U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended June 30, 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 July 26, 1996
FORM 10-QSB
BELMONT BANCORP.
Quarter Ending June 30,1996
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - June 30, 1996,
December 31, 1995, and June 30, 1995
Consolidated Statements of Income-Three Months and
Six Months Ended June 30, 1996 and June 30, 1995
Consolidated Statements of Cash Flows-Six Months
Ended June 30, 1996 and June 30, 1995
Consolidated Statements of Changes in Shareholders' Equity
Six Months Ended June 30, 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
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
<TABLE>
<CAPTION>
June 30 1996 1995 % Change
<S> <C> <C> <C>
Earnings and dividends ($000's)
Net income $ 2,574 $ 2,104 22.3
Operating earnings (1) 3,339 2,666 25.2
Cash dividends declared on common stock 592 455 30.1
Per common share (2):
Net income $ 1.20 $ 0.98 22.4
Cash dividends declared 0.280 0.215 30.2
Book value 11.44 10.47 9.2
Market price for the quarter:
High 28.00 19.75 41.8
Low 26.00 16.00 62.5
At quarter-end ($000's)
Assets $ 352,937 $ 310,644 13.6
Loans and leases 176,857 155,199 14.0
Deposits 256,624 249,547 2.8
Stockholders' equity 25,182 23,149 8.8
Key Ratios
Return on average assets 1.55% 1.36% 13.9
Return on average common shareholders'
equity 20.39% 20.01% 1.9
Net interest margin (TE) 4.47% 4.60% (2.8)
Number of shares (2) 2,114,644 2,114,639 0.0
Number of full time equivalent employees 116.5 112.0 4.0
Total assets per FTE employee ($000) 3,030 2,774 9.2
</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 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>
<CAPTION>
Consolidated Condensed Balance Sheet
(Unaudited) ($000s except per share amounts)
June 30, December June 30,
31,
1996 1995 1995
ASSETS
<S> <C> <C> <C>
Cash and due from banks $ 9,740 $ 10,175 $ 9,732
Securities available for sale at
market value 132,074 112,109 46,589
Securities held to maturity 21,151 23,726 87,927
Loans 176,857 159,957 155,199
Less allowance for possible loan losses 2,945 2,703 2,228
Net loans 173,912 157,254 152,971
Premises and equipment, net 6,039 5,090 4,930
Other real estate owned 645 579 579
Accrued income receivable 2,527 2,150 2,110
Other assets 6,849 6,196 5,806
Total Assets $352,937 $317,279 $310,644
LIABILITIES
Non-interest bearing deposits
Demand $ 27,581 $ 26,494 $ 25,645
Interest-bearing deposits:
Demand 37,429 27,193 25,826
Savings 80,485 78,883 79,016
Time 111,129 114,280 119,060
Total deposits 256,624 246,850 249,547
Short-term borrowings 50,683 38,665 36,792
Long-term debt 17,467 4,802 -
Accrued interest on deposits and other
borrowings 709 661 713
Other liabilities 2,272 1,137 443
Total liabilities $327,755 $292,115 $287,495
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 at June 30, 1996 1,057 1,057 1,057
Surplus 7,781 7,781 7,782
Treasury stock (832 shares in 1996 and
1995) (8) (8) (8)
Retained earnings:
Unappropriated 16,090 14,148 12,635
Appropriated for contingencies 850 850 850
Net unrealized gain (loss) on
securities available for sale (1,588) 336 (167)
Total shareholders' equity $ 25,182 $ 25,164 $ 23,149
Total liabilities and
shareholders' equity $352,937 $317,279 $310,644
</TABLE>
<TABLE>
<CAPTION>
Consolidated Condensed Statement
of Income
(Unaudited) ($000s except per share amounts)
Three months Ended Six Months Ended
June 30 June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and lease
financing
Taxable $ 3,899 $ 3,424 $ 7,568 $ 6,792
Tax-exempt 83 74 161 132
Investment
securities:
Taxable 1,989 1,884 4,028 3,955
Tax-exempt 321 338 642 693
Dividends 38 30 75 59
Interest on fed funds
sold 1 13 7 30
Total interest
income 6,331 5,763 12,481 11,661
INTEREST EXPENSE
Deposits 2,331 2,339 4,613 4,588
Borrowings 727 309 1,294 806
Total interest
expense 3,058 2,648 5,907 5,394
Net interest income 3,273 3,115 6,574 6,267
Provision for
possible loan losses 105 300 255 700
Net interest income
after provision
for possible loan
losses 3,168 2,815 6,319 5,567
NON-INTEREST INCOME
Trust fees 103 113 263 296
Service charges on
deposits 159 143 315 274
Other operating
income 154 110 308 226
Investment securities
gains (losses) - - (1) 1
Gains on securities
avail.for sale 4 37 234 163
Total non-
interest income 420 403 1,119 960
NON-INTEREST EXPENSE
Salary and employee
benefits 794 700 1,620 1,505
Net occupancy expense
of premises 170 127 340 274
Equipment expenses 205 200 387 377
Other operating
expenses 804 730 1,519 1,541
Total non-
interest expense 1,973 1,757 3,866 3,697
Income before
income taxes 1,615 1,461 3,572 2,830
INCOME TAXES 450 363 998 726
Net income $ 1,165 $ 1,098 $ 2,574 $ 2,104
PER COMMON SHARE DATA
Net income per share $ 0.54 $ 0.51 $ 1.20 $ 0.98
Cash dividend per
share $ 0.1500 $ 0.1100 $ 0.280 $ 0.215
Book value per share $ 11.44 $ 10.47
Weighted average
shares outstanding 2,114,644 2,114,644 2,114,644 2,114,639
</TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30
(Unaudited)
<TABLE>
<CAPTION>
BELMONT BANCORP.
1996 1995
<S> <C> <C>
Operating Activities
Net income $ 2,574 $ 2,104
Adjustments to reconcile net income
to net cash flows provided by operating
activities:
Provision for possible loan losses 255 700
Depreciation and amortization
expense 314 299
Amortization of investment security
premiums 776 483
Accretion of investment security
discounts and
interest recorded on zero-
coupon securities (184) (185)
Investment securities (gains) losses 1 (1)
(Gains) losses on securities
available for sale (234) (163)
Loss (gain) on sale of fixed assets 1 4
Gain on sale of loans (31) (27)
(Increase) decrease in interest
receivable (377) 23
Increase (decrease) in interest
payable 48 123
Others, net 1,473 (111)
Net cash provided (used) by
operating activities 4,616 3,249
Investing Activities
Proceeds from sales of investment
securities 551 -
Proceeds on sale of securities
available for sale 43,998 49,144
Proceeds from maturities and calls
of investment securities 1,108 5,583
Purchases of investment securities - (2,322)
Purchase of securities available for
sale (78,697) (51,500)
Principal collected on mortgage-
backed securities 12,377 8,047
Net (increase) decrease in loans and
leases, net of charge offs (21,756) (10,449)
Proceeds on sale of loans 4,774 2,454
Loans purchased 0 (94)
Recoveries on loans previously
charged off 33 12
Purchases of premises and equipment (1,269) (589)
Proceeds on sale of fixed assets 5 4
Net cash provided (used) by
investing activities (38,876) 290
Financing Activities
Net increase (decrease) in deposits 9,774 (6,376)
Net increase (decrease) in short-
term borrowings 12,018 1,294
Proceeds on long-term debt 12,725 -
Payments on long-term debt (60) -
Dividends paid on common and
preferred stock (632) (495)
Net cash provided (used) by
financing activities 33,825 (5,577)
Increase (Decrease) in Cash and Cash
Equivalents (435) (2,038)
Cash and Equivalents at Beginning of
Year 10,175 11,770
Cash and Equivalents at June 30 $ 9,740 $ 9,732
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) ($ expressed in 000s)
<CAPTION>
BELMONT BANCORP.
Year Ended December 31, 1995 and
Six Months Ended June 30, 1996
Unrealized
Retained Earnings Loss On
Preferred Common Unappro- Appro- Treas Securities
Stock Stock Surplus priated priated Stock Available
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
($.475 per share) (1,004)
Change in unrealized
loss-securities
available for sale 1,828
Balance, December
31, 1995 1,000 1,057 7,781 14,148 850 (8) 336
Year to date 1996
Net income 2,574
Cash dividends
declared:
Preferred stock (40)
Common stock
($.28 per share) (592)
Change in
unrealized loss-
securities
available-for-sale (1,924)
Balance, June 30, 1996 1,000 1,057 7,781 16,090 850 (8) (1,588)
</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 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.
Per share data has been restated in previous periods
for a 100% common stock dividend paid in May 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The net income of Belmont Bancorp. for the second
quarter of 1996 increased 6.1% to $1,165,000, compared to
$1,098,000 in the second quarter of 1995. Earnings per
common share increased to $0.54 in the second quarter of
1996, compared to $0.51 in the second quarter of 1995.
For the six months ended June 30, 1996, net income
increased 22.3% to $2,574,000, compared to $2,104,000 for
the first six months of 1995. Earnings per common share
were $1.20 for the first six months of 1996, compared to
$0.98 for the corresponding period last year, an increase of
22.4%.
Operating earnings increased to $3,339,000 for the six
months ended June 30, 1996, up 25.2% from $2,666,000 for the
same period last year. For the second quarter of 1996,
operating earnings were $1,611,000, up 13.1% from $1,424,000
during the year ago quarter.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1996 and 1995.
<TABLE>
<CAPTION>
Quarter ended Six months ended
June 30, June 30,
($000s) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Return on average assets 1.37% 1.44% 1.55% 1.36%
Return on shareholders'
equity 18.03% 19.60% 19.91% 19.46%
Return on average common
equity 18.43% 20.14% 20.39% 20.01%
Average assets $340,945 $304,435 $331,971 $309,162
Average shareholders' equity $ 25,848 $ 22,405 $ 25,853 $ 21,629
</TABLE>
Average assets increased $22.8 million during the six
months ended June 30, 1996 compared to the same period
during 1995. Average shareholders' equity increased $4.2
million for the same period.
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Tables 1 and 3, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the six months and three
months ended June 30, 1996, 1995, and 1994. 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
decreased from 8.34% during the first six months of 1995 to
8.28% in 1996, a decline of 6 basis points. (A basis point
(bp) is equivalent to .01%.) The cost of interest bearing
liabilities increased 12 basis points from 4.17% during the
first half of 1995 to 4.29% in 1996. The net interest
margin (net interest income divided by interest earning
assets) was 4.47% during the first half of 1996 compared to
4.60% during the comparative year-to-date period.
The taxable equivalent yield on interest earning assets
decreased from 8.34% during the second quarter of 1995 to
8.11% in 1996, a decrease of 23 basis points. The cost of
interest bearing liabilities rose 13 basis points from 4.16%
during the second quarter of 1995 to 4.29% in 1996. The net
interest margin decreased from 4.62% to 4.30% 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>
<CAPTION>
TABLE 1 - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
Six Months Ended June 30,
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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning
assets
Loans and leases $167,058 $7,795 9.41% $148,816 $6,986 9.47% $130,506 $5,536 8.55%
Securities
Taxable 121,107 4,101 6.83% 116,259 4,012 6.96% 106,421 2,924 5.54%
Exempt from
income tax 24,044 934 7.83% 24,842 1,004 8.15% 21,057 798 7.64%
Federal funds
sold 270 7 5.23% 1,002 30 6.04% 246 3 2.46%
Total interest
earning assets 312,479 12,837 8.28% 290,919 12,032 8.34% 258,230 9,261 7.23%
Cash and due from
banks 8,758 8,348 8,161
Other assets 13,683 12,984 11,883
Valuation
allowance-
available for
sale securities (138) (1,224) (507)
Allowance for
possible loan loss (2,811) (1,865) (1,483)
Total assets 331,971 309,162 276,284
Liabilities:
Interest bearing
liabilities
Interest checking 35,393 532 3.03% 25,545 297 2.34% 27,339 288 2.12%
Savings 78,986 1,191 3.04% 79,085 1,172 2.99% 100,553 1,489 2.99%
Other time
deposits 114,016 2,890 5.11% 126,676 3,118 4.96% 91,565 1,950 4.29%
Other Borrowings 49,081 1294 5.32% 29,498 807 5.52% 11,744 199 3.42%
Total interest
bearing
liabilities 277,476 5,907 4.29% 260,804 5,394 4.17% 231,201 3,926 3.42%
Demand deposits 26,419 25,024 24,216
Other liabilities 2,223 1,705 1,473
Total liabilities 306,118 287,533 256,890
Shareholders'
equity 25,853 21,629 19,458
Liabilities &
shareholders'
equity 331,971 309,162 276,348
Net interest
income
Margin on a
taxable equivalent
basis 6,930 4.47% 6,638 4.60% 5,335 4.17%
Net interest rate
spread 3.99% 4.17% 3.81%
Interest bearing
liabilities
to interest
earning assets 88.80% 89.65% 89.53%
</TABLE>
<TABLE>
<CAPTION>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
Six Months Ended June 30
1996 Compared to 1995 1995 Compared 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 $856 ($42) ($4) $810 $777 $590 $83 $1,450
Securities
Taxable 167 (75) (3) 89 270 748 70 1,088
Exempt from
Income Taxes (32) (39) 1 (70) 143 53 11 207
Federal Funds
Sold (22) (4) 3 (23) 9 4 13 26
Total Interest
Income Change 969 (160) (3) 806 1,199 1,395 177 2,771
Increase (Decrease)
in Interest Expense:
Interest Checking 114 87 33 234 (19) 30 (2) 9
Savings (1) 20 0 19 (318) 1 0 (317)
Other Time
Deposits (312) 93 (9) (228) 748 304 117 1,169
Short Term
Borrowings 536 (29) (19) 488 301 122 184 607
Total Interest
Expense Change 337 171 5 513 712 457 299 1,468
Increase (Decrease)
in Net Interest
Income on a Taxable
Equivalent Basis $632 ($331) ($8) $293 $487 $938 ($122) $1,303
(Increase) Decrease
in Taxable
Equivalent
Adjustment 14 (61)
Net Interest Income
Change $307 $1,242
</TABLE>
<TABLE>
<CAPTION>
TABLE 3. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
Three Months Ended June 30,
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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest
earning assets
Loans and
leases $172,681 $4,012 9.32% $150,618 $3,531 9.40% $133,121 $2,854 8.60%
Securities
Taxable 124,849 2,027 6.51% 110,091 1,913 6.97% 107,131 1,569 5.87%
Exempt from
income tax 24,221 467 7.73% 24,507 489 8.00% 23,849 470 7.90%
Federal funds
sold 72 1 5.57% 813 13 6.41% 24 0 0.00%
Total interest
earning assets 321,823 6,507 8.11% 286,029 5,946 8.34% 264,125 4,893 7.43%
Cash and due
from banks 8,852 8,224 8,153
Other assets 14,056 12,802 12,030
Valuation
allowance-
available for
sale securities (903) (579) (1,004)
Allowance for
possible loan loss (2,883) (2,041) (1,464)
Total assets 340,945 304,435 281,840
Liabilities:
Interest
bearing
liabilities :
Int. checking 37,557 290 3.10% 26,020 153 2.36% 27,404 145 2.12%
Savings 79,653 603 3.04% 77,967 582 2.99% 99,910 740 2.97%
Other time
deposits 113,583 1,438 5.08% 127,960 1,604 5.03% 93,943 1,017 4.34%
Other
Borrowings 54,919 726 5.30% 23,490 309 5.28% 14,951 137 3.68%
Total interest
bearing
liabilities 285,712 3,057 4.29% 255,437 2,648 4.16% 236,208 2,039 3.46%
Demand deposits 27,018 24,775 24,924
Other
liabilities 2,367 1,818 1,400
Total
liabilities 315,097 282,030 262,532
Shareholders'
equity 25,848 22,405 19,372
Liabilities
& shareholders'
equity 340,945 304,435 281,904
Net interest
income
Margin on a
taxable
equivalent
basis 3,450 4.30% 3,298 4.62% 2,854 4.33%
Net interest
rate spread 3.82% 4.18% 3.97%
Interest
bearing
liabilities
to interest
earning assets 88.78% 89.30% 89.43%
</TABLE>
<TABLE>
<CAPTION>
TABLE 4. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
Three Months Ended June 30,1996
1996 Compared to 1995 1995 Compared 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 $517 ($32) ($4) $481 $375 $267 $35 $677
Securities
Taxable 256 (126) (17) 113 43 293 8 344
Exempt from
Income Taxes (6) (16) 0 (22) 13 6 0 19
Federal Funds
Sold (12) (2) 2 (12) 0 0 13 13
Total Interest
Income Change 755 (176) (19) 560 431 566 56 1,053
Increase
(Decrease) in
Interest Expense:
Interest
Checking 68 48 21 137 (7) 16 (1) 8
Savings 13 8 0 21 (163) 6 (1) (158)
Other Time
Deposits (180) 16 (1) (165) 368 161 58 587
Short Term
Borrowings 413 2 2 417 78 60 34 172
Total Interest
Expense Change 314 74 22 410 276 243 90 609
Increase
(Decrease) in Net
Interest
Income on a
Taxable
Equivalent Basis $441 ($250) ($41) $150 $155 $323 ($34) $444
(Increase)
Decrease in
Taxable
Equivalent
Adjustment 8 7
Net Interest
Income Change $158 $451
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 11.3%, or $90,000, and totaled $886,000
for the first six months of 1996, compared to $796,000 for
the respective period last year. Changes in various
categories of other income are depicted in the table below.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
($000s) 1996 1995 % Change 1996 1995 % Change
<S> <C> <C> <C> <C> <C> <C>
Trust fees $103 $113 -8.8% $ 263 $296 -11.1%
Service charges on deposits 159 143 11.2% 315 274 15.0%
Gain on sale of loans 15 17 -11.8% 31 27 14.8%
Other income 139 93 49.5% 277 199 39.2%
Subtotal 416 366 13.7% 886 796 11.3%
Security gains (losses) 0 0 na (1) 1 -200.0%
Gains (losses) securities
held for sale 4 37 -89.2% 234 163 43.6%
Total $420 $403 4.2% $1,119 $960 16.6%
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated market values of
securities held to maturity at June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of
U.S. Government corporations and
agencies $ 2,267 $ 0 $148 $ 2,119
Obligations of states and
political subdivisions 4,924 69 152 4,841
Mortgage-backed securities 13,960 39 222 13,777
Total $21,151 $108 $522 $20,737
</TABLE>
Included above in U.S. Government corporations and
agencies is a structured note with a book value of
$2,267,000 and a market value of $2,119,000 which matures in
the year 2000.
The amortized cost and estimated market values of
securities available for sale at June 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of
U.S. Government corporations and
agencies $ 15,333 $ 1 $ 408 $ 14,926
Obligations of states and
political sub. 22,234 30 678 21,586
Mortgage-backed securities 62,064 241 841 61,464
Mortgage derivatives 32,165 259 1,009 31,415
Marketable equity securities 2,684 - - 2,684
Total $134,480 $531 $2,936 $132,075
</TABLE>
Included above in U.S. Government corporations and
agencies is a structured note with a book and estimated
market values of $1,732,000.
The mortgage derivatives are comprised solely of
collateralized mortgage obligations (CMOs) including one
principal only CMO issued by FNMA with a book value of
$247,000 and an estimated market value of $200,000.
Privately issued CMOs included in the table above have a
book value of $14,115,000 and an estimated market value of
$14,212,000. Credit risk on privately issued CMOs is
evaluated based upon independent rating agencies and on the
underlying collateral of the obligation. At June 30, 1996,
the Corporation held two CMOs issued by Prudential Home
Mortgage with an aggregate book value of $6,930,000 and an
estimated market value of $6,956,000 and one CMO issued by
Ryland Acceptance Corporation with a book value of
$3,106,000 and an estimated market value of $3,072,000.
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 June 30, Six Months Ended June 30,
($000s) 1996 1995 % Change 1996 1995 % Change
<S> <C> <C> <C> <C> <C> <C>
Salaries and wages $ 588 $ 554 6.1% $1,202 $1,113 8.0%
Employee benefits 206 146 41.1% 418 392 6.6%
Net occupancy expense 170 127 33.9% 340 274 24.1%
Equipment expense 205 200 2.5% 387 377 2.7%
Other operating expenses 804 730 10.1% 1,519 1,541 -1.4%
Total $1,973 $1,757 12.3% $3,866 $3,697 4.6%
</TABLE>
Increases in employee related costs as well as
occupancy and equipment expenses during the quarter and year-
to-date comparative periods are primarily due to the opening
of a new office in Wheeling, WV. Other operating expenses
were positively impacted by the a reduction in FDIC
insurance premiums during six month period which fell by
$199,000. This was offset by a charge to other real estate
owned expense of $140,000 for real estate taxes paid on
foreclosed property and an increase of $62,000 for state
franchise and income taxes.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of
Income. Actual losses on loans and leases are charged
against the allowance built up on the Consolidated Balance
Sheet through the allowance for possible loan losses. The
amount of loans and leases actually removed as assets from
the Consolidated Balance Sheets is referred to as charge-
offs and, after netting out recoveries previously charged-
off assets, becomes net charge-offs.
For the first half of 1996, $255,000 was added to the
allowance and charged to expense compared to $700,000 in
1995. At June 30, 1996, the allowance for possible loan
losses to total loans and leases was 1.76% compared to 1.44%
last year. The ratio of the Allowance for Possible Loan
Losses to underperforming assets increased to 313.0% at June
30, 1996. The following table details the Allowance for
Possible Loan Losses and also includes various loan charge
off statistics for 1996 and 1995.
<TABLE>
<CAPTION>
Allowance for Possible Loan Losses
Three Months Ended Six Months Ended
June 30, June 30,
($000s) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Balance, beginning of
period $2,703 $1,537 $2,703 $1,537
Provision for possible
loan losses 105 300 255 700
Loans charged-off 41 10 46 21
Recoveries on loans
previously charged-off 28 7 33 12
Net charge offs 13 3 13 9
Balance, end of period $2,795 $1,834 $2,945 $2,228
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Loans and leases
outstanding at period $167,563 $146,908 $167,563 $155,199
Average loans and
leases $161,434 $147,013 $161,434 $148,816
Annualized net charge
offs as a percent of:
Average loans and
leases 0.03% 0.01% 0.02% 0.01%
Total loans at end
of period 0.03% 0.01% 0.02% 0.01%
Reserve for
possible loan losses 1.86% 0.65% 0.88% 0.81%
Reserve for possible
loan losses to:
Average loans and
leases 1.73% 1.25% 1.82% 1.50%
Total loans at end
of period 1.67% 1.25% 1.76% 1.44%
Under-performing
assets 297.02% 197.84% 312.96% 240.35%
</TABLE>
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at June 30 follows:
<TABLE>
<CAPTION>
Under-performing assets June 30,
($000s) 1996 1995
<S> <C> <C>
Non-accrual loans and leases $106 $326
Ninety days past due loans and
leases still accruing interest 190 22
Other real estate owned 645 579
Total $941 $927
Restructured loans and leases
included in above totals $ 0 $ 0
Restructured loans and leases in
compliance with modified terms 108 108
</TABLE>
Asset quality remained high since the year ago period.
Total under-performing assets were $941,000 at June 30, 1996
compared to $927,000 at June 30, 1995.
CAPITAL RESOURCES
At June 30, 1996, shareholders' equity was $25,182,000
compared to $25,164,000 at December 31, 1995 and $23,149,000
at June 30, 1995. The following table presents various
capital ratios as of June 30:
<TABLE>
<CAPTION>
Average shareholder's equity to :
<S> <C> <C>
Average assets 7.8% 7.0%
Average deposits 10.1% 8.4%
Average loans and
leases 15.5% 14.5%
Risk-based capital
ratio:
Tier 1 12.2% 12.6%
Total 13.4% 13.8%
Leverage ratio 7.2% 7.0%
</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 June
30, 1996, the Corporation had a Tier 1 capital ratio of
12.2% and a total capital ratio of 13.4%, well above
regulatory minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total
assets, referred to as a total assets leverage ratio. At
June 30, 1996, the Corporation's leverage ratio was 7.0%.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security
shareholders
None
Item 5. Other information
None
Item 6. Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Belmont Bancorp.
(Registrant)
July 31, 1996 s/ J. Vincent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 9,740
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 132,074
<INVESTMENTS-CARRYING> 21,151
<INVESTMENTS-MARKET> 20,737
<LOANS> 176,857
<ALLOWANCE> 2,945
<TOTAL-ASSETS> 352,937
<DEPOSITS> 256,624
<SHORT-TERM> 50,683
<LIABILITIES-OTHER> 2,981
<LONG-TERM> 17,467
0
1,000
<COMMON> 1,057
<OTHER-SE> 23,125
<TOTAL-LIABILITIES-AND-EQUITY> 352,937
<INTEREST-LOAN> 7,729
<INTEREST-INVEST> 4,752
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 12,481
<INTEREST-DEPOSIT> 4,613
<INTEREST-EXPENSE> 5,907
<INTEREST-INCOME-NET> 6,574
<LOAN-LOSSES> 255
<SECURITIES-GAINS> 233
<EXPENSE-OTHER> 3,866
<INCOME-PRETAX> 3,572
<INCOME-PRE-EXTRAORDINARY> 3,572
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,574
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.20
<YIELD-ACTUAL> 4.47
<LOANS-NON> 106
<LOANS-PAST> 190
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,360
<ALLOWANCE-OPEN> 2,703
<CHARGE-OFFS> 46
<RECOVERIES> 33
<ALLOWANCE-CLOSE> 2,945
<ALLOWANCE-DOMESTIC> 2,945
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,333
</TABLE>
