowings (18,233) (8,112)
Proceeds on long-term debt 10,000 10
Payments on long-term debt (30) -
Dividends paid on common and preferred stock (294) (242)
Net cash provided (used) by financing activities 5,151 (5,493)
Increase (Decrease) in Cash and Cash Equivalents (892) (3,875)
Cash and Equivalents at Beginning of Year 10,175 11,770
Cash and Equivalents at March 31 $ 9,283 $ 7,895
</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-K for 1995.
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 1996. 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.
All references in the accompanying financial statements to
the number of common shares and per share amounts have been
restated to reflect the stock dividend paid in May 1995 to
shareholders of record May 1, 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 three months ended
March 31, 1996 increased 40.1% to $1,409,000, compared to
$1,006,000 for the first three months of 1995. Earnings per
common share were $0.66 for the first three months of 1996,
compared to $0.47 for the corresponding period last year, an
increase of 40.4%. Operating earnings increased to $1,728,000 for
the three months of 1996, up 39.1% from $1,242,000 for the same
period last year.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1996 and 1995.
<TABLE>
<CAPTION> March 31,
($000s) 1996 1995
<S> <C> <C>
Return on average assets 1.74% 1.28%
Return on shareholders'
equity 21.80% 19.30%
Return on average common
equity 22.35% 19.87%
Average assets $322,997 $313,890
Average shareholders'
equity $ 25,859 $ 20,854
</TABLE>
Average assets increased $9.1 million from $313.9 million to
$323.0 million from March 31, 1995 to March 31, 1996. Average
shareholders' equity increased $5.0 million primarily through the
retention of earnings.
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.
Table 1, 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 three months ended March 31, 1996, 1995 and
1994. The table contains 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 8.34% during the first quarter of 1995 to 8.47% in
1996, an increase of 13 basis points. (A basis point (bp) is
equivalent to .01%.) The cost of interest bearing liabilities
rose 11 basis points from 4.18% during the first quarter of 1995
to 4.29% in 1996. The net interest margin increased from 4.58% to
4.66% during the comparative quarters.
Table 2, 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)
Three Months Ended March 31,
1996 1995 1994
Average Average Average Average Average Average
Out- Revenue Yield/ Out- Revenue/ Yield/ out- Revenue Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets
Loans and leases $161,434 $3,783 9.50% $147,013 $3,453 9.53% $127,892 $2,682 8.50%
Securities
Taxable 117,365 2,074 7.17% 122,429 2,099 6.95% 107,404 1,355 5.12%
Exempt from income tax 23,867 467 7.94% 25,177 516 8.31% 16,636 329 8.02%
Trading account assets 0 0 0.00% 0 0 0.00% 0 0 0.00%
Federal funds sold 469 6 5.19% 1,191 17 5.79% 468 3 2.60%
Interest bearing deposits 0 0 0.00% 0 0 0.00% 0 0 0.00%
Total interest earning assets 303,135 6,330 8.47% 295,810 6,085 8.34% 252,400 4,369 7.02%
Cash and due from banks 8,664 8,472 8,168
Other assets 13,311 13,165 11,736
Valuation allowance-available for
sale securities 627 (1,869) (10)
Allowance for possible loan loss (2,740) (1,688) (1,503)
Total assets 322,997 313,890 270,791
Liabilities
Interest bearing liabilities
Interest checking 33,229 242 2.95% 25,070 144 2.33% 27,274 142 2.11%
Savings 78,320 588 3.04% 80,203 590 2.98% 101,197 750 3.01%
Other time deposits 114,449 1,452 5.15% 125,391 1,515 4.90% 89,186 933 4.24%
Other Borrowings 43,244 567 5.32% 35,507 497 5.68% 8,537 62 2.95%
Total interest bearing liabilities 269,242 2,849 4.29% 266,171 2,746 4.18% 226,194 1,887 3.38%
Demand deposits 25,820 25,274 23,508
Other liabilities 2,077 1,591 1,546
Total liabilities 297,139 293,036 251,248
Shareholders' equity 25,858 20,854 19,543
Liabilities & shareholders'
equity 322,997 313,890 270,791
Net interest income
Margin on a taxable equivalent
basis 3,481 4.66% 3,339 4.58% 2,482 3.99%
Net interest rate spread 4.18% 4.16% 3.64%
Interest bearing liabilities
to interest earning assets 88.82% 89.98% 89.62%
</TABLE>
<TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
<CAPTION> Three Months Ended March 31, 1995
1996 1995
Compared Compared
to 1995 to 1994
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 $339 ($ 8) $ 0 $ 331 $ 401 $322 $ 48 $ 771
Securities:
Taxable (87) 64 (3) (26) 190 486 68 744
Exempt from Income Taxes (27) (23) 1 (49) 169 12 6 187
Trading Account Assets 0 0 0 0 0 0 0 0
Federal Funds Sold (10) (2) 1 (11) 5 4 6 15
Interest Bearing Deposits 0 0 0 0 (1) (1) 1 (1)
Total Interest Income Change 215 31 (1) 245 764 823 129 1,716
Increase (Decrease) in Interest
Expense:
Interest Checking 47 39 12 98 (11) 15 (2) 2
Savings (14) 12 0 (2) (156) (6) 1 (161)
Other Time Deposits (132) 76 (7) (63) 379 145 59 583
Short Term Borrowings 108 (31) (7) 70 196 57 182 435
Total Interest Expense Change 9 96 (2) 103 408 211 240 859
Increase (Decrease) in Net Interest
Income on a Taxable Equivalent Basis $206 ($ 65) $ 1 $ 142 $ 356 $612 ($ 111) $ 857
(Increase) Decrease in Taxable
Equivalent
Adjustment 7 (68)
Net Interest Income Change $ 149 $ 789
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 9.3%, or $40,000, and totaled $470,000 for the
first three months of 1996, compared to $430,000 for the
respective period last year. Changes in various categories of
other income are depicted in the table below.
<TABLE>
<CAPTION>
Three months ended March 31,
($000s) 1996 1995 % Change
<S> <C> <C> <C>
Trust fees $160 $183 -12.6%
Service charges on deposits 156 131 19.1%
Gain on sale of loans 16 10 60.0%
Other income 138 106 30.2%
Subtotal 470 430 9.3%
Security gains (losses) (1) 1 -200.0%
Gains (losses) securities
available for sale 230 126 82.5%
Total $699 $557 25.5%
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated market values of securities
held to maturity at March 31, 1996 are as follows:
<TABLE>
Held to Maturity:
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
($000s)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government corporations and $ 2,267 $ 0 $111 $ 2,156
agencies
Obligations of states and political 4,982 91 129 4,944
subdivisions
Mortgage-backed securities 15,663 142 116 15,689
Total $22,912 $233 $356 $22,789
</TABLE>
Obligations of U.S. Government corporations and agencies
consist of one floating rate structured note.
The amortized cost and estimated market values of securities
available for sale at March 31, 1996 are as follows:
<TABLE>
<CAPTION>
Available for Sale:
Gross Gross
Unreal- Unreal- Estimated
Amortized ized ized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government corporations and
agencies $ 13,468 $ 0 $ 209 $ 13,259
Obligations of states and political
subdivisions 15,786 50 328 15,508
Mortgage-backed securities 50,070 550 307 50,313
Mortgage derivatives 30,428 256 433 30,251
Marketable equity securities 2,496 - - 2,496
Total $112,248 $856 $1,277 $111,827
</TABLE>
Obligations of U.S. Government corporations and agencies
include a structured note with a book value of $1,730,000 and an
estimated market value of $1,676,000.
The mortgage derivatives are comprised solely of
collateralized mortgage obligations (CMOs) including one principal
only CMO issued by FNMA with a book value of $267,000 and an
estimated market value of $215,000. Privately issued CMOs
included in the table above have a book value of $14,949,000 and
an estimated market value of $15,111,000. Credit risk on
privately issued CMOs is evaluated based upon independent rating
agencies and on the underlying collateral of the obligation. At
March 31, 1996, the Corporation held two CMOs issued by Prudential
Home Mortgage with an aggregate book value of $7,197,000 and an
estimated market value of $7,195,000 and one CMO issued by Ryland
Acceptance Corporation with a book value of $3,398,000 and an
estimated market value of $3,373,000.
Market factors and prepayment speeds can have an impact on
the yield and average lives of mortgage-backed securities
including mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically, when
comparing the Corporation to various peer groups, the overhead
costs of the Corporation have been significantly lower than peer.
The following table shows the dollar amounts and growth in various
components of operating expenses.
<TABLE>
<CAPTION>
Three months ended
March 31,
($000s) 1996 1995 % Change
<S> <C> <C> <C>
Salaries and wages $ 614 $ 559 9.8%
Employee benefits 212 246 -13.8%
Net occupancy expense 170 147 15.6%
Equipment expense 182 177 2.8%
Other operating 715 811 -11.8%
expenses
Total $1,893 $1,940 -2.4%
</TABLE>
Occupancy expense increased 15.6% during the first three
months of 1996 compared to last year. This increase is primarily
attributable to a new office that opened in Wheeling, WV in
January 1996. Employee benefits declined due to a lower accrual
for the Corporation's defined contribution profit sharing plan.
Other operating expenses declined $96,000 as a result of the
reduction in the FDIC premium rate.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on the
growth of the loan and lease portfolio and on historical loss
experience. The expense is called the provision for possible loan
losses in the Consolidated Statement of Income. Actual losses on
loans and leases are charged against the allowance built up on the
Consolidated Balance Sheet through the allowance for possible loan
losses. The amount of loans and leases actually removed as assets
from the Consolidated Balance Sheets is referred to as charge-offs
and, after netting out recoveries previously charged-off assets,
becomes net charge-offs.
For the first three months of 1996, $150,000 was added to the
allowance and charged to expense compared to $400,000 in 1995. At
March 31, 1996, the allowance for possible loan losses to total
loans and leases was 1.70% compared to 1.31% last year. The ratio
of the Allowance for Possible Loan Losses to underperforming
assets increased to 295.0% at March 31, 1996, up from 262.0% last
year. The following table details the Allowance for Possible Loan
Losses and also includes various loan charge off statistics for
1996 and 1995.
<TABLE>
Allowance for Possible Loan Losses
Three months ended March 31,
<CAPTION>
March 31,
($000s) 1996 1995
<S> <C> <C>
Balance, beginning of period $ 2,703 $ 1,537
Provision for possible loan losses 150 400
Loans charged-off 5 11
Recoveries on loans previously charged- 5 5
off
Net charge offs 0 6
Balance, end of period $ 2,853 $ 1,931
Loans and leases outstanding at period $167,563 $146,908
Average loans and leases $161,434 $147,013
Annualized net charge offs as a
percent of:
Average loans and leases 0.00% 0.02%
Total loans at end of period 0.00% 0.02%
Reserve for possible loan losses 0.00% 1.24%
Reserve for possible loan losses to:
Average loans and leases 1.77% 1.31%
Total loans at end of period 1.70% 1.31%
Under-performing assets 295.04% 262.01%
</TABLE>
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual loans,
leases and debt securities on which the ultimate collectibility of
the full amount of interest is uncertain, (2) loans and leases
past due ninety days or more as to principal or interest and (3)
other real estate owned. A summary of under-performing assets at
March 31 follows:
<TABLE>
<CAPTION>
Under-performing assets
March 31,
($000s) 1996 1995
<S> <C> <C>
Non-accrual loans and leases $206 $ 96
Ninety days past due loans and
leases still accruing interest 182 55
Other real estate owned 579 586
Total $967 $737
Restructured loans and leases
included in above totals $ 0 $ 0
Restructured loans and leases in
compliance with modified terms 104 231
</TABLE>
Loans restructured and in compliance with modified terms are
not included in total nonperforming assets.
Asset quality remained excellent at March 31, 1996. Total
under-performing assets were $967,000 or .30% of total assets at
March 31, 1996 compared to $737,000 or .24% of total assets at
March 31, 1995.
LONG TERM DEBT
Long term debt consists of advances from the Federal Home Loan
Bank as follows:
($000s) Amount Rate Maturity
Fixed rate, non-amortizing advance $1,000 7.00% 4/11/97
Fixed rate, non-amortizing advance 2,000 5.90% 6/02/98
Fixed rate, non-amortizing advance 1,000 6.15% 5/30/97
Fixed rate, non-amortizing advance 10,000 5.40% 1/02/98
Fixed rate, amortizing advance 226 5.80% 1/01/06
Fixed rate, amortizing advance 277 5.55% 1/01/99
Fixed rate, amortizing advance 269 6.95% 9/01/15
CAPITAL RESOURCES
The Corporation maintains a relatively high level of capital
as a margin of safety for its depositors and shareholders. At
March 31, 1996, shareholders' equity was $25,664,000 compared to
$25,164,000 at December 31, 1995 and $21,860,000 at March 31,
1995. The following table presents various capital ratios as of
March 31:
<TABLE>
<CAPTION>
March 31, 1996 1995
<S> <C> <C>
Average shareholder's
equity to:
Average assets 8.0% 6.6%
Average deposits 10.3% 8.1%
Average loans and 16.0% 14.2%
leases
Risk-based capital
ratio:
Tier 1 13.2% 12.8%
Total 14.7% 14.0%
Leverage ratio 7.6% 6.7%
</TABLE>
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 March 31, 1996, the Corporation had a Tier 1 capital
ratio of 13.2% and a total capital ratio of 14.7%, 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 March 31, 1996, the
Corporation's leverage ratio was 7.6%.
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
The annual meeting of Belmont Bancorp. was held April 16,
1996. The following items were submitted to a vote of the
shareholders:
Proposal Number 1: Election of Directors
The following individuals were elected to serve on the Board of
Directors Election of Directors for a three-year term expiring at
the annual shareholders' meeting in 1999:
Mary L. Holloway Haning, Special Projects Co-ordinator, Plastic
Surgery, Inc (Sept. 1995-Present); Director of Admissions,
Wheeling Country Day School (1987-June 1995)
For: 1,864,692
Against: 1,322
Charles J. Kaiser, Jr., Attorney, Partner, Phillips, Gardill,
Kaiser & Altmeyer
For: 1,863,722
Against: 1,322
Samuel A. Mumley, Executive Secretary, Ohio Valley Athletic
Conference
For: 1,856,008
Against: 1,322
Thomas Olszowy, Independent Insurance Agent, Tom Olszowy Insurance
Agency
For: 1,866,669
Against: 1,322
Charles A. Wilson, Jr., President, Wilson Funeral & Furniture Co.
For: 1,848,159
Against: 1,322
Other members of the Board of Directors are listed in the
Corporation's proxy statement dated March 15, 1996 and are is
hereby incorporated by reference.
Proposal Number 2: To ratify the appointment of S. R. Snodgrass
A.C. as independent auditors for the year ending December 31,
1996.
This proposal was approved as follows:
For 1,841,329
Against 22,131
Abstain 1,814
Proposal Number 3: To transact other such business as may come
before the meeting.
This proposal was approved as follows:
For 1,828,096
Against 29,064
Abstain 8,114
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)
April 30, 1996 s/ J. Vincent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,283
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 111,827
<INVESTMENTS-CARRYING> 22,912
<INVESTMENTS-MARKET> 22,789
<LOANS> 167,563
<ALLOWANCE> 2,853
<TOTAL-ASSETS> 323,141
<DEPOSITS> 260,558
<SHORT-TERM> 20,432
<LIABILITIES-OTHER> 1,715
<LONG-TERM> 14,772
0
1,000
<COMMON> 1,057
<OTHER-SE> 23,607
<TOTAL-LIABILITIES-AND-EQUITY> 323,141
<INTEREST-LOAN> 3,747
<INTEREST-INVEST> 2,403
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,150
<INTEREST-DEPOSIT> 2,282
<INTEREST-EXPENSE> 2,849
<INTEREST-INCOME-NET> 3,301
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 229
<EXPENSE-OTHER> 1,893
<INCOME-PRETAX> 1,957
<INCOME-PRE-EXTRAORDINARY> 1,957
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,409
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
<YIELD-ACTUAL> 4.66
<LOANS-NON> 206
<LOANS-PAST> 182
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,335
<ALLOWANCE-OPEN> 2,703
<CHARGE-OFFS> 5
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 2,853
<ALLOWANCE-DOMESTIC> 2,853
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,999
</TABLE>
