U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from _____________ to _________________
Commission file number 0-12724
BELMONT BANCORP.
(Name of small business issuer in its charter)
Ohio (State of Incorporation) I.R.S. Employer ID
No. 34-1376776
325 MAIN STREET
BRIDGEPORT, OHIO 43912
(Address of principal executive offices)
Telephone (614)-695-3323
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
Title of each class: Name of each exchange on
which registered:
Common stock, $0.50 par value NASDAQ SmallCap Market
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will be contained, to the best of the
Registrant's knowledge. In definitive proxy or information
statements incorporated by reference to Part III of this Form 10-
K or any amendment to this Form 10-K.X
Aggregate market value of voting stock held by nonaffiliates as
of March 13, 1996 - $57,624,000
There were 2,114,644 shares of $0.50 par value, common stock
outstanding as of March 13, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of the Registrant dated March 15,
1996 are incorporated in Items 10, 11, 12, and 13. The Annual
Report of the Registrant is incorporated by reference in Items 5,
6, 7, and 8.
PART I
ITEM 1-BUSINESS
BELMONT BANCORP.
Belmont Bancorp. is a bank holding company which was
organized under the laws of the State of Ohio in 1982. On April
4, 1984, Belmont Bancorp. acquired all of the outstanding capital
stock of Belmont National Bank (formerly Belmont County National
Bank), a banking corporation organized as a national banking
association. Belmont National Bank provides a variety of
financial services. In addition to Belmont National Bank, the
Corporation owns Belmont Financial Network, Inc., a non-bank
subsidiary.
BELMONT NATIONAL BANK
Belmont National Bank resulted from the merger on January 2,
1959, of the First National Bank of St. Clairsville, and the
First National Bank of Bridgeport. Both banks were organized as
national associations prior to the turn of the century. Belmont
National Bank operates through a network of ten branches located
in Belmont, Harrison and Tuscarawas Counties in Ohio. The main
office is located in the city of St. Clairsville. Other branch
locations in Belmont County include Bridgeport, Lansing,
Shadyside, and the Ohio Valley Mall. Branches in Harrison County
are located in Jewett and Cadiz, Ohio. Branches in Tuscarawas
County are located in New Philadelphia, Ohio. The three New
Philadelphia offices were acquired on October 2, 1992, when
Belmont National Bank acquired the deposits and loans of these
offices from Diamond Savings and Loan.
Belmont National Bank provides a wide range of retail
banking services to individuals and small to medium-sized
businesses. These services include various deposit products,
business and personal loans, credit cards, residential mortgage
loans, home equity loans, and other consumer oriented financial
services including IRA and Keogh accounts, safe deposit and night
depository facilities. Belmont National Bank also owns automatic
teller machines located at the Ohio Valley Mall and in New
Philadelphia, Ohio providing 24 hour banking service to our
customers. Belmont National Bank belongs to MAC, a nationwide
ATM network with thousands of locations nationwide. Belmont
National Bank offers a wide variety of fiduciary services. The
trust department of the Bank administers pension, profit-sharing,
employee benefit plans, personal trusts and estates.
BELMONT FINANCIAL NETWORK
On July 1, 1985, Belmont Bancorp. formed a subsidiary
corporation, Belmont Financial Network, Inc.(BFN). The purpose
of the subsidiary was primarily to engage in lease consulting for
personal or real property. Changes to the federal tax code that
eliminated new investment tax credits as of December 31, 1987
adversely affected the leasing business. The daily operations of
Belmont Financial Network were suspended during 1989 to reduce
overhead costs. The leases formerly serviced by Belmont
Financial Network are presently administered by Belmont National
Bank. BFN was inactive throughout 1995.
BELMONT INVESTMENT AND FINANCIAL SERVICES, INC.
During 1988, Belmont National Bank began the operations of
Belmont Investment and Financial Services, Inc., a wholly-owned
subsidiary of the Bank. Belmont Investment and Financial
Services, Inc. was organized so that the Bank's customers would
have available to them a wider array of financial products as
well as sound investment and financial planning. Through Belmont
Investment and Financial Services, Inc., customers can purchase
government or corporate bonds, and mutual fund products. In
1990, the services provided by the Corporation, other than
advisory services, were reorganized into a department of the
Bank.
SUPERVISION AND REGULATION
Belmont Bancorp. is subject to regulation under the Bank
Holding Company Act of 1956, as amended (the "Act"). The Act
requires the prior approval of the Federal Reserve Board for a
bank holding company to acquire or hold more than a 5% voting
interest in any bank, and restricts interstate banking
activities. The Act restricts Belmont's non-banking activities
to those which are closely related to banking. The Act does not
place territorial restrictions on the activities of nonbank
subsidiaries of bank holding companies. Belmont's banking
subsidiary is subject to limitations with respect to intercompany
loans and investments. A substantial portion of Belmont's cash
revenues is derived from dividends paid by its subsidiary bank.
These dividends are subject to various legal and regulatory
restrictions as summarized in Note 15 of the financial
statements.
The Bank is subject to the provisions of the National
Banking Act and the regulations of the Federal Reserve Board and
the Federal Deposit Insurance Corporation. Under the Bank
Holding Company Act of 1956, as amended, and under regulations of
the Federal Reserve Board pursuant thereto, a bank holding
company is prohibited from engaging in certain tie-in
arrangements in connection with extensions of credit.
The monetary policies of regulatory authorities, including
the Federal Reserve Board, have a significant effect on the
operating results of banks and bank holding companies. The
nature and future monetary policies and the effect of such
policies on the future business and earnings of Belmont Bancorp.
and its subsidiary bank cannot be predicted.
FOREIGN OPERATIONS
Belmont Bancorp. has no foreign operations.
EXECUTIVE OFFICERS
For information concerning executive officers of Belmont
Bancorp. and Belmont National Bank, see Item 10 of Form 10-K.
ITEM 2-PROPERTIES
DESCRIPTION ON PROPERTIES
The principal executive offices of Belmont National Bank are
located in St. Clairsville, Ohio, the seat of Belmont County.
This office consists of a two story brick building owned by the
Bank with attached drive-in facilities. The building consists of
9,216 square feet which houses the commercial bank operations and
the executive, marketing and human resources offices. In
addition, the Bank transacts business in the following branch
locations:
Mall Office-This office is located at the Ohio Valley Mall,
a major shopping mall located two miles east of St.
Clairsville, Ohio, and consists of a 4,000 square foot
office inside the mall proper, plus a stand alone drive-in
facility at the perimeter of the Mall. Automatic teller
machines are located at the drive-in location and inside the
branch office.
Lansing Office-This 1,352 square foot office is located in
Lansing, Ohio, a small community approximately six miles
east of St. Clairsville on US. Route 40. The facility is a
masonry building with adjoining drive-in facilities.
Bridgeport Office-This office is located in Bridgeport,
Ohio, a community located on the Ohio/West Virginia border,
approximately 10 miles east of St. Clairsville. This 5,096
square foot facility is a recently remodeled masonry
building with adjoining drive-in facilities.
Shadyside Office-This 1,792 square foot office is located in
Shadyside, a village located on Ohio State Route 7. The
facility is a masonry building with accompanying drive-in
facilities.
Jewett Office-This office is located in Harrison County
approximately twenty-six miles north of St. Clairsville,
across from Cross Street, the intersection of State Routes 9
and 151. The building is constructed of masonry brick and
contains 2,400 square feet with an accompanying drive-in
facility.
Cadiz Office-This office is located in Cadiz, Ohio in
Harrison County, approximately seventeen miles north of St.
Clairsville at the intersection of State Routes 9 and 22.
The brick and tile building contains 1,800 square feet with
an accompanying drive-in facility.
New Philadelphia Office-This office, located at 152 North
Broadway Avenue, is a 33,792 square foot site improved with
two inter-connected, two story brick office buildings with a
total building area of 13,234 square feet. Part of the
office space is leased to other businesses. This location
also has a drive-in facility and an automatic teller
machine.
New Philadelphia Office-This office, located at 2300 East
High Avenue, is comprised of a one story, 1,605 square foot
brick structure with a 783 square foot drive-thru canopy.
New Philadelphia Office-This office, located at 525 Wabash
Avenue, is comprised of a 14,250 square foot site with a 246
square foot drive-thru banking facility.
All offices are owned by the Bank except for the Mall
Office. The lease at the Mall location is in effect until the
year 1996 with options to renew thereafter.
Wheeling, WV Office - In January 1996, Belmont National Bank
relocated its corporate headquarters to Wheeling, WV. The office
is a leased facility located at 980 National Road, Wheeling, WV.
ITEM 3-LEGAL PROCEEDINGS
None.
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
PART II
ITEM 5-MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDERS' MATTERS
<TABLE>
<CAPTION>
1995
Dividend
Quarter High Low per Share
<S> <C> <C> <C>
1st $18.00 $14.25 $ 0.105
2nd 19.75 16.00 0.110
3rd 25.00 18.50 0.130
4th 26.50 23.50 0.130
Total $ 0.475
1994
Dividend
Quarter High Low per Share
1st $8.80 $8.40 $ 0.084
2nd 9.80 8.80 0.084
3rd 12.88 10.00 0.105
4th 18.00 11.50 0.105
Total $ 0.378
</TABLE>
The number of shareholders of record for the Corporation's
stock as of March 6, 1996 was 614. The latest available market
price based on an actual trade price was $27.25 per share on
March 13, 1996.
Belmont Bancorp.'s common stock has a par value of $0.50
and, since October 1994, has been traded on the Nasdaq SmallCap
market.
The tables above show its high and low market prices and
dividend information for the past two years. Prior to the Nasdaq
listing in October 1995, market prices were based on actual
trades known to the Corporation due to lack of an established
market. Market prices and cash dividends paid per share have been
restated to reflect the effect of a 10% common stock dividend
paid in January 1994, a 25% common stock dividend paid in July
1994 and a 2-for 1 split paid in May 1995.
Information regarding the limitations on dividends available
to be paid can be located in Footnote 15 of the Notes to the
Consolidated Financial Statements in the Corporation's Annual
Report (Exhibit B).
Treasury stock is accounted for using the cost method.
There were 832 shares held in treasury on December 31, 1995 and
424 shares in treasury on December 31 1994.
ITEM 6.-SELECTED FINANCIAL DATA
The Summarized Quarterly Financial Information and the
Consolidated Five Year Summary of Operations contained in the
Corporation's annual report (Exhibit B) are hereby incorporated
by reference.
ITEM 7-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The data presented in this discussion should be read in
conjunction with the audited consolidated financial statements.
RESULTS OF OPERATIONS
SUMMARY
For 1995, net income increased 30.06% from the previous
year; net income for the year ended 1994 increased 25.89%
compared to 1993. Net income per common share for 1995 was $1.95
compared to $1.49 per common share in 1994 and 1.18 in 1993. The
Corporation's net income to average assets, referred to as return
on assets, increased to 1.35% for the year ended 1995 from 1.12%
last year and 0.96% during 1993. Operating income consists of
earnings before income taxes, minus net investment and trading
gains or plus net investment and trading losses. Operating
income increased by $1,113,000 or 25.74% from 1994 to 1995. The
table below summarizes earnings performance for the past three
years.
<TABLE>
<CAPTION>
($000s) except per share data 1995 1994 1993
<S> <C> <C> <C>
Operating income $5,437 $4,324 $2,032
Net income 4,206 3,234 2,569
Net income per share $ 1.95 $ 1.49 $ 1.18
Return on average assets 1.35% 1.12% 0.96%
Return on average common
equity 18.90% 16.71% 14.57%
Return on average total
equity 18.42 16.27% 14.21%
</TABLE>
1995 1994
compared compared
% Increase from previous year to 1994 to 1993
Operating income 25.74% 112.80%
Net income 30.06% 25.89%
NET INTEREST REVENUE
A major share of the Corporation's income results from the
spread between income on interest earning assets and interest
expense on the liabilities used to fund those assets, known as
net interest income. Net interest income is affected by changes
in interest rates and amounts and distributions of interest
earning assets and interest bearing liabilities outstanding. Net
interest margin is net interest income divided by the average
earning assets outstanding. A third frequently used measure is
net interest rate spread which is the difference between the
average rate earned on assets and the average rate incurred on
liabilities without regard to the amounts outstanding in either
category.
The Consolidated Average Balance Sheets and Analysis of Net
Interest Income Changes included in the Corporation's annual
report (Exhibit B), compare interest revenue and interest earning
assets outstanding with interest cost and liabilities outstanding
for the years ended December 31, 1995, 1994, and 1993, and
computes net interest income, net interest margin and net
interest rate spread for each period. All three of these
measures are reported on a taxable equivalent basis.
The Corporation's net interest income grew by $1,764,000 on
a taxable equivalent basis during 1995 compared to the same
period last year, a 15.30% increase. The increase in net
interest income was primarily attributable to the increase in
average earning assets and improved net interest margins. During
1995, the Corporation's average interest-earning assets grew by
approximately $20.9 million, up 7.68% from 1994.
The yield on interest earning assets improved from 7.49%
during 1994 to 8.28% during 1995, an increase of 79 basis points.
(A basis point (bp) is equivalent to .01%.) However this
increase was offset by an increase in the cost of interest
bearing liabilities of 57 basis points from 1994 to 1995.
Consequently, the net interest rate spread increased from 3.87%
during 1994 to 4.09% during 1995.
The Analysis of Net Interest Income Changes, separates the
dollar change in the Corporation's net interest income into
three components: changes caused by (1) an increase or decrease
in the average assets and liability balances outstanding
(volume); (2) the changes in average yields on interest earning
assets and average rates for interest bearing liabilities
(yield/rate); and (3) combined volume and yield/rate effects
(mix).
This table shows that the increase in the Corporation's net
interest income during the year-to-date periods presented from
1994 to 1995 was generated by growth in the levels of earning
assets and average interest bearing liabilities outstanding
(depicted by the volume column).
OTHER OPERATING INCOME
Other operating income excluding securities gains and
losses, increased 30.47% and totaled $1,683,000 in 1995, compared
to $1,290,000 in 1994 and $1,193,000 in 1993. The table below
shows the dollar amounts and growth rates of the components of
other operating income.
<TABLE>
<CAPTION>
1995 1994 1993
($000s) Total Change Total Change Total
<S> <C> <C> <C> <C> <C>
Trust income $ 431 $ 21.11% $ 341 24.45% $ 274
Service charges on 555 5.31% 527 11.18% 474
deposits
Gain on sale of 136 491.30% 23 -65.67% 67
loans
Recovery on class 189 na - na -
action lawsuit
Other income 390 -2.26% 399 5.56% 378
Subtotal $1,683 30.47% 1,290 8.13% 1,193
Investment (11) -22.22% (9) 95.61% (205)
securities gains
(losses)
Gains (losses) on
securities
available for sale 113 305.45% (55) -104.35% 1,264
Trading gains -
(losses) - 100.00% 1 100.86% (116)
Total $1,785 45.48% $1,227 -42.56% $2,136
</TABLE>
During the fourth quarter of 1995, the Corporation recovered
$189,000 for settlement of a class action lawsuit arising out of
the issuance and sale of taxable municipal bonds. This accounts
for nearly half of the increase in Noninterest income.
Another significant increase in Noninterest income is
attributable to gains on sale of loans which increased $113,000
from 1994 to 1995. The Corporation utilized the secondary
mortgage market during 1995 to divest itself of fixed rate
mortgage loans with rates below a target rate for purposes of
managing the interest rate risk associated with these loans.
Servicing rights were retained on the loans sold. The
Corporation continues to utilize the secondary market as a means
of offering competitively priced mortgage loan products without
retaining the interest rate risk associated with long term, fixed
rate product.
Trust income increased 21.11% from 1994 to 1995 and 24.45%
from 1993 to 1994. This is an area that the Corporation expects
to continue to develop and aggressively grow in the future.
Losses on investments held in the maturity portfolio during
1995 and 1994 occurred as a result of calls on municipal bonds in
the portfolio. These losses totaled $11,000 during 1995 and
9,000 during 1994. Net gains were realized on securities
available for sale during 1995 totaling $113,000 compared to
losses of $55,000 during 1994 and gains of $1,264,000 during
1993.
The related income taxes on securities transactions,
including trading and securities available for sale, were $25,000
and $67,000 for the years ended 1995 and 1993, respectively. A
tax credit of $15,000 was attributable to securities transactions
for 1994.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. The table below
details the percentage changes in various categories of expense
for the three years ended 1995, 1994, and 1993.
<TABLE>
<CAPTION>
($000s) 1995 % 1994 % 1993 % 1992
Change Change Change
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and $2,555 12.01% $2,281 8.98% $2,093 26.16% $1,659
wages
Employee 802 20.60% 665 -6.99% 715 46.22% 489
benefits
Net occupancy 552 3.56% 533 -1.48% 541 28.50% 421
expense
Equipment 764 23.62% 618 25.87% 491 8.63% 452
expense
Other 2,950 -0.74% 2,972 1.89% 2,917 39.84% 2,086
operating
expenses
Total $7,623 7.84% $7,069 4.62% $6,757 32.31% $5,107
</TABLE>
Salaries and wages included incentive performance bonuses
tied to earnings performance totalling $343,000 in 1995, $247,000
during 1994 and $129,000 during 1993. The increase in employee
benefits from 1994 to 1995 was impacted by a higher contribution
to the employees' profit sharing plan and by the purchase of
personal computers for use by employees and directors at home. A
goal of the Corporation's subsidized purchase of personal
computers for its employees was to enhance their proficieny and
skill on personal computers and translate that into added
productivity in the workplace.
A commonly used measure of operating efficiency is the
amount of assets managed per full time equivalent employee (FTE).
The table below depicts assets managed per FTE for each of the
last 3 years compared to the Corporation's peer group as measured
by the most recently available Uniform Bank Performance Report.
<TABLE>
<CAPTION>
($000s) 1995 1994 1993
<S> <C> <C> <C>
Total assets $317,279 $312,963 $267,505
FTEs 113.0 110.5 118.0
Assets managed per $ 2,808 $ 2,832 $ 2,267
FTE
Peer group(1) $ 2,310 $ 2,200 $ 1,900
(1) 1995 Peer data as of September 30, 1995
</TABLE>
Equipment expense increased from 1994 to 1995 due an
increase in depreciation expense and repair and maintenance
expense associated with the Corporation's in-house data
processing system. During most of 1994 and all of 1993, the
Corporation utilized a third party data processing servicer;
payments for these services were included in other operatng
expenses.
Other noninterest operating expense includes FDIC insurance
assessments. The premiums paid during 1995 were impacted by a
reduction of the FDIC insurance premium rate in September and
December on deposits insured by the Bank Insurance Fund (BIF).
Approximately 70% of the Corporation's deposits are insured by
the BIF. As a result FDIC and other insurance included in other
operating expenses were $430,000, $616,000 and $581,000 in 1995,
1994 and 1993 respectively.
Approximately 30% of the Corporation's deposits are insured
through the Savings Association Insurance Fund (SAIF) of the FDIC
and continue to be assessed at 23 cents per $100. These deposits
had been acquired from a thrift in 1992. However Congress is
currently considering a special, one-time assessment on SAIF-
insured deposits. If enacted, this assessment could result in a
one-time, pretax charge of up to $500,000, which could be offset
by lower ongoing insurance costs in the future.
FINANCIAL CONDITION
SECURITIES
The book values of investments as of December 31, 1995 and
1994 are detailed in Footnote 3 of the Notes to the Consolidated
Financial Statements in the Corporation's annual report (Exhibit
B).
The investment portfolio consists largely of fixed and
floating rate mortgage related securities, predominantly
underwritten to the standards of and guaranteed by the government
agency GNMA and by the government-sponsored agencies of FHLMC and
FNMA. These securities differ from traditional debt securities
primarily in that they have uncertain maturity dates and are
priced based on estimated prepayment rates on the underlying
mortgages.
<TABLE>
Securities Held to Maturity
December 31, 1995
<CAPTION> Over 10 Year
Maturity < 1-5 Year 6-10 Year Maturity Total
1 year Maturity Maturity
($000s) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S.
Government
agencies and
corporations $ - - $ 2,269 4.79 $ - - $ - - $ 2,269 4.79%
States and
political
subdivisions 35 9.23 654 8.21 1,145 7.77 3,200 10.43% 5,034 9.53%
(a)
Agency
mortgage-
backed
securities 866 0.47 9,094 6.78 3,651 7.36 2,812 8.46% 16,423 6.86%
(b)
Total $901 0.81% $12,017 6.48% $4,796 7.46% $6,012 9.51% $23,726 7.23%
</TABLE>
(a) Taxable equivalent
yields
(b) Maturities of
mortgage-backed
securities are based on
estimated average life.
<TABLE>
Securities
Available for
Sale
(excluding
Equity
Securities)
December 31,
1995
<CAPTION>
Maturity < 1-5 Year 6-10 Year Over 10 Year
1 year Maturity Maturity Maturity Total
($000s) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. $ - - $ 101 5.89% $ - - $ - - $ 101 5.89%
Treasury
securities
U.S.
Government
agencies
and - - 11,695 6.41% - - 967 9.58% $ 12,662 6.65%
corporations
Agency
mortgage-
backed
securities 129 6.16% 43,596 7.04% 14,756 7.62% 10,869 8.38% 69,350 7.37%
(b)
States and
political
subdivisions - - 679 6.62% 6,157 7.18% 11,536 7.71% 18,372 7.49%
(a)
Mortgage
derivative - - - - - - 9,378 7.45% 9,378 7.45%
securities
Total fair $129 6.16% $56,071 6.90% $20,913 7.49% $32,750 7.91% $109,863 7.31%
value
Amortized
cost $131 $56,093 $20,796 $32,334 $109,354
(a) Taxable equivalent
yields
(b) Maturities of
mortgage-backed
securities are based on
estimated average life.
</TABLE>
The mortgage derivative securities consist solely of
collateralized mortgage obligations (CMOs) including one
principal-only CMO issued by FNMA with a book value of $267,000
and a market value of $209,000. The remaining CMOs are privately
issued. Credit risk on privately issued CMOs is evaluated based
upon independent rating agencies and on the underlying collateral
of the obligation. At December 31, 1995, the Corporation held
one CMO issued by Prudential Home Mortgage with a book value of
$3,046,000 and a market value of $3,073,000.
The state and political subdivision portfolio includes
approximately $1.9 million zero coupon revenue bonds. These
bonds are purchased at a significant discount to par value and
the income recognized on the bonds is derived from the accretion
of the discount using a method that approximates a level yield.
MARKETABLE EQUITY SECURITIES
The Corporation held marketable equity securities in its
investment portfolio as of December 31, 1995. In accordance with
regulatory requirements, all equity securities were transferred
to Securities Available for Sale on January 1, 1994 because these
securities do not have a stated maturity. Current accounting
principles require that marketable equity securities be recorded
at the lower of cost or market value with a corresponding
adjustment to reduce shareholders' equity if market value is
lower than cost. At December 31, 1995 and 1994, estimated market
values approximated original cost.
<TABLE>
<CAPTION>
Taxable
Equivalent
December 31, 1995 ($000s) Cost Market Value Yield
<S> <C> <C> <C>
Federal Home Loan Bank stock $1,844 $1,844 6.82%
Corporate Stock 215 215 4.57%
Federal Reserve Bank 187 187 6.00%
Stock
$2,246 $2,246
Equivalent
December 31, 1994 ($000s) Cost Market Value Yield
Federal Home Loan Bank stock $1,724 $1,724 6.38%
Corporate Stock 155 155 2.74%
Federal Reserve Bank 187 187 6.00%
Stock
$2,066 $2,066
</TABLE>
LOANS AND LEASES
The following table shows the history of commercial and
consumer loans and leases by major category at December 31.
<TABLE>
<CAPTION>
($000s) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Commercial loans:
Real estate construction $ 1,530 $ 1,801 $ 2,081 $ 973 $ 771
Acceptances of other banks - - - - -
Real estate mortgage 28,744 23,701 21,211 19,184 20,817
Commercial, financial
and agricultural 50,532 38,983 25,317 19,568 9,424
Direct financing leases 3 5 9 58 476
Total commercial loans $ 80,809 $ 64,490 $ 48,618 $ 39,783 $31,488
Consumer loans:
Residential mortgage $ 69,999 $ 76,094 $ 70,301 $ 65,536 $38,720
Installment loans 6,959 5,116 5,281 7,535 6,538
Credit card and other 2,190 1,396 1,032 1,123 1,309
consumer
Total consumer loans $ 79,148 $ 82,606 $ 76,614 $ 74,194 $46,567
Total loans and leases $159,957 $147,096 $125,232 $113,977 $78,055
</TABLE>
An analysis of maturity and interest rate sensitivity of business
loans at the end of 1995 follows:
<TABLE>
<CAPTION>
Under 1 to 5 Over 5
($000s) 1 Year Years Years Total
<S> <C> <C> <C> <C>
Domestic loans:
Real estate construction $ 1,213 $ 4 $ 313 $ 1,530
Real estate mortgage 17,813 4,247 6,684 28,744
Commercial, financial
and agricultural 35,193 9,932 5,407 50,532
Direct financing leases 0 3 3
Total business loans (a) $54,219 $14,186 $12,404 $80,809
Rate sensitivity:
Predetermined rate $ 4,200 $ 5,272 $12,224 $21,696
Floating or adjustable rate 50,019 8,914 180 59,113
Total domestic business loans $54,219 $14,186 $12,404 $80,809
Foreign loans 0 0 0 0
(a) does not include nonaccrual loans
</TABLE>
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation, as part of its philosophy of risk
management, has established various credit policies and
procedures intended to minimize the Corporation's exposure to
undue credit risk. Credit evaluations of borrowers are performed
to ensure that loans are granted on a sound basis. In addition,
care is taken to minimize risk by diversifying specific industry.
Credit risk is continuously monitored by Management through the
periodic review of individual credits to ensure compliance with
policies and procedures. Adequate collateralization, contractual
guarantees, and compensating balances are also utilized by
Management to mitigate risk.
Management determines the appropriate level of the allowance
for possible loan losses by continually evaluating the quality of
the loan portfolio. The reserve is allocated to specific loans
that exhibit above average credit loss potential based upon their
payment history and the borrowers' financial conditions.
Management maintains a watch list of substandard loans for
monthly review. Although several of these loans are not
delinquent and may be adequately secured, Management believes
that due to location, size, or past payment history, it is
necessary to monitor these loans monthly.
The allowance for possible loan losses totaled $2,703,000,
or 1.69% of total loans and leases at December 31, 1995. At the
end of the previous year, the allowance for possible loan losses
was $1,537,000, or 1.04% of total loans and leases. The
provision charged to expense during 1995 was $1,150,000 compared
to $805,000 in the year ago period.
Management's allocation of the allowance for possible loan
losses for the past four years based on estimates of potential
future loan loss is set forth in the table below:
<TABLE>
<CAPTION>
% of % of % of % of
Total Total Total Total
($000s) 1995 Loans 1994 Loans 1993 Loans 1992 Loans
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specific reserves:
Commercial $ 310 0.19% $ 10 0.01% $ 960 0.77% $ 370 0.32%
Mortgage 10 0.01% 5 0.00% 38 0.03% 51 0.04%
Consumer 5 0.00% 7 0.00% 21 0.02% 41 0.04%
Criticized loans without
specific allocation 414 0.26% 315 0.21% 160 0.13% 153 0.13%
Provision for loan categories
based on historical loss
experience:
Commercial 1,344 0.84% 687 0.47% 335 0.27% 284 0.25%
Commercial real estate 152 0.10% 103 0.07% 7 0.01% 10 0.01%
Residential mortgage 325 0.20% 298 0.20% 28 0.02% 29 0.03%
Consumer 143 0.09% 112 0.08% 68 0.05% 86 0.08%
Total $ 2,703 1.69% $ 1,537 1.04% $ 1,617 1.29% $ 1,024 0.90%
Total loans and leases $159,957 $147,096 $125,232 $113,977
outstanding
</TABLE>
The allocation of the loan loss reserve in the manner
described above is not available for 1991.
The following table sets forth the five year historical
information on the reserve for loan losses:
<TABLE>
ALLOWANCE FOR POSSIBLE LOAN LOSSES
<CAPTION>
Five year history
($000s) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Balance as of January 1 $1,537 $1,617 $1,024 $1,013 $ 891
Provision of loan losses
1,150 805 577 405 125
Adjustment incident to
acquisition - - - 4 -
Loans charged off:
Real estate
25 49 19 13 19
Commercial
- 806 - 59 6
Consumer
26 85 15 25 22
Direct financing leases
- - - 340 -
Total loans charged-off
51 940 34 437 47
Recoveries of loans
previously
charged-off:
Real estate 3 18 - 2 9
Commercial
1 29 21 22 19
Consumer
18 7 11 6 16
Direct financing leases
45 1 18 9 -
Total recoveries
67 55 50 39 44
Net charge-offs (recoveries)
(16) 885 (16) 398 3
Balance at December 31 $2,703 $1,537 $1,617 $1,024 $1,013
</TABLE>
<TABLE>
<CAPTION>
($000s) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Loans and leases outstanding
at December 31 $159,957 $147,096 $125,232 $113,977 $78,055
Allowance as a percent of
loans
and leases outstanding 1.69% 1.04% 1.29% 0.90% 1.30%
Average loans and leases $152,502 $134,952 $120,218 $ 95,489 $76,333
Net charge-offs as a percent
of average loans and leases -0.01% 0.66% -0.01% 0.42% 0.00%
</TABLE>
The following schedule shows the amount of under-performing
assets and loans 90 days or more past due but accruing interest.
<TABLE>
<CAPTION>
UNDER-PERFORMING ASSETS
($000s) 1995 1994 1993
<S> <C> <C> <C>
Nonaccrual loans and leases $162 $ 478 $2,358
Loans 90 days or more past
due but accruing interest 14 11 436
Other real estate owned 579 586 69
Total $755 $1,075 $2,863
</TABLE>
In addition to the above schedule of non-performing assets,
Management prepares a watch list consisting of loans over
$100,000 which Management has determined require closer
monitoring to further protect the Corporation against loss. The
balance of loans classified by Management as substandard due to
delinquency and a change in financial position at the end of 1995
and not included in the table above was $787,000. There are no
other loans classified for regulatory purposes that would
materially impact future operating results, liquidity or capital
resources or which management doubts the ability of the borrower
to comply with loan repayment terms.
DEPOSITS
Primarily core deposits are used to fund interest-earning
assets. The Corporation has a lower volume of interest-free
checking accounts than its peer group which is typical for its
market area. This results in an overall higher cost of funds
than peer average. The accompanying tables show the relative
composition of the Corporation's average deposits and the change
in average deposit sources during the last three years.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS ($000s) 1995 1994 1993
<S> <C> <C> <C>
Demand $ 25,819 $ 24,797 $ 21,093
Interest bearing checking 25,953 26,764 30,895
Savings 78,679 95,655 85,865
Other time 108,578 89,431 96,045
Certificates-$100,000 and 12,751 10,229 10,661
over
Total average deposits $251,780 $246,876 $244,559
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF AVERAGE 1995 1994 1993
DEPOSITS
<S> <C> <C> <C>
Demand 10.26% 10.04% 8.63%
Interest bearing checking 10.31% 10.84% 12.63%
Savings 31.25% 38.75% 35.11%
Other time 43.12% 36.23% 39.27%
Certificates-$100,000 and 5.06% 4.14% 4.36%
over
Total 100.00% 100.00% 100.00%
CHANGE IN AVERAGE
DEPOSIT SOURCES ($000s) 1994 to 1995 1993 to 1994
Demand $ 1,022 $ 3,704
Interest bearing checking
(811) (4,131)
Savings
(16,976) 9,790
Other time
19,147 (6,614)
Certificates-$100,000 and
over 2,522 (432)
Total $ 4,904 $ 2,317
</TABLE>
Average deposits increase 1.99% from 1994 to 1995. The mix
of deposits is directly affected by the interest rate
environment. During periods of low interest rates, customers
tend to maintain their balances in savings accounts. As deposit
rates increase, funds flow from savings deposits to time
deposits. As part of its asset/liability strategy during 1995,
the Corporation offered several certificate of deposit promotions
to extend maturities on deposits. This resulted in a decrease in
average savings balances and an increase in average time
balances.
BORROWINGS
Other sources of funds for the Corporation include short-
term repurchase agreements and Federal Home Loan Bank borrowings.
Borrowings at the Federal Home Loan Bank are utilized to match
the maturities of selected loans and to leverage the capital of
the Corporation to enhance profitability for shareholders.
CAPITAL RESOURCES
At December 31, 1995, shareholders' equity was $25,164,000
compared to $20,214,000 at December 31, 1994, an increase of
$4,950,000 or 24.49%. The increase in capital during 1995 was
due to retention of earnings and the increase in market value of
Securities Available for Sale.
The Federal Reserve Board has adopted risk-based capital
guidelines that assign risk weightings to assets and off-
balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% of risk-weighted assets and total capital of 8.0% of risk-
weighted assets. Tier 1 capital consists principally of
shareholders' equity less goodwill, while total capital
consists of core capital, certain debt instruments and a
portion of the reserve for loan losses. At December 31, 1995,
the Corporation had a Tier 1 capital ratio of 13.07% and a
total capital ratio of 14.59%, well above the regulatory
minimum requirements.
The following table shows several capital and liquidity
ratios for the last three years:
<TABLE>
<CAPTION>
December 31 1995 1994 1993
<S> <C> <C> <C>
Average shareholder's equity
to :
Average assets 7.34% 6.87% 6.76%
Average deposits 9.07% 8.05% 7.39%
Average loans and leases 14.97% 14.73% 15.04%
Primary capital 8.78% 6.95% 7.84%
Risk-based capital ratio:
Tier 1 13.07% 12.26% 12.82%
Total 14.59% 13.21% 14.04%
Leverage ratio 7.39% 6.33% 6.42%
</TABLE>
National banks must maintain a total assets leverage
ratio of at least 3.0%. The total assets leverage ratio is
calculated by dividing capital less intangibles into assets,
net of intangibles. In many cases, regulators require an
additional cushion of at least 1.0% to 2.0%. At December 31,
1995, the Corporation's Tier One leverage ratio was 7.39%.
The following table presents dividend payout ratios for the
past three years.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Total dividends declared
as a percentage of net 25.77% 27.18% 30.36%
income
Common dividends declared
as a percentage of earnings
per common share 24.36% 25.37% 28.05%
</TABLE>
Currently there are no known trends, events or
uncertainties that would have a material effect on the
Corporation's liquidity, capital resources or results of
operations.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation meets its liability based needs through the
operation of Belmont National Bank's branch banking network that
gathers demand and retail time deposits. The Bank also acquires
funds through repurchase agreements and overnight federal funds
that provide additional sources of liquidity. Total deposits
decreased by $9.1 million, or 3.55%, from the end of 1994 to
1995. Short term borrowings increased by $3.2 million over the
same period. Average deposits increased 1.99% during 1995
compared to 1994.
The Corporation also has unused lines of credit with various
correspondent banks totaling $10.4 million which may be used as
an alternative funding source.
INTEREST RATE SENSITIVITY
The Corporation's net interest revenue can be vulnerable to
wide fluctuations arising from a change in the general level of
interest rates to the degree that the average yield on assets
responds differently to such a change than does the average cost
of funds. To maintain a consistent earnings performance, the
Corporation actively manages the repricing characteristics of its
assets and liabilities to control net interest income rate
sensitivity.
The mismatching of asset and liability repricing
characteristics in specific time frames is referred to as
interest rate sensitivity gaps. Mismatching or "gapping" can be
profitable when the term structure of interest rates (the yield
curve) is positive, i.e. short term yields are lower than long
term yields, but gapping entails an element of risk, particularly
in volatile markets. An institution is said to have a negative
gap when its liabilities reprice in a shorter time period than
its assets. A positive gap exists when assets reprice more
quickly than liabilities. A negative gap in a period when the
general level of interest rates is declining will produce a
larger net interest income spread than would be the case if all
assets and liabilities were perfectly matched. Conversely, net
interest income will be adversely affected by a negative gap
position in a period when the general level of interest rates is
rising. Gaps, therefore, must be prudently managed.
The Corporation examines its interest rate sensitivity
position by categorizing the balance sheet into respective
repricing time periods similar to those shown on the accompanying
table. Repricing of certain assets, such as installment loans,
mortgage loans and leases, is based upon contractual amortization
or repricing, although experience indicates that they reprice
more quickly due to early payoffs. Mortgage-backed securities
are included in maturity/repricing categories based upon
historical prepayment speeds. Based upon historical deposit rate
relationships, savings and interest bearing checking are
partially included in the non-rate sensitive category since rate
changes on these products are not completely sensitive to
fluctuations in the interest rate environment.
Asset/liability management encompasses both interest rate
risk and liquidity management. The resulting net cumulative gap
positions reflect the Corporation's sensitivity to interest rate
changes over time. The calculation is a static indicator and is
not a net interest income predictor of a dynamic business in a
volatile environment. As a static indicator, the gap methodology
does capture major trends.
<TABLE>
<CAPTION>
Rate Sensitivity
Analysis
December 31, 1995
Maturing or repricing
Non-rate
Total Sensitive
31-90 91-180 181-365 1 year 1-5 & over
1-30 days days days days & under years 5 years Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest earning
assets:
Loans and leases $43,672 $ 9,688 $ 6,851 $13,783 $ 73,994 $ 28,496 $ 57,467 $159,957
Investment securities 697 3,703 1,106 1,678 7,184 6,608 9,934 23,726
Securities available 2,681 1,628 6,688 6,908 17,905 39,496 54,708 112,109
for sale
Total interest $47,050 $15,019 $14,645 $22,369 $ 99,083 $ 74,600 $122,109 $295,792
earning assets
Interest bearing
liabilities:
Interest checking $ - $ - $ - $ - $ - $ - $ 27,193 $ 27,193
Savings 21,145 - - - 21,145 - 57,738 78,883
Certificates-$100,000 2,360 1,266 3,410 3,205 10,241 1,327 309 11,877
and over
Other time 6,498 16,185 23,621 24,050 70,354 24,877 7,172 102,403
Short term borrowings 38,665 - - - 38,665 - - 38,665
Long term debt - - - - - 4,802 - 4,802
Total interest $ 68,668 $ 17,451 $ 27,031 $ 27,255 $140,405 $ 26,204 $ 92,412 $259,021
bearing liabilities
Rate sensitivity gap $(21,618) (2,432) $(12,386) (4,886) $(41,322) $ 48,396 $ 29,697 $ 36,771
Cumulative gap $(21,618)$(24,050) $(36,436) $(41,322) $ 7,074 $ 36,771
Cumulative gap as a
percentage of
interest earning -7.31% -8.13% -12.32% -13.97% 2.39% 12.43%
assets
</TABLE>
Interest bearing checking and savings deposits that have no
contractual maturity are scheduled in the table above according
to Management's best estimate of their repricing sensitivity to
changes in market rates. If all of these deposits had been
included in the 1-30 days category above, the cumulative gap as a
percentage of earning assets would have been negative 36.02%,
36.84%, 41.03%, 42.68%, 26.32% and positive 12.43%, respectively,
for the 1-30 days, 31-90 days, 91-180 days, 181-365 days, 1-5
years, and greater than 5 years categories at December 31, 1995.
In January 1996, the maturity of $10 million included in
short term borrowings was extended to one year and an additional
$10 million was extended to two years.
ITEM 8 - FINANCIAL STATEMENTS & SUPPLEMENTARY DATA
The annual report of Belmont Bancorp. is hereby incorporated
by reference and appears as Exhibit B. Management's report on
their responsibility for financial reporting is included in the
Corporation's annual report.
ITEM 9 - DISAGREEMENT OF ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in Belmont Bancorp.'s definitive proxy
statement dated March 15, 1996 (Exhibit C) is incorporated by
reference in response to this item.
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF JANUARY 1, 1996:
Name Age Position
J. Vincent Ciroli, Jr. 50 President and Chief
Executive, Officer,
Belmont Bancorp. &
Belmont National Bank
William Wallace 40 Vice President, Belmont Bancorp.;
Executive Vice President & Chief
Operating Officer,
Belmont National Bank
Jane R. Marsh 34 Secretary, Belmont Bancorp.;
Senior Vice President,
Controller & Cashier, Belmont
National Bank
Each of the officers listed above has been an executive
officer of the Corporation or one of its subsidiaries during the
past five years.
ITEM 11 - EXECUTIVE COMPENSATION
The information appearing in Belmont Bancorp.'s definitive
proxy statement dated March 15, 1996 (Exhibit C) is incorporated
by reference in response to this item.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information appearing in Belmont Bancorp.'s definitive
proxy statement dated March 15, 1996 (Exhibit C) is incorporated
by reference in response to this item.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing in Belmont Bancorp.'s definitive
proxy statement dated March 15, 1996 (Exhibit C) is incorporated
by reference in response to this item.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on March 19, 1996.
By Terrence A. Lee, Chairman BELMONT BANCORP
Terrence A. Lee, Chairman (Registrant)
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the
date indicated.
John A. Belot John A. Belot Director
Vincent Ciroli, Jr. J. Vincent Ciroli, Jr. Director,President & CEO.
Belmont Bancorp.,
Belmont National Bank
Samuel Mumley Samuel Mumley Director
Mary L. Holloway Haning Mary L. Holloway Haning Director
Charles J. Kaiser, Jr. Charles J. Kaiser, Jr. Director
John H. Goodman, II John H. Goodman, II Director
Dana Lewis Dana Lewis Director
Jane R. Marsh Jane R. Marsh Secretary, Belmont
Bancorp. and Sr.
Vice President,
Controller & Cashier,
Belmont National Bank
James Miller James Miller Director
W. Quay Mull, II W. Quay Mull, II Director
Tom Olszowy Tom Olszowy Director
Keith Sommer Keith Sommer Director
William Wallace William Wallace Director & Vice
President, Belmont
Bancorp.;
Executive Vice
President & COO,
Belmont National Bank
Charles A. Wilson, Jr. Charles A. Wilson, Jr. Vice Chairman
Terrence A. Lee Chairman of the
Board
Terrence A. Lee March 19, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit 1 - Consent of Independent Certified Public Accountants
Exhibit 2 - Belmont Bancorp.'s 1995 Annual Report to Shareholders
Exhibit 3 - Belmont Bancorp.'s Proxy Statement to Shareholders, dated
March 15, 1996
Exhibit 27 - Financial Data Schedule
<PAGE>
EXHIBIT 1 - CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of Belmont
Bancorp.
We consent to incorporation by reference of our report dated
January 23, 1996, relating to the consolidated balance sheets of
Belmont Bancorp. as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity,
and statements of cash flows for each of the three years in the
period ended December 31, 1995. Said report appears as Exhibit B
of Belmont Bancorp.'s annual form 10-K.
s/S.R. Snodgrass A.C.
S.R. Snodgrass A.C.
Wheeling, WV
March 19, 1996
Corporate Profile
Belmont Bancorp. (the Corporation) is a $317 million bank
holding company, incorporated in Ohio. Belmont National
Bank, a wholly-owned subsidiary of the Corporation, is an
FDIC-insured, federally chartered commercial bank.
The Bank delivers a comprehensive range of financial
products and services to individuals, families, businesses
and corporations through ten full service offices and two
drive-up service locations. Belmont National Bank's primary
market areas for its consumer, commercial, trust and
investment services are Belmont, Harrison, Tuscarawas and
Jefferson counties in Ohio, and Marshall and Ohio counties
in West Virginia.
<TABLE>
Financial Highlights
(unaudited) (000's except per share data)
<CAPTION>
1995 1994 % change
<S> <C> <C> <C>
Net income $ 4,206 $ 3,234 30.1%
Operating Return on average assets 1.35% 1.12%
results Return on average common equity 18.90% 16.71%
Return on average total equity 18.42% 16.19%
Per Net income $ 1.95 $ 1.49 30.8%
common Dividend 0.475 0.378 25.7%
share Book value at year-end 11.43 9.09 25.8%
At Total assets $ 317,279 $ 312,963 1.4%
year- Total loans 159,957 147,096 8.7%
end Total deposits 246,850 255,923 -3.5%
Total shareholders' equity 25,164 20,214 24.5%
Liquidity Average common equity
and to average total assets 7.02% 6.52%
capital Average total equity
ratios to average total assets 7.34% 6.87%
Tier one capital ratio 13.07% 12.26%
Total risk-based capital ratio 14.59% 13.21%
Leverage ratio 7.39% 6.33%
Dividend payment ratio 25.77% 27.49%
</TABLE>
From Management
1995 represented another year of continued growth and
record profits for Belmont Bancorp. Your Corporation
continues to show double digit income growth, with net
income of $4,206,000 for all of 1995 compared to $3,234,000
for twelve months 1994, a 30.1% increase. On a per share
basis this was $1.95 compared to $1.49, respectively.
Equally impressive was our return on average equity and
our return on average assets. Return on average equity
increased to 18.90% from 16.71% in 1994. Return on average assets
increased to 1.35% from 1.12% in 1994. Total shareholder
equity increased 24.5% to $25,164,000 from $20,214,000.
During 1995, our loan portfolio grew 8.7% to
$159,957,000, our net interest margin increased from 4.25%
to 4.55% and our loan quality improved. Nonperforming
assets as a percentage of total assets decreased to only
0.23% of total assets from 0.34% of total assets.
Additionally, our allowance for possible loan loss as a
percentage of total loans increased to 1.69% from
1.04%...excellent by any standard.
Your Corporation is also pleased to announce that 1996
represents 150 years of service for Belmont National Bank;
and we are still a young organization continuing to look for
ways to service the needs of all the communities we serve.
1996 also represents the year we moved Belmont National
Bank headquarters to Wheeling, West Virginia. This move
permits your Corporation to have an interstate presence
ahead of the law change permitting most banks to do so. We
believe this move helps the value of our franchise.
From Management
We will not be resting on our laurels in 1996; we
anticipate continued expansion in both Ohio and West
Virginia opening new offices in both states during the year.
Personally, I would like to extend my sincere
appreciation to all the officers and staff of the
Corporation, and the Board of Directors whose dedication
make Belmont Bancorp. and Belmont National Bank one of the
top banking organizations in the country. I would
especially like to thank William P. Goddard, who recently
resigned from our Board of Directors. Bill's wisdom, advise
and counsel will be missed by our whole organization.
And, as always, I would like to thank our shareholders
who have shown trust in the leadership of our Corporation
and to whom we pledge our continuing best effort. We look
forward to providing them with another prosperous year.
This annual report pays tribute to our forefathers who
founded our organization back in 1846. We hope you enjoy
this brief visit to the past.
J. Vincent Ciroli, Jr. Terrence A. Lee
President & CEO Chairman
One Hundred and Fifty Years Young
Belmont National Bank has the proud distinction of
being one of the ten oldest financial institutions in the
State of Ohio. Our roots go deep, representing an important
part of our heritage as well as the development of the Ohio
Valley and our communities.
The Bank began in 1846 as the Belmont Branch of the
State Bank of Ohio located in Bridgeport. Although there
are few records from the Bank's early history, we do know
that John C. Tallman was Cashier and John Warfield was
President. The directors of the old State Bank were Jacob
Holloway, Ezekiel Harris, Henry Kennon, John Warfield, John
Kinsey, James Y. Patterson, John K. Newland, James A. Gray,
and Hugh McNeely. Under the efficient management of these
men, the bank withstood the Crash of 1857.
The affairs of the Belmont Branch of the State Bank of
Ohio were wound up by limitation in 1863 and reorganized
under the name First National Bank of Bridgeport on December
5, 1863. In addition to being one of the first National
Banks in the State of Ohio, First National Bank of
Bridgeport was the 214th National Bank in the United States.
It was funded with $200,000 of capital stock purchased by 80
shareholders at a cost of $100 per share. The Bank's
largest investors were Jacob Holloway of Flushing (former
director of the old State Bank) and John P. Smith of
Pittsburgh, each purchasing 100 shares. Directors of the
reorganized bank were Crispin Oglebay, William W. Holloway,
Finley B. McGraw, Hiram W. Smith, and Ebenezer P. Rhodes.
William W. Holloway was elected President, while John C.
Tallman (former Cashier of the old State Bank) was retained
as Cashier. Handwritten minutes from the Bank's board
meetings indicate the President's salary was established at
$1,000 per annum and the Cashier's salary at $2,000 per
annum.
One Hundred and Fifty Years Young
On January 30, 1864, a new bank was organized in St.
Clairsville with $60,000 of capital stock purchased by 47
shareholders at a cost of $100 per share. It became the
315th National Bank in the United States. Directors of the
new First National Bank of St. Clairsville were D. D. T.
Cowen, Joseph Woodsmansee, Ross J. Alexander, John Darrah
and David Brown. Judge D. D. T. Cowen, Attorney, was
elected President, while H. C. Welday was retained as
Cashier with a salary of $600 per annum. Judge Cowen
continued to serve as the Bank's President until his death
on April 9, 1884. Here are a few interesting notes from
board meetings. "On motion it was resolved to buy twenty
two feet front and thirty four feet deep of the southwest
corner of H. C. Welday's Lot on the south side of Main
Street for Six Hundred Dollars on which to build a Banking
House." "Joseph B. Butler was employed to haul the stone
for the Banking House at the rate of One Dollar per perch (a
measure of length equal to 5 1/2 yards)." "On Board motion
the Cashier was directed to subscribe for the Bank the sum
of Twenty Five Dollars to help defray the expense of
opposing the removal of the County Seat from St. Clairsville
to Bellair." The board enjoyed having dinner together after
board meeting adjournment. Ernst String's Restaurant and
Johnson's and Wilson's Restaurant were favorites to "partake
of an oyster supper." On April 18, 1865, the following
notation was written: "On motion it was Ordered that the
Cashier drape the Banking House in black and close the Bank
on the 19th. It being the day of the funeral observance of
the President of the United States Abraham Lincoln."
One Hundred and Fifty Years Young
In 1903, the First National Bank of Bridgeport reorganized
under the name of Bridgeport National Bank with J. J.
Holloway named President. The Bank weathered the depression
and remained open until the Bank Holiday. It closed for
just one day and then reopened. An advertisement which
appeared in the Bridgeport High School's 1916 yearbook
exclaimed the following for Bridgeport National Bank. "It
passed through The Panic of 1857, The Great Civil War of
1861-1865, The Panic of 1873, The Panic of 1893 and The
Panic of 1907. During these troublesome times no depositor
was ever asked to wait one hour for his or her money."
On December 22, 1958, an agreement was entered into by
First National Bank in St. Clairsville to merge with
Bridgeport National Bank to form Belmont County National
Bank. O. A. Holsinger, the President of Bridgeport National
Bank, was named President of Belmont County National Bank.
On April 1, 1990, Belmont County National Bank changed
its name to Belmont National Bank. On June 1 of that same
year, the Bank expanded service into Harrison County with
the purchase of assets and deposits of the First National
Bank of Jewett. Service expansion continued into Tuscarawas
County in 1992 when the Bank purchased the assets and
deposits of three offices of Diamond Savings and Loan
Association.
Today, Belmont National Bank is beginning its expansion
into West Virginia, with a newly opened office in the
Woodsdale area of Wheeling and a soon to open office in Elm
Grove.
<TABLE>
Belmont Bancorp. and Subsidiaries
Summarized Quarterly Financial Information
(Unaudited) ($000's except per share data)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1995
Interest income $ 5,876 $ 5,785 $ 5,955 $ 5,838
Interest expense 2,746 2,648 2,791 2,742
Net interest income 3,130 3,137 3,164 3,096
Provision for credit 400 300 200 250
losses
Security gains (losses) 127 37 18 (80)
Net overhead 1,488 1,413 1,377 1,662
Income before income 1,369 1,461 1,605 1,104
taxes
Income taxes 363 363 385 222
Net income $ 1,006 $ 1,098 $ 1,220 $ 882
Net income per
common share $ 0.46 $ 0.51 $ 0.57 $ 0.41
1994
Interest income $ 4,250 $ 4,702 $ 5,250 $ 5,513
Interest expense 1,887 2,039 2,331 2,550
Net interest income 2,363 2,663 2,919 2,963
Provision for credit 250 270 85 200
losses
Security gains (losses) 15 (3) (2) (73)
Net overhead 1,269 1,411 1,377 1,722
Income before income 859 979 1,455 968
taxes
Income taxes 218 187 320 302
Net income $ 641 $ 792 $ 1,135 $ 666
Net income per common
share $ 0.29 $ 0.37 $ 0.53 $ 0.30
1993
Net income $ 301 $ 332 $ 1,125 $ 811
Net earnings per common
share $ 0.14 $ 0.15 $ 0.52 $ 0.37
</TABLE>
<TABLE>
Belmont Bancorp. and Subsidiaries
Consolidated Five Year Summary of Operations
For the Years Ending December 31, 1995, 1994, 1993, 1992,
1991 (Unaudited) ($000's except per share data)
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Interest income $ 23,454 $ 19,715 $ 16,789 $ 14,717 $ 16,198
Interest expense 10,927 8,807 8,616 8,082 10,091
Net interest income 12,527 10,908 8,173 6,635 6,107
Provision for credit losses 1,150 805 577 405 125
Net interest income after
provision for credit losses 11,377 10,103 7,596 6,230 5,982
Securities and trading gains
(losses) 102 (63) 943 323 44
Other operating income 1,683 1,290 1,193 966 915
Operating expenses 7,623 7,069 6,757 5,107 4,629
Income before income taxes 5,539 4,261 2,975 2,412 2,312
Income taxes 1,333 1,027 406 574 528
Net income 4,206 $ 3,234 $ 2,569 $ 1,838 $ 1,784
Earnings per common share(1) 1.95 $ 1.49 $ 1.18 $ 0.85 $ 0.84
Cash dividend declared per
share (1) $ 0.475 $ 0.378 $ 0.331 $ 0.324 $ 0.320
Book value per common
share (1) $ 11.43 $ 9.09 $ 8.68 $ 7.84 $ 7.31
Total loans $159,957 $147,096 $125,232 $113,977 $ 78,055
Total assets 317,279 312,963 267,505 267,332 197,015
Total deposits 246,850 255,923 243,232 245,743 176,859
Total shareholders' equity 25,164 20,214 19,355 17,565 15,445
(1) Restated for stock dividends paid during 1994 and 1995.
</TABLE>
<TABLE>
Belmont Bancorp. and Subsidiaries
<CAPTION>
Assets
1995 1994
<S> <C> <C>
Cash and due from banks $ 10,175 $ 11,770
Securities available for sale (at market value) 112,109 49,132
Securities held to maturity (market value of
$23,758 - 1995; and $86,828 - 1994) 23,726 92,463
Loans 159,957 147,096
Less allowance for possible loan losses (2,703) (1,537)
Net loans 157,254 145,559
Premises and equipment, net 5,090 4,648
Other real estate owned 579 586
Accrued income receivable 2,150 2,133
Other assets 6,196 6,672
Total assets $ 317,279 $ 312,963
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing deposits:
Demand $ 26,494 $ 27,269
Interest bearing deposits:
Demand 27,193 26,273
Savings 78,883 84,023
Time 114,280 118,358
Total deposits 246,850 255,923
Short-term borrowings 38,665 35,498
Long-term debt 4,802 -
Accrued interest on deposits and other borrowings 661 590
Other liabilities 1,137 738
Total liabilities 292,115 292,749
Shareholders' Equity
Preferred stock - authorized 90,000 shares with no
par value; issued and outstanding, none - -
Senior cumulative preferred stock - authorized,
issued and outstanding 10,000 shares with a
$100 par value 1,000 1,000
Common stock - in 1995 $0.50 par value, 8,900,000
shares authorized, 2,115,476 issued; in 1994
$3.57 par value, 1,750,000 shares authorized;
1,057,738 issued. 1,057 3,777
Surplus 7,781 5,061
Treasury stock (832 shares in 1995 and 424 shares
in 1994.) (8) (8)
Retained earnings:
Unappropriated 14,148 11,026
Appropriated for contingencies 850 850
Net unrealized gain (loss) on securities
available for sale 336 (1,492)
Total shareholders' equity 25,164 20,214
Total liabilities and shareholders' equity $ 317,279 $ 312,963
The accompanying notes are an integral part of the
financial statements.
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Income
For the Years Ended December 31, 1995, 1994 and 1993
($000's)
<CAPTION>
Interest Income
1995 1994 1993
<S> <C> <C> <C>
Loans and lease financing:
Taxable $ 13,924 $ 11,499 $ 10,508
Tax-exempt 288 190 167
Investment securities:
Taxable 7,638 6,714 5,080
Tax-exempt 1,424 1,209 643
Dividends 133 98 221
Interest on trading securities - 1 45
Interest on federal funds sold 47 4 125
Total interest income 23,454 19,715 16,789
Interest Expense
Deposits 9,022 7,865 8,525
Short-term borrowings 1,905 942 91
Total interest expense 10,927 8,807 8,616
Net interest income 12,527 10,908 8,173
Provision for Possible Loan Losses 1,150 805 577
Net interest income after provision
for possible loan losses 11,377 10,103 7,596
Non-Interest Income
Trust fees 413 341 274
Service charges on deposits 555 527 474
Other operating income 715 422 445
Investment securities gains (losses) 102 (64) 1,059
Trading gains (losses) - 1 (116)
Total non-interest income 1,785 1,227 2,136
Non-Interest Expense
Salary and employee benefits 3,357 2,946 2,808
Net occupancy expense of premises 552 533 541
Equipment expenses 764 618 491
Other operating expenses 2,950 2,972 2,917
Total non-interest expense 7,623 7,069 6,757
Income before income taxes 5,539 4,261 2,975
Income Taxes 1,333 1,027 406
Net income $ 4,206 $ 3,234 $ 2,569
Weighted - Average Number of Shares
Outstanding 2,114,644 2,114,524 2,114,020
Earnings Per Common Share $ 1.95 $ 1.49 $ 1.18
The accompanying notes are an integral part of the financial
statements.
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1995, 1994 and 1993
($000's)
<CAPTION>
Unrealized
Gain (Loss)
Retained Earnings on Securities
Preferred Common Unappro- Appro- Treasury Available
Stock Stock Surplus priated priated Stock for Sale
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1992 $ 1,000 $ 2,749 $ 3,647 $ 9,333 $ 850 $ (14) $ -
1993 Net income - - - 2,569 - - -
Cash dividend
declared:
Preferred stock - - - (80) - - -
Common stock
($.331 per share) - - - (700) - - -
Sale of treasury
stock - - - - - 1
Balance, December
31,1993 1,000 2,749 3,647 11,122 850 (13) -
Effect of adopting
SFAS 115 - - - - - - 6
10% Common stock
dividend
at fair market
value - 274 1,413 (1,687) - - -
25% Common stock
dividend
at par value - 754 - (754) - - -
1994 Net income - - - 3,234 - - -
Cash dividends
declared:
Preferred stock - - - (80) - - -
Common stock
($.378 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)
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 (per
share $.475) - - - (1,004) - - -
Change in
unrealized
gain (loss)-
securities
available
for sale - - - - - - 1,828
Balance, December
31, 1995 $ 1,000 $ 1,057 $ 7,781 $14,148 $ 850 $ (8) $ 336
The accompanying notes are an integral part of the financial
statements.
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1995, 1994 and 1993
($000's)
<CAPTION>
1995 1994 1993
Operating Activities
<S> <C> <C> <C>
Net income $ 4,206 $ 3,234 $ 2,569
Adjustments to reconcile net income
to net cash flows
provided (used) by operating
activities:
Provision for loan losses 1,150 805 577
Depreciation and amortization
expense 601 519 446
Amortization of investment security
premiums 1,123 1,877 3,025
Accretion of investment security
discounts
and interest recorded on zero-
coupon securities (305) (403) (601)
Investment securities (gains)
losses 11 10 205
Trading (gains) losses - (1) 116
(Gains) losses on securities
available for sale (113) 55 (1,264)
Proceeds from sale of securities
held in trading account - 1,517 11,196
Purchase of securities for
trading account - (1,516) (13,346)
Loss (gain) on sale of fixed
assets 23 2 (29)
Gain on sale of loans (136) (23) (67)
Gain on sale of other real
estate owned - (1) -
(Increase) decrease in interest
receivable (17) (420) 38
Increase (decrease) in interest
payable 71 137 (265)
Purchase of life insurance
contracts - - (194)
Others, net (65) 1,859 (734)
Net cash provided (used) by
operating activities 6,549 7,651 1,672
Investing Activities
Proceeds from sales of
investment securities - - 21,558
Proceeds from maturities and
calls of investment
securities 12,154 3,207 899
Purchase of securities
available for sale (106,839) (26,052) (78,448)
Purchase of investment
securities (2,321) (47,621) (85,103)
Proceeds on sale of
securities available for sale 85,414 16,198 104,137
Principal collected on mortgage-
backed securities 19,405 29,434 50,537
Net increase in loans and leases,
net of charge-offs (23,491) (25,486) (15,002)
Proceeds on sale of loans 10,816 2,104 3,841
Loans purchased (94) - (185)
Recoveries on loans
previously charged-off 67 55 50
Proceeds from sale of other
real estate owned - 84 210
Purchase of premises and
equipment (1,071) (711) (842)
Proceeds from sale of fixed
assets 4 1 29
Net cash provided by (used
in) investing activities (5,956) (48,787) 1,681
Financing Activities
Net increase (decrease) in
deposits (9,073) 12,691 (2,511)
Net increase (decrease) in short-
term borrowings 3,167 31,789 716
Proceeds from the issuance of
long-term debt 4,805 - -
Payments on long-term debt (3) - -
Dividends paid on common and
preferred stock (1,084) (889) (780)
Sale of treasury stock - 6 1
Net cash provided by (used
in) financing activities (2,188) 43,597 (2,574)
Increase (Decrease) in Cash and
Cash Equivalents (1,595) 2,461 779
Cash and Cash Equivalents at
Beginning of Year 11,770 9,309 8,530
Cash and Cash Equivalents at
End of Year $ 10,175 $ 11,770 $ 9,309
The accompanying notes are an integral part of the financial
statements.
</TABLE>
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993
1. Summary of Significant Accounting Policies
The accounting and reporting policies and practices of the
Corporation are in accordance with generally accepted
accounting principles and conform to general practices
within the banking industry. The more significant of these
policies and practices are summarized below.
Nature of Operations: Belmont Bancorp. provides a variety
of banking services to individuals and businesses through
the branch network of its wholly-owned subsidiary, Belmont
National Bank (BNB). BNB operates nine full-service banking
facilities located in Belmont, Harrison and Tuscarawas
Counties in Ohio. In 1995, BNB received approval from the
Office of the Comptroller of the Currency to move its
headquarters to Wheeling, West Virginia. Its tenth full-
service banking facility was opened in Wheeling in January
1996.
Principles of Consolidation: The consolidated financial
statements include the accounts of Belmont Bancorp. and its
wholly-owned subsidiaries, Belmont National Bank and Belmont
Financial Network, Inc. Material intercompany accounts and
transactions have been eliminated.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Held to Maturity Securities: These securities are purchased
with the original intent to hold to maturity and events
which may be reasonably anticipated are considered when
determining the Corporation's intent and ability to hold to
maturity. Securities meeting such criteria at date of
purchase and as of the balance sheet date are carried at
cost, adjusted for amortization of premiums and accretion of
discounts.
Available for Sale Securities: Debt and equity securities
to be held for indefinite periods of time and not intended
to be held to maturity are classified as available for sale
and carried at market value with net unrealized gains and
losses, net of tax, reflected as a component of
shareholders' equity until realized. Securities held for
indefinite periods of time include securities that may be
sold to meet liquidity needs or in response to significant
changes in interest rates or prepayment risks as part of the
Corporation's overall asset/liability management strategy.
Prior to December 31, 1993, marketable equity securities
were carried at the lower of aggregate cost or market value
with net unrealized gains and losses reflected as
adjustments to retained earnings. Market value depreciation
below cost on debt securities held for sale prior to
December 31, 1993, was required to be reflected in current
period earnings.
Trading Securities: Trading securities are held for resale
within a short period of time and are stated at market
value. Trading gains and losses include the net realized
gain or loss and market value adjustments of the trading
account portfolio.
Income Recognition: Income earned by the Corporation and
its subsidiaries is recognized principally on the accrual
basis of accounting. Certain fees, principally service, are
recognized as income when billed. The subsidiary bank
suspends the accrual of interest when, in management's
opinion, the collection of all or a portion of interest has
become doubtful. Generally, when a loan is placed on non-
accrual, the bank charges all previously accrued and unpaid
interest against income. In future periods, interest will
be included in income to the extent received only if
complete principal recovery is reasonably assured.
The Corporation adopted the provisions of Statement of
Financial Accounting Standards No. 114 and No. 118,
"Accounting for Creditors for Impairment of a Loan." It is
the Corporation's policy not to recognize interest income on
specific impaired loans unless the likelihood of future loss
is remote. Interest payments received on such loans are
applied as a reduction of the loan principal balance. Since
the adoption of SFAS Nos. 114 and 118, the Corporation had
no loans which management has determined to be impaired.
The Corporation defers and amortizes loan fees and related
origination costs. These fees and costs are amortized into
interest or other income over the estimated life of the loan
using a method which approximates the interest method.
Direct Financing Leases: The leasing operation of the
Corporation consists of the leasing of various types of
equipment under leases classified as direct financing
leases. Interest and service charges, net of initial direct
costs, are deferred and reported as income in decreasing
amounts over the term of the lease so as to provide an
approximate constant yield on the outstanding principal
balance.
Allowance For Loan Losses: The allowance for loan losses is
maintained at a level which, in management's judgment, is
adequate to absorb credit losses inherent in the loan
portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan
portfolio, including the nature of the portfolio, credit
concentrations, trends in historical loss experience,
specific impaired loans, and economic conditions. Allowance
for impaired loans are generally determined based on
collateral values or the present value of estimated cash
flows. The allowance is increased by a provision for loan
losses, which is charged to expense and reduced by charge-
offs, net of recoveries. Changes in the allowance relating
to impaired loans are charged or credited to the provision
for loan losses. Because of uncertainties inherent in the
estimation process, management's estimate of credit losses
inherent in the loan portfolio and the related allowance may
change in the near term.
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1995, 1994 and 1993 (000's)
1. Summary of Significant Accounting Policies (continued)
Premises and Equipment: Premises and equipment are stated
at cost, less accumulated depreciation and amortization.
Provisions for depreciation and amortization are computed
generally using the straight line method over the estimated
useful lives of the assets. Leasehold improvements are
amortized on the straight line basis over the lease period.
When units of property are disposed of, the premises and
equipment accounts are relieved of the cost and the
accumulated depreciation related to such units. Any
resulting gains or losses are credited to or charged against
income. Costs of repairs and maintenance are charged to
expense as incurred. Major renewals and betterments are
capitalized at cost.
Other Real Estate: Real estate acquired in satisfaction of
indebtedness is recorded at the lesser of the loan balance
prior to foreclosure, plus certain costs incurred for
improvements to the property, or fair value less estimated
selling costs of the property.
Earnings Per Common Share: Earnings per common share are
calculated based on net income after preferred dividend
requirements and the weighted average number of shares of
common stock outstanding during the year.
Stock Split and Stock Dividends: On February 2, 1994, the
Corporation distributed 76,672 shares of common stock in
connection with a 10% stock dividend. On July 22, 1994, the
Corporation distributed 211,275 shares of common stock in
connection with a 25% stock dividend.
On February 21, 1995, the Corporation declared a two-for-one
stock split, which was effected in the form of a 100% stock
dividend to shareholders of record on May 1, 1995, and paid
on May 8, 1995.
On April 18, 1995, shareholders approved a change in the par
value of the Corporation's common stock to $0.50 per share
from $3.57 per share. Shareholder approval was also
received to increase the number of shares of common stock
authorized to 8,900,000.
Excess of Cost Over Net Assets Acquired: The excess of cost
over net assets of branches purchased in 1991 is being
amortized on the straight line method over ten years. The
excess of cost over net assets of branches purchased in 1992
is being amortized on the straight line method over a five
to eight year period for the portion allocated to the core
deposit base and ten years for the remaining excess. The
unamortized balances at December 31, 1995 and 1994, were
$1,508,000 and $1,923,000, respectively. Amortization
charged to expense was $415,000 in 1995 and 1994, and
$416,000 in 1993.
Reclassifications: Certain prior year amounts have been
reclassified to conform with current year presentation.
2. Changes in Accounting Policies
On January 1, 1994, the Corporation adopted Financial
Accounting Standards No. 115 (SFAS No. 115), "Accounting for
Certain Investments in Debt and Equity Securities." SFAS
No. 115 requires entities to classify debt and equity
securities as either held to maturity, available for sale,
or trading securities. Under SFAS No. 115, held to maturity
securities are recorded at amortized cost; whereas available
for sale securities and trading securities are carried at
market value. SFAS No. 115 further requires that unrealized
gains and losses on available for sale securities be
reported, net of tax, as a separate component of
shareholders' equity. Adoption of SFAS No. 115 had no
effect on current year earnings.
In November 1995, the Financial Accounting Standards Board
issued implementation guidance on SFAS No. 115. In
accordance with this guidance, the Corporation reassessed
the appropriateness of the classifications of all
securities. As a result, securities with an amortized cost
of $56,490,000 and unrealized loss of $95,000 were
transferred from the held to maturity category to the
available for sale category in December 1995.
In 1993, the Corporation adopted Financial Accounting
Standards No. 109 (SFAS No. 109), "Accounting for Income
Taxes." SFAS No. 109 requires an asset and liability
approach which recognizes the amount of taxes payable or
refundable in the current year and deferred tax consequences
of events that have been recognized previously in financial
statements or tax returns. The impact on tax expense in
1993 due to adoption of SFAS No. 109 was a consolidated
benefit of $28,109 recorded as of January 1, 1993.
In 1993, the Corporation adopted Financial Accounting
Standards No. 106, "Employers Accounting for Post-retirement
Benefits Other Than Pensions." The effect of this change
was to decrease net income for 1993 by $138,000 ($ .07 per
share).
3. Investment Securities
The estimated market value of investment securities are as
follows at December 31:
<TABLE>
<CAPTION>
1995 1994
Gross Gross Est. Gross Gross Est.
Amort Unrealized Unrealized Market Amort Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities
held to
maturity:
U.S.
Treasury
securities
and
obligations
of U.S.
Government
corporations
and agencies $2,269 $ - $ (65)$ 2,204 $ 4,248 $ 22 $ (312) $ 3,958
Obligations of
states and
political
subdivisions 5,034 127 (78) 5,083 24,244 51 (1,615) 22,680
Mortgage
derivative
securities 12,695 - (836) 11,859
Mortgage-backed
securities 16,423 147 (99) 16,471 51,276 7 (2,952) 48,331
Total held to
maturity $23,726 $ 274 $(242)$ 23,758 $92,463 $ 80 $(5,715) $86,828
Securities
available for
sale:
U.S. Treasury
securities and
obligations of
U.S. Govern
ment
corporations
and agencies $12,697 $ 66 $ - $ 12,763 $ 6,388 $ - $ (128) $ 6,260
Obligations
of states and
political
subdivisions 18,162 296 (86) 18,372 - - - -
Mortgage
derivative
securities 9,180 256 (58) 9,378 938 - (87) 851
Mortgage-
backed
securities 69,315 466 (431) 69,350 42,000 3 (2,048) 39,955
Total debt
securities 109,354 1,084 (575) 109,863 49,326 3 (2,263) 47,066
Equity
securities 2,246 - - 2,246 2,066 - - 2,066
Total
available
for sale $111,600 $1,084 $(575)$112,109 $51,392 $ 3 $(2,263) $49,132
</TABLE>
The amortized cost and estimated market value of investment
securities at December 31, 1995, by contractual maturity,
follow. Expected maturities will differ from contractual
maturities because issuers may have the right to call or
prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Securities Securities
Held to Maturity Available for Sale
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
<S> <C> <C> <C> <C>
Due in one year or less $ 35 $ 35 $ - $ -
Due after one year
through five years 2,923 2,887 12,420 12,476
Due after five years
through ten years 1,141 1,165 5,946 6,021
Due after ten years 3,204 3,200 12,493 12,638
Mortgage-backed
securities 16,423 16,471 69,315 69,350
Mortgage derivative
securities - - 9,180 9,378
Equity securities - - 2,246 2,246
Total $23,726 $23,758 $111,600 $112,109
</TABLE>
At December 31,1995 and 1994, the mortgage derivative
securities consist solely of collateralized mortgage
obligations (CMOs) including one principal-only CMO with a
book value of $267,000 and an estimated fair market value of
$209,000 at December 31, 1995. At December 31, 1995,
securities held to maturity include a U.S. Government agency
structured note with a carrying value of $2,269,000 and an
estimated market value of $2,204,000; securities available
for sale include two U.S. Government agency structured notes
with a carrying value of $1,931,000 and estimated market
value of $1,997,000.
<TABLE>
Sales and write-downs of investment securities resulted in
the following:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Proceeds from sales $ 85,414 $ 16,198 $ 21,558
Gross gains 464 31 790
Gross losses (352) (86) (191)
Realized losses on market
declines - - (804)
Losses on securities called (26) (9) -
Gains on securities called 16 - -
</TABLE>
All securities sold were classified as available for sale at
the time of sale. There were no transfers of securities
between classifications, except for those discussed in Note
2.
Assets carried at $39,149,000 and $36,538,000 at December
31, 1995 and 1994, respectively, were pledged to secure
United States Government and other public funds, and for
other purposes as required or permitted by law.
4. Loans and Allowance for Possible Loan Losses
<TABLE>
Loans outstanding at December 31 are as follows:
<CAPTION>
1995 1994
<S> <C> <C>
Real estate-construction $ 1,530 $ 1,801
Real estate-mortgage 69,999 76,094
Real estate-secured by nonfarm,
nonresidential property 28,744 23,701
Commercial, financial and agricultural 46,055 35,036
Obligations of political subdivisions
in the U.S. 4,477 3,947
Installment and credit card loans to
individuals 9,149 6,512
Direct financing leases 3 5
Loans receivable $ 159,957 $ 147,096
</TABLE>
The bank discontinues accruing interest income on loans and
leases when, in the opinion of management, the
collectibility of such interest appears doubtful. Non-
accruing loans and leases amounted to $162,000 and $478,000
at December 31, 1995 and 1994, respectively. The after-tax
effect of the interest that would have been accrued on these
loans was $5,000 in 1995 and $38,000 in 1994.
<TABLE>
The following is an analysis of loan activity to directors,
executive officers, and their associates (see Note 12):
<CAPTION>
1995 1994
<S> <C> <C>
Balance previously reported $4,904 $2,775
New loans during the year 4,097 3,716
Total 9,001 6,491
Less repayments during the year 2,201 1,587
Balance, December 31 $6,800 $4,904
</TABLE>
<TABLE>
Activity in the allowance for loan losses is summarized as
follows:
<CAPTION> December 31
1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $1,537 $1,617 $1,024
Additions charged to operating expense 1,150 805 577
Recoveries on loans previously
charged-off 67 55 50
Total 2,754 2,477 1,651
Loans charged-off 51 940 34
Balance at end of year $2,703 $1,537 $1,617
</TABLE>
The entire allowance represents a valuation reserve which is
available for future charge-offs.
5. Premises and Equipment
<TABLE>
Premises and equipment are stated at cost, less accumulated
depreciation and amortization, as follows:
<CAPTION>
Original
December 31 Useful Life
1995 1994 Years
<S> <C> <C> <C>
Land and land improvements $ 1,009 $ 734
Buildings 3,534 3,138 30 - 50
Furniture, fixtures and equipment 4,272 3,971 5 - 12
Leasehold improvements 373 406 5 - 20
Total 9,188 8,249
Less accumulated depreciation
and amortization 4,098 3,601
Premises and equipment, net $ 5,090 $ 4,648
</TABLE>
Charges to operations for depreciation and amortization
approximate $601,000, $519,000, and $446,000 for 1995, 1994,
and 1993, respectively.
6. Deposits
<TABLE>
The distribution of the bank's deposits at December 31, 1995
and 1994, are as follows:
<CAPTION>
1995 1994
Non- Non-
interest interest
Bearing Interest Bearing Bearing Interest Bearing
Demand Demand Savings Time Demand Demand Savings Time
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individuals,
partnerships
and Corpora-
tions $12,422 $27,193 $78,883 $110,258 $16,978 $26,273 $84,023 $113,319
U.S.
Government 272 - - - 197 - - -
States and
political
subdivisions 12,124 - - 4,022 7,460 - - 5,039
Other
depository
institutions
in the U.S. - - - - - - - -
Certified,
officers'
checks,
travelers
cheques,
etc. 1,676 - - - 2,634 - -
Total $26,494 $27,193 $78,883 $114,280 $27,269 $26,273 $84,023 $118,358
</TABLE>
6. Deposits (continued)
<TABLE>
Time deposits include certificates of deposit issued in
denominations of $100,000 or more which amounted to
$11,877,000 at December 31, 1995, and $12,090,000 at
December 31, 1994. A maturity distribution of time
certificates of deposit of $100,000 or more follows:
<CAPTION>
1995 1994
<S> <C> <C>
Due in three months or less $ 3,626 $ 3,697
Due after three months through six months 3,303 3,073
Due after six months through twelve months 3,312 2,182
Due after one year through five years 1,327 3,036
Due after five years 309 102
Total $ 11,877 $ 12,090
(/TABLE>
7. Short-Term Borrowings
Short term borrowings consist of advances from the Federal
Home Loan Bank of Cincinnati, federal funds purchased and
securities sold under agreement to repurchase.
Federal funds purchased and securities sold under agreements
to repurchase represent primarily overnight borrowings.
Information related to these borrowings is summarized below:
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Securities sold under repurchase agreements:
Balance at year end $14,539 $8,736 $3,709
Average during the year $17,669 $8,210 $3,581
Maximum month-end balance $24,012 $9,653 $4,319
Weighted average rate during the year 4.82% 3.56% 2.25%
Rate at December 31 3.05% 4.93% 2.75%
Federal funds purchased:
Balance at year end $ - $4,500 N/A
Average during the year $ 700 $ 397 N/A
Maximum month-end balance $ - $4,500 N/A
Weighted average rate during the year 6.87% 4.43% N/A
Rate at December 31 - 6.25% N/A
</TABLE>
Advances from the Federal Home Loan Bank of Cincinnati are
made under a blanket agreement which allows for maximum
borrowings of $30,000,000. Each advance is for a ninety day
term and bears interest at a variable rate, adjusted daily.
Collateral for the advances consists of residential mortgage
loans and shares of stock of the Federal Home Loan Bank of
Cincinnati. Information related to these borrowings at
December 31, 1995 and 1994, is summarized below:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Balance outstanding $ 24,126 $ 22,262
Interest rate at December 31 6.15% 7.00%
Collateral:
Residential mortgage loans $ 36,190 $ 33,393
Federal Home Loan Bank stock $ 1,844 $ 1,724
</TABLE>
8. Long-Term Debt
Long-term debt consists of advances from the Federal Home
Loan Bank of Cincinnati. Fixed-rate, single payment loans
totaling $4,000,000 at December 31, 1995, mature in 1997 and
1998 with interest rates ranging from 5.9% to 7.0%. Fixed
rate, amortizing loans totaling $802,000 at December 31,
1995, reach final maturity in years 1998 through 2015, with
interest rates ranging from 5.55% to 6.95%. The loans are
secured by residential mortgage loans with a carrying value
of $7,203,000 and Federal Home Loan Bank Stock.
Scheduled principal payments on long-term debt in each of
the five years subsequent to December 31, 1995 are as
follows:
1996 $ 119
1997 $ 2,125
1998 $ 2,133
1999 $ 29
2000 $ 31
9. Income Tax
As discussed in Note 1, the Corporation adopted the
Financial Accounting Standards Board Statement 109 as of
January 1, 1993. The cumulative effect of the change in
accounting for income tax of $(28,000) is determined as of
January 1, 1993. The effect on the Statement of Income is
considered immaterial ($ .01 per share), and the total is
included in the income tax expense for 1993.
The components of applicable income taxes are as follows:
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Currently payable $ 1,726 $ 880 $ 775
Deferred (393) 147 (369)
Income tax $ 1,333 $1,027 $ 406
</TABLE>
<TABLE>
The following temporary differences gave rise to the
deferred tax asset at December 31, 1995 and 1994:
<CAPTION>
1995 1994
<S> <C> <C>
Allowance for loan losses $ 770 $ 373
Interest on non-accrual loans 9 20
Unrealized (gains) losses on investments (145) 805
Deferred loan origination fees 19 25
Deferred compensation and liability
for future employees benefits 81 78
Intangible assets 216 150
Premises and equipment due to
differences in depreciation (121) (101)
Direct finance leases (86) (102)
Federal Home Loan Bank stock dividends (84) (44)
Total deferred tax assets $ 659 $ 1,204
</TABLE>
9. Income Tax (continued)
<TABLE>
A reconciliation between the amount of reported income tax
expense and the amount computed by applying the statutory
federal income tax rate to income before income taxes is as
follows:
<CAPTION>
1995 1994 1993
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Tax at statutory rate $1,883 34.0 $1,449 34.0 $1,011 34.0
Reductions in taxes
resulting from:
Tax exempt interest
on investments
and loans (582) (10.5) (476) (11.2) (275) (9.2)
Non-taxable portion-
dividends - - - - (45) (1.5)
Excess of tax loss over
book gains on
investment securities (22) (0.4) - - (161) (5.4)
Utilization of capital
loss carrybacks - - - - (112) (3.8)
Earnings on life
insurance policies (33) (0.6) (18) (0.4) (20) (0.7)
Non-deductible
interest expense 75 1.4 64 1.5 50 1.7
Others - net 12 0.2 8 0.2 (14) (0.5)
Cumulative effect of
adoption of FASB 109 - - - - (28) (1.0)
Actual tax expense $1,333 24.1 $1,027 24.1 $ 406 13.6
</TABLE>
The bank has available $623,000 in capital loss
carryforwards. This amount will expire in 1998.
10. Employee Benefit Plans
The Corporation has a profit-sharing retirement plan which
includes all full-time employees who have reached the age of
twenty-one and have completed a least one year of service.
Each participant can elect to contribute to the plan an
amount not to exceed 10% of their salary. The plan provides
for an employer matching contribution on the first 4% of the
participant's elective contribution. In addition to the
matching contribution, the plan provides for a discretionary
contribution to be determined by the bank's board of
directors.
Total pension expense for 1995, 1994, and 1993 was $242,000,
$180,000, and $105,000, respectively.
In addition to providing the profit-sharing plan, Belmont
Bancorp. sponsors two defined benefit post-retirement plans
that cover both salaried and nonsalaried employees.
Employees must be fifty-five years old and have ten years of
service to qualify for both plans. One plan provides
medical and dental benefits, and the other provides life
insurance benefits. The post-retirement health care plan is
contributory, with retiree contributions adjusted annually;
the life insurance plan is noncontributory. On January 1,
1993, Belmont Bancorp. adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employer's
Accounting for Post-retirement Benefits Other than
Pensions." The statement requires the accrual of the
expected cost of providing post-retirement benefits to
employees and certain dependents during the years that an
employee renders service.
<TABLE>
The following table sets forth the plan's combined funded
status reconciled with the amount shown in the Corporation's
balance sheet at December 31:
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees $ 42 $ 40
Fully eligible active plan participants 50 46
Other active plan participants 53 35
145 121
Plan assets at fair value - -
Accumulated post-retirement benefit
obligation in excess of plan assets 145 121
Unrecognized net gain (loss) from past
experience different from that assumed
and from changes in assumptions (26) (14)
Prior service cost not yet recognized
in expense 38 51
Unrecognized transition obligation (12) (13)
Accrued post-retirement benefit cost
in the balance sheet $ 145 $ 145
</TABLE>
The Corporation's post-retirement health care plan is
underfunded. The accumulated post-retirement benefit
obligation and plan assets for that plan are $145,000 and $-
0-, respectively at December 31, 1995, and $121,000 and $-0-
respectively at December 31, 1994.
<TABLE>
Post-retirement expense includes the following components:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $ 4 $ 6 $ 43
Interest cost on accumulated
post-retirement benefit obligation 10 10 64
Actual return on plan assets - - -
Net amortization and deferral (11) (5) 47
Benefit payments - - (16)
Post-retirement expense $ 3 $ 11 $ 138
</TABLE>
The annual assumed rate of increase in the per capita cost
of covered benefits for 1996 is 11.5% for medical benefits
and 8.5% for dental benefits (compared to 12.0% and 9.0% for
1995 for the respective benefits). The rates are assumed to
decrease gradually to 6% (for medical 2007 and for dental in
2001), and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care trend
rates by one percentage point in each year would increase
the accumulated post-retirement benefit obligation as of
December 31, 1995, by $6,000, and the aggregate of the
service and interest cost components of net periodic post-
retirement benefit cost for 1995 by $1,000. The weighted-
average discount rate used in determining the accumulated
post-retirement benefit obligation was 7.0% at December 31,
1995, and 8.5% at December 31, 1994. The long-term
inflation rate assumed was 4% for both years.
11. Leases
The subsidiary bank utilized certain bank premises and
equipment under long-term leases expiring at various dates.
In certain cases, these leases contain renewal options and
generally provide that the Corporation will pay for
insurance, taxes and maintenance.
As of December 31, 1995, the future minimum rental payments
required under noncancelable operating leases with initial
terms in excess of one year are as follows:
<TABLE>
<CAPTION>
Operating Leases
<S> <C>
Year ending December 31,
1996 $ 117
1997 117
1998 65
1999 47
2000 47
Thereafter 237
Total minimum lease payments $ 630
</TABLE>
Rental expense under operating leases approximated $86,000
in 1995, $83,000 in 1994, and $82,000 in 1993.
12. Related Party Transactions
Certain directors and executive officers and their
associates were customers of, and had other transactions
with, the subsidiary bank in the ordinary course of business
in 1995 and 1994. The outstanding balance of all loans to
the related parties was $6,800,000 and $4,904,000 at
December 31, 1995 and 1994, respectively. All loans and
commitments included in such transactions were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with others and did not involve more than the
normal risk of collectibility or present other unfavorable
features.
13. Financial Instruments with Off-Balance-Sheet Risk
The subsidiary bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to
meet the financing needs of its customers. These financial
instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet. The contract amounts of
those instruments reflect the extent of involvement the
Corporation has in particular classes of financial
instruments.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount
of those instruments. The Corporation uses the same credit
policies in making commitments and conditional obligations
as it does for on-balance-sheet instruments.
The following represents financial instruments whose
contract amounts represent credit risk at December 31:
<TABLE>
<CAPTION>
Contract Amount
1995 1994
<S> <C> <C>
Commitments to extend credit $ 16,021 $ 14,210
Standby letters of credit 866 1,307
</TABLE>
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have
fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Corporation
upon extension of credit, is based on management's credit
evaluation of the counterparty. Collateral held varies but
may include accounts receivable, inventory, property, plant,
and equipment, and income-producing properties.
Standby letters of credit are conditional commitments issued
by the Corporation to guarantee the performance of a
customer to a third party. Those guarantees are primarily
issued to support public and private borrowing arrangements.
Of the standby letters of credit, $587,000 will expire in
1996, while the remaining $279,000 expire in various years
through 2005. The credit risk involved in issuing letters
of credit is essentially the same as that involved in
extending loan facilities to customers.
14. Concentration of Credit Risk
The subsidiary bank extends commercial, consumer, and real
estate loans to customers primarily located in Belmont,
Harrison, and Tuscarawas Counties in Ohio and Ohio County,
West Virginia. While the loan portfolios are diversified,
the ability of the borrowers to meet their contractual
obligations partially depends upon the general economic
condition of Southeastern Ohio and the Northern Panhandle of
West Virginia.
15. Limitation on Dividends
The approval of the Comptroller of the Currency is required
to pay dividends if the total of all dividends declared by a
national bank in any calendar year exceeds the total of its
retained net profits of the preceding two years. Under this
formula, the bank can declare dividends in 1996 without
approval of the Comptroller of the Currency of approximately
$6,200,000 plus an additional amount equal to the bank's net
profit for 1996 up to the date of any such dividend
declaration. The subsidiary bank is the primary source of
funds to pay dividends to the shareholders of Belmont
Bancorp.
16. Other Operating Expenses
<TABLE>
Other operating expenses include the following:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Taxes other than payroll
and real estate $ 287 $ 228 $ 267
Supplies and printing 295 262 249
Insurance, including
Federal Deposit Insurance 430 616 581
Data processing 64 281 303
Advertising 159 102 121
Amortization of intangibles 415 415 416
Other (individually less than
1% of total interest income) 1,300 1,068 980
Total $ 2,950 $ 2,972 $ 2,917
</TABLE>
17. Restrictions on Cash
The subsidiary bank is required to maintain an average
reserve balance with the Federal Reserve Bank. The average
amounts of the reserve balance for the years ended December
31, 1995 and 1994, were $1,724,000 and $1,734,000,
respectively.
18. Cash Flow Information
The Corporation's policy is to include cash on hand, amounts
due from banks and federal funds sold in the definition of
cash and cash equivalents.
Cash payments for interest in 1995, 1994, and 1993 were
$10,856,000, $8,670,000, and $8,880,000, respectively. Cash
payments for income taxes for 1995, 1994, and 1993 were
$1,740,000, $1,030,000, and $462,000, respectively.
19. Preferred Stock
On October 2, 1992, the Corporation issued 10,000 shares of
$100 par value, non-voting, senior cumulative preferred
stock. Dividends are payable quarterly in an amount equal
to $8 per annum. The shares are subject to a dividend
adjustment feature at January 1, 2000, which provides for an
increase in the dividend rate based on the prime rate of
interest. The stock has a liquidation preference of $100
per share and a stated redemption value of $100 per share.
The shares also contain conversion rights, effective January
1, 2000, permitting shareholders after that date to convert
one share of preferred stock for 11.11 shares of the
Corporation's common stock.
20. Fair Value of Financial Statements
Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments",
requires disclosure of fair value information about
financial instruments, whether or not recognized in the
balance sheet. In cases where quoted market prices are not
available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlements
of the instruments. Statement 107 excludes certain
financial instruments and all nonfinancial instruments from
its disclosure requirements. In addition, the value of long-
term relationships with depositors and other customers are
not reflected. The value of these items is significant.
Accordingly, the aggregate fair value amounts presented do
not represent the underlying value of the Corporation.
The following methods and assumptions were used in
estimating fair values of financial instruments as disclosed
herein:
Cash and Cash Equivalents: For those short-term
instruments, the carrying amount is a reasonable estimate of
fair value.
Investment Securities and Securities Available for Sale:
For debt securities, derivative instruments and marketable
equity securities held for investment purposes and for sale,
fair values are based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair
value is estimated using quoted market prices for similar
securities.
Loans: For certain homogeneous categories of loans, such as
some residential mortgages, fair value is estimated using
the quoted market prices for securities backed by similar
loans. The fair value of other types of loans is estimated
by discounting the future cash flows using the current rates
at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining
maturities.
Deposit Liabilities: The fair value of demand deposits,
savings accounts, and certain money market deposits is the
amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar
remaining maturities.
Short-Term Borrowings: These liabilities represent
primarily overnight borrowings and debt maturing within
ninety days of issuance with interest rates adjusted weekly.
Accordingly, the carrying amount is a reasonable estimate of
fair value.
Long-Term Debt: The fair values of long-term debt are
estimated using discounted cash flow analyses based on the
Corporation's current incremental borrowing rates for
similar types of borrowing arrangements.
The fair values of the Corporation's financial instruments
are as follows:
<TABLE>
<CAPTION>
1995 1994
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 10,175 $ 10,175 $ 11,770 $ 11,770
Securities available for sale 112,109 112,109 49,132 49,132
Securities held to maturity 23,726 23,758 92,463 86,828
Loans, net 157,254 160,186 145,559 143,300
Financial liabilities:
Deposits 246,850 247,255 255,923 257,123
Short-term borrowings 38,665 38,665 35,498 35,498
Long-term debt 4,802 4,864 - -
</TABLE>
21. Condensed Parent Company Financial Statements
Presented below are the condensed balance sheets, statements
of income, and statements of cash flows for Belmont Bancorp.
Balance Sheets
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets
Cash $ 23 $ 377
Investment in subsidiaries
(at equity in net assets) 24,485 19,504
Equity securities 120 60
Advances to subsidiaries, net 398 145
Prepaid taxes 158 148
Total Assets $25,184 $20,234
Liabilities
Accrued dividends $ 20 $ 20
Shareholders' Equity
Preferred stock
Senior cumulative preferred stock 1,000 1,000
Common stock 1,057 3,777
Capital surplus 7,781 5,061
Treasury stock-832 shares in 1995
and 424 shares in 1994 (8) (8)
Retained earnings-appropriated 850 850
Retained earnings-unappropriated 14,148 11,026
Net unrealized gain (loss)
on securities available for sale 336 (1,492)
Total shareholders' equity 25,164 20,214
Total Liabilities and Shareholders'
Equity $25,184 $20,234
Statement of Income
1995 1994 1993
Operating Income
Dividends from subsidiaries $ 1,084 $ 879 $ 780
Other income 10 10 9
Total income 1,094 889 789
Operating Expenses (59) (33) (30)
Nonoperating Income - - 1
Income before income tax and equity in
undistributed income of subsidiaries 1,035 856 760
Income Tax (credit) (18) (8) (8)
Equity in Undistributed Income
of Subsidiaries 3,153 2,370 1,801
Net Income $ 4,206 $3,234 $2,569
Statement of Cash Flows
1995 1994 1993
Operating Activities
Net income $4,206 $3,234 $2,569
Adjustments to reconcile net income to
net cash provided by operating activities:
Undistributed earnings of affiliates (3,153) (2,370) (1,801)
Investment securities gains - - (1)
Changes in operating assets and
liabilities:
Prepaid taxes (10) (148) 121
Accrued expenses - (166) 166
Net cash provided by operating
activities 1,043 550 1,054
Investing Activities
Payments (to) from subsidiaries (253) 539 (464)
Proceeds from sales of equity
securities - - 1
Investment purchases (60) - -
Net cash provided (used) by
investing activities (313) 539 (463)
Financing Activities
Cash paid for fractional shares - (10) -
Sale of treasury stock - 5 1
Dividends (1,084) (879) (780)
Net cash used by financing activities (1,084) (884) (779)
Increase (Decrease) in Cash & Cash
Equivalents (354) 205 (188)
Cash and Cash Equivalents at
Beginning of Year 377 172 360
Cash and Cash Equivalents
at End of Year $ 23 $ 377 $ 172
</TABLE>
Supplemental disclosure:
The Corporation made income tax payments of $1,740,000,
$1,030,000 and $462,000 in 1995, 1994, and 1993,
respectively. These payments represented income tax
payments for the Corporation and its consolidated
subsidiaries.
The Corporation incurred no interest expense in 1995, 1994
or 1993.
Opinion of Independent Certified Public Accountants
Board of Directors
Belmont Bancorp.
St. Clairsville, Ohio
We have audited the accompanying consolidated balance sheets
of Belmont Bancorp. and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of income,
changes in shareholders' equity, and cash flows, for each of
the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the
corporation's management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Belmont Bancorp. and subsidiaries at
December 31, 1995 and 1994, and the consolidated results of
its operations, changes in shareholders' equity, and cash
flows, for each of the three years in the period ended
December 31, 1995, in conformity and with generally accepted
accounting principles.
As discussed in Note 2 to the Consolidated Financial
Statements, in 1994, Belmont Bancorp. changed its method of
accounting for debt and equity securities and, in 1993,
changed its methods of accounting for income taxes and post
retirement benefits other than pensions.
S. R. Snodgrass A. C.
Wheeling, West Virginia
January 23, 1996
Report on Management's Responsibilities
Management of Belmont Bancorp. is responsible for the
accurate and objective preparation of the consolidated
financial statements and the estimates and judgements upon
which certain financial statements are based. Management is
also responsible for preparing the other financial
information included in this annual report. In our opinion,
the financial statements on the preceding pages have been
prepared in conformity with generally accepted accounting
principles and other financial information in this annual
report is consistent with the financial statements.
Management is also responsible for establishing and
maintaining an adequate internal control system which
encompasses policies, procedures and controls directly
related to, and designed to provide reasonable assurance as
to the integrity and reliability of the financial reporting
process and the financial statements generated therefrom.
The concept of reasonable assurance is based on the
recognition that there are inherent limitations in all
systems of internal control, and that the cost of such
systems should not exceed the benefits to be derived
therefrom.
The systems and controls and compliance therewith are
reviewed by an extensive program of internal audits and by
our independent auditors. Their activities are coordinated
to obtain maximum audit coverage with a minimum of duplicate
effort and cost. The independent auditors have access to
all internal audit work papers. Management believes the
system of internal control effectively meets its objectives
of reliable financial reporting.
The Board of Directors pursues its responsibility for the
quality of the Corporation's financial reporting primarily
through its Audit Committee which is comprised solely of
outside directors. The Audit Committee meets regularly with
management, the internal auditor and independent auditors to
ensure that each is meeting its responsibilities and to
discuss matters concerning internal controls, accounting and
financial reporting. The internal auditor and independent
auditors have full and free access to the Audit Committee.
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
Belmont Bancorp.
Belmont National Bank
William Wallace Jane R. Marsh
Vice President, Belmont Bancorp. Secretary, Belmont Bancorp.
Executive Vice President and Senior Vice President
Chief Operating Officer Controller and Cashier
Belmont National Bank Belmont National Bank
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Average Balance Sheets
For the Years Ended December 31, 1995, 1994, and 1993
(Fully Taxable Equivalent Basis) ($000s)
<CAPTION>
1995 1994 1993
Average Average Average Average Average Aver.
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 $152,502 $ 14,347 9.41% $134,952 $ 11,779 8.73% $120,218 $ 10,753 8.94%
Securities
Taxable 113,409 7,768 6.85% 114,468 6,810 5.95% 111,760 5,169 4.63%
Exempt
from
income
taxes 25,689 2,062 8.03% 21,866 1,746 7.98% 12,474 1,104 8.85%
Trading
account
assets - - - 138 1 0.72% 831 45 5.42%
Federal
funds sold 805 47 5.84% 130 4 3.08% 4,147 125 3.01%
Interest
bearing
deposits - - - - - - 98 2 2.04%
Total
interest
earning
assets 292,405 24,224 8.28% 271,554 20,340 7.49% 249,528 17,198 6.89%
Cash and
due from
banks 8,448 8,275 7,823
Other
assets 12,927 12,014 11,568
Market
value
apprecia
tion
(deprecia
tion) of
securities
available for
sale (731) (860) -
Allowance
for possible
loan loss (2,139) (1,427) (1,328)
Total
Assets $310,910 $289,556 $267,591
Liabilities
Interest
bearing
liabilities
Interest
checking $25,953 $ 614 2.37% $ 26,764 $ 581 2.17% $ 30,895 $ 745 2.41%
Savings 78,679 2,359 3.00% 95,655 2,850 2.98% 85,865 2,788 3.25%
Other time
deposits 121,329 6,049 4.99% 99,660 4,434 4.45% 106,706 4,992 4.68%
Other
borrowings 34,665 1,905 5.50% 21,217 942 4.44% 3,675 91 2.48%
Total
interest
bearing
liabili
ties 260,626 10,927 4.19% 243,296 8,807 3.62% 227,141 8,616 3.79%
Demand
deposits 25,819 24,797 21,093
Other
liabilities 1,632 1,583 1,272
Total
liabili-
ties 288,077 269,676 249,506
Share-
holders'
Equity 22,833 19,880 18,085
Total
Liabilities
and
Share-
holders'
Equity $310,910 $289,556 $267,591
Net
interest
income
margin
on a
taxable
equivalent
basis 13,297 4.55% 11,533 4.25% 8,582 3.44%
Net interest
rate spread 4.09% 3.87% 3.10%
Interest
bearing
liabilities
to interest
earning
assets 89.13% 89.59% 91.03%
</TABLE>
Fully taxable equivalent basis computed at effective federal
tax rate of 34%.
Average loan balances include nonperforming loans.
<TABLE>
Analysis of Net Interest Income Changes
For the Years Ended December 31, 1995, 1994 and 1993 (Fully
Taxable Equivalent Basis) (000's)
<CAPTION>
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 $1,532 $ 917 $ 119 $2,568 $1,318 $ (260) $ (32) $1,026
Securities
Taxable (63) 1,031 (10) 958 125 1,480 35 1,640
Exempt
from
income
taxes 305 9 2 316 831 (108) (81) 642
Trading
account
assets (1) (1) 1 (1) (38) (39) 33 (44)
Federal
funds sold 21 4 18 43 (121) 3 (3) (121)
Interest
bearing
deposits - - - - (2) (2) 2 (2)
Total
interest
income
change 1,794 1,960 130 3,884 2,113 1,074 (46) 3,141
Increase
(decrease) in
interest
expense
Interest
checking (18) 52 (1) 33 (100) (74) 10 (164)
Savings (506) 18 (3) (491) 318 (230) (26) 62
Other time
deposits 964 535 116 1,615 (330) (245) 17 (558)
Short-term
borrowings 597 224 142 963 434 72 345 851
Total
interest
expense
change 1,037 829 254 2,120 322 (477) 346 191
Increase
(decrease)
in net
interest
income on
a taxable
equivalent
basis $ 757 $1,131 $(124) $1,764 $1,791 $1,551 $(392) $2,950
(Increase)
decrease in
taxable
equivalent
adjustment (145) (215)
Net interest
income change $1,619 $2,735
</TABLE>
Belmont Bancorp. Directors
John A. Belot
President,
Walden Industries, Inc.
J. Vincent Ciroli, Jr.
President and Chief Executive Officer,
Belmont Bancorp. and Belmont National Bank
William P. Goddard
Director
John H. Goodman, II
Realtor, President, Goodman Group, Inc.
Mary L. Holloway Haning
Special Projects Coordinator,
Plastic Surgery, Inc.
Charles J. Kaiser, Jr.
Attorney-at-Law, Partner,
Phillips, Gardill, Kaiser and Altmeyer
Terrence A. Lee
Chairman,
Belmont Bancorp. and Belmont National Bank;
CPA, Partner, Lee, O'Connor & Associates
Dana J. Lewis
President, Zanco Enterprises, Inc.
James R. Miller
Vice President and General Manager,
Joy Technologies, Inc.
W. Quay Mull, II
Chairman, Mull Machine Company
Tom Olszowy
Independent Insurance Agent,
Tom Olszowy Insurance
Keith A. Sommer
Attorney, Partner,
Sommer, Solovan, Liberati and Shaheen
William Wallace
Vice President, Belmont Bancorp.;
Executive Vice President and
Chief Operating Officer,
Belmont National Bank
Charles A. Wilson, Jr.
Vice Chairman, Belmont Bancorp.
and Belmont National Bank;
President, Wilson Funeral & Furniture Co.
Belmont Bancorp. Officers
Terrence A. Lee
Chairman
Charles A. Wilson, Jr.
Vice Chairman
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
William Wallace
Vice President
Jane R. Marsh
Secretary
Belmont National Bank Officers
Terrence A. Lee
Chairman
Charles A. Wilson, Jr.
Vice Chairman
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
William Wallace
Executive Vice President and Chief Operating Officer
Jane R. Marsh
Senior Vice President, Controller and Cashier
Robert A. Brown
Vice President, Marketing
and Product Development Manager
J. Douglas Cash
Vice President and Regional Manager
Richard E. Dolan
Vice President and Trust Officer
Gerald J. Elliott
Vice President and Compliance Officer
Larry G. Gibbs
Vice President & Trust Officer
Logan B. Sturgeon
Vice President & Senior Trust Officer
Trent B. Troyer
Vice President and Regional Manager
Belmont Financial Network, Inc.
J. Vincent Ciroli, Jr.
Chairman and President
Jane R. Marsh
Secretary and Treasurer
Belmont Investment and Financial Services,Inc.
J. Vincent Ciroli, Jr.
President and Chief Executive Officer
William Wallace
Vice President, Secretary and Treasurer
Belmont National Bank Locations
Bridgeport Office
325 Main Street
Bridgeport, OH 43912
(614) 635-1142
Cadiz Office
657 Lincoln Avenue
Cadiz, OH 43907
(614) 942-4664
Jewett Office
318 East Main Street
Jewett, OH 43986
(614) 946-2411
Lansing Office
55160 National Road
Lansing, OH 43934
(614) 635-1454
New Philadelphia Office
152 North Broadway
New Philadelphia, OH 44663
(330) 343-5518
Ohio Valley Mall Office
Ohio Valley Mall
St. Clairsville, OH 43950
(614) 695-9926
St. Clairsville Office
154 West Main Street
St. Clairsville, OH 43950
(614) 695-3323
Schoenbrunn Office
2300 East High Avenue
New Philadelphia, OH 44663
(216) 339-9200
Shadyside Office
4105 Central Avenue
Shadyside, OH 43947
(614) 671-9346
Woodsdale Office
980 National Road
Wheeling, WV 26003
(304) 233-9691
Wabash Avenue Drive-In Office
525 Wabash Avenue
New Philadelphia, OH 44663
Belmont Bancorp.
325 Main Street
Bridgeport, OH 43912
(614) 695-3323
Notice of Form 10-K
Upon written request of any shareholder on record on
December 31, 1995, the Corporation will provide, without
charge, a copy of its 1995 Annual Report on Form 10-K,
including financial statements and schedules, as required to
be filed with the Securities and Exchange Commission. To
obtain a copy of Form 10-K, contact Ms. Teri Walters,
Administrative Officer, Belmont Bancorp., 325 Main Street,
Bridgeport, OH 43912.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
BELMONT BANCORP.
April 16, 1996
To the Shareholders of BELMONT BANCORP.:
The Annual Meeting of Shareholders of BELMONT BANCORP. will be
held in the Belmont National Bank conference room at Belmont
National Bank, 980 National Road, Wheeling, West Virginia, on
Tuesday, April 16, 1996, at 1:00 p.m. for the following
purposes:
1. To elect five (5) persons as Directors to serve for a
three-year term expiring at the annual shareholders'
meeting in 1999.
2. To consider and act upon a proposal to ratify the
appointment of S. R. Snodgrass A.C. as independent auditors
for the year ending December 31, 1996.
3. To transact such other business as may properly come before
the meeting and any adjournment thereof.
Only shareholders of record at the close of business on
February 29, 1996, are entitled to notice of and to vote at the
meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. PROXIES MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING
THEREOF. THUS, IF YOU ARE PRESENT AT THE MEETING AND SO REQUEST
YOUR PROXY WILL NOT BE USED.
BY ORDER OF THE BOARD OF DIRECTORS.
JANE R. MARSH, Secretary
Bridgeport, Ohio
March 15, 1996
PROXY STATEMENT
OF
BELMONT BANCORP.
325 Main Street
Bridgeport, Ohio 43912
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1996
This Proxy Statement is furnished to the shareholders of
Belmont Bancorp. in connection with the solicitation by the Board
of Directors of Belmont Bancorp. (the "Corporation") of proxies
for the Annual Meeting of Shareholders of the Corporation to be
held on April 16, 1996, in the conference room of Belmont
National Bank, 980 National Road, Wheeling, West Virginia, and
any adjournment thereof. Shares represented by properly executed
proxies received at the time of the meeting that have not been
revoked will be voted at the meeting in the manner described in
the proxies. Any proxy may be revoked any time before it is
exercised.
This Proxy Statement and the accompanying Proxy are being
mailed to shareholders on March 15, 1996.
The Board of Directors has fixed the close of business on
February 29, 1996, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual
Meeting. On the record date 2,114,644 shares of Common Stock of
the Corporation were outstanding and entitled to be voted at the
meeting. Each share of Common Stock is entitled to one vote
except in the election of Directors where shareholders are
entitled to cumulate their votes. Cumulative voting permits each
shareholder as many votes as shall equal the number of his shares
of Common Stock multiplied by the number of Directors to be
elected, and he may cast all of such votes for a single Director
or he may distribute them among the number to be voted for, as he
may see fit.
The proxies are solicited by the Board of Directors of the
Corporation, and the cost thereof is borne by the Corporation.
Proxies may be revoked by the shareholders who execute them at
any time prior to the exercise thereof, by written notice to the
Corporation or by announcement at the Shareholders' Meeting.
Unless so revoked, the shares represented by all proxies will be
voted by the persons named in the proxies at the Shareholders'
Meeting and at all adjournments thereof, in accordance with the
specifications set forth therein, or, absent such specifications,
in accordance with the judgment of the holders of such proxies.
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS
The Board of Directors of the Corporation by resolution at its
meeting on January 16, 1996, set the number of Directors at
fourteen (14) members with five (5) members to be elected to the
class which expires at the annual meeting in 1999. All nominees
are currently Directors of the Corporation and its principal
subsidiary, Belmont National Bank. Except for James R. Miller
and Mary L. Holloway Haning, each nominee has continuously served
in his principal occupation for the past five years.
The following persons have been nominated for election to the
Board of Directors to serve for a three-year term expiring at the
annual shareholders' meeting in 1999:
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
Mary L. Holloway Haning 40 1993 1,565 (1) *
Special Projects Coordinator,
Plastic Surgery, Inc.
(Sept. 1995-Present)
Director of Admissions,
Wheeling Country Day School
(1987-June 1995)
Charles J. Kaiser, Jr. 46 1979 9,548 (2) *
Attorney, Partner, Phillips,
Gardill, Kaiser & Altmeyer
Samuel A. Mumley (3) 64 1996 100 *
Executive Secretary,
Ohio Valley Athletic
Conference
Thomas Olszowy 49 1993 15,066 (4) *
Independent Insurance Agent,
Tom Olszowy Insurance Agency
Charles A. Wilson, Jr. 53 1973 21,816 (5) 1.03
President,
Wilson Funeral & Furniture Co.
Footnotes
1. This amount includes 1,024 shares held for the benefit of
Mary L. Holloway Haning in trust in which Wesbanco Bank Wheeling
is trustee.
2. This amount includes 72 shares held in the name of Deborah
P. Kaiser, IRA, wife of Charles J. Kaiser, Jr., to which Mr.
Kaiser disclaims any beneficial interest and 600 shares held in
the name of Marchak Investment Co., a partnership, in which Mr.
Kaiser is a general partner and holds a substantial beneficial
interest.
3. Samuel A. Mumley was appointed to the Board on February 20,
1996, to serve out the remainder of the term of William P.
Goddard who retired.
4. This amount includes 11,982 shares held in the names of Tom
and Diana Olszowy joint tenants with right of survivorship in
which Mr. Olszowy shares voting and investment power. This
amount also includes 302 shares held in the name of Tom Olszowy,
custodian for Dana Paul Olszowy, and 802 shares held in the name
of Tom Olszowy, custodian for Jonathan T. Olszowy, to which Mr.
Olszowy disclaims any beneficial interest.
5. This amount includes 3,122 shares held in the name of Wilson
Funeral and Furniture Company of which Mr. Wilson is President,
holds a substantial stock interest and has voting power.
*Denotes less than a 1% interest.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE
ABOVE NOMINEES TO THE BOARD OF DIRECTORS OF BELMONT BANCORP.
In addition to the foregoing nominees, the following persons
are presently serving as members of the Board of Directors:
Directors Whose Term of Office Will Expire at the Annual
Shareholders' Meeting in 1997
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
John A. Belot 53 1979 20,631 (6) 1.0
President,
Walden Industries, Inc.
Terrence A. Lee, CPA 46 1987 1,715 (7) *
Chairman, Belmont Bancorp.
and Belmont National Bank;
Partner, Lee, O'Connor &
Associates
Dana J. Lewis 52 1994 10,652 *
President, Zanco
Enterprises, Inc.
New Philadelphia, Ohio;
Owner/Operator of McDonald
restaurants
W. Quay Mull, II 53 1984 12,594 (8) *
Chairman of the Board
Mull Industries, Inc.
William Wallace 40 1991 9,614 (9) *
Executive Vice President &
Chief Operating Officer,
Belmont National Bank;
Vice President, Belmont
Bancorp.
Footnotes
6. This amount includes 6,324 shares held jointly by Terry L.
Belot, wife of John A. Belot, and Jason Michael Belot, son of
John A. Belot; 6,324 shares held jointly by Terry L. Belot and
John A. Belot, Jr., son of John A. Belot; 5,500 shares held in
the name of Jason Michael Belot; and 549 shares held in the name
of John A. Belot, Jr. Mr. John A. Belot has retained voting
rights with respect to these shares. This amount also includes
1,000 shares held in the name of Terry L. Belot, IRA, to which
Mr. Belot disclaims any beneficial interest.
7. This amount includes 12 shares held in the name of Terrence
A. Lee, Custodian for Katherine M. Lee, UOTMA; 12 shares held in
the name of Terrence A. Lee, Custodian for Natalie A. Lee, UOTMA;
and 12 shares held in the name of Terrence A. Lee, Custodian for
Tara N. Lee, UOTMA; Mr. Lee's minor daughters. This amount does
not include 21,084 shares held in the name of John H. Goodman, II
and Terrence A. Lee, Trustees for a trust dated February 2, 1991,
to which Mr. Lee disclaims any beneficial interest.
8. This amount includes 8,040 shares held in the name of Mull
Machine Company of which Mr. Mull is President and holds a
substantial ownership interest.
9. This amount includes 2,576 shares held jointly with Christine
Wallace, Mr. Wallace's wife, in which he shares voting and
investment power; 2,038 shares held in the name of Christine
Wallace, IRA, to which Mr. Wallace disclaims any beneficial
interest; 444 shares held in the name of William Wallace as
Custodian for Joseph J. Wallace, UWVTMA; 444 shares held in the
name of William Wallace as Custodian for Lauren C. Wallace,
UWVTMA; 412 shares held in the name of William Wallace as
Custodian for Adrienne C. Wallace, UWVTMA; and 380 shares held in
the name of William Wallace as Custodian for William J. Wallace,
UWVTMA; Mr. Wallace's minor children.
Directors Whose Term of Office Will Expire at the Annual
Shareholders' Meeting in 1998
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
J. Vincent Ciroli, Jr. 50 1984 9,983 *
President & Chief
Executive Officer,
Belmont Bancorp. and
Belmont National Bank
John H. Goodman, II 51 1974 45,026 (10) 2.13
Realtor, President
Goodman Group, Inc.
Keith A. Sommer 55 1995 2,734 *
Attorney, Partner, Sommer,
Sollovan, Liberati &
Shaheen
James R. Miller 53 1995 400 *
Vice President &
General Manager
Joy Technologies Inc.,
April 1992 - present
Specialty Operations
Manager,
Westinghouse Electric,
1970-1992
Footnotes
10. This amount includes 2,854 shares held in the name of
Marylouise Goodman IRA, and 130 shares held in the name of
Marylouise Goodman, wife of John H. Goodman, II, to which Mr.
Goodman disclaims any beneficial interest. This amount also
includes 21,084 shares held in the name of John H. Goodman, II
and Terrence A. Lee, Trustees under a trust dated February 2,
1991, to which Mr. Goodman disclaims any beneficial interest.
This amount also includes 1,605 shares held by John H. Goodman,
II and J. Harvey Goodman, Trustees under a trust dated February
13, 1995 and 4,587 shares held by J. Harvey Goodman and John H.
Goodman, II, Trustees under a trust dated April 26, 1995.
As of February 29, 1996, the Directors and Officers of the
Corporation as a group beneficially owned 161,444 shares or 7.63
percent of the outstanding common stock of the Corporation.
Transactions with Directors and Officers
Certain Directors and Executive Officers and their associates
were customers of and had transactions with the Bank in the
ordinary course of the Bank's business during 1995. From time to
time the law firm of Phillips, Gardill, Kaiser & Altmeyer, of
which Charles J. Kaiser, Jr., a director of both the Corporation
and the Bank, is a partner, has rendered legal services to the
Corporation and the Bank. It is contemplated that this firm will
be retained to perform legal services during the current year.
Meetings of the Board of Directors and Committees and
Compensation of Members
The Board of Directors of the Corporation met eight (8) times
during the year 1995. Each member of the Board of Directors of
the Corporation attended seventy-five percent (75%) or more of
the total number of meetings of the Board and its committees of
which they were members. The Board of Directors of Belmont
National Bank met twelve (12 ) times during 1995. The Directors
of the Corporation and the Bank are the same.
The Board of Directors elects an Executive Committee annually.
Messrs. Ciroli, Goodman, Kaiser, Lee, Mull, Olszowy and Wilson
are members of the Executive Committee of both the Corporation
and the Bank. Meetings of the Executive Committee are called to
consider Corporation or Bank business which may arise between
normally scheduled meetings or to consider in depth policies and
make recommendations to the Board of Directors. The Executive
Committee of the Bank met six (6) times during 1995.
The Executive Committee of the Corporation also serves as a
Nominating Committee. As such, the Committee seeks and
recommends individuals for nomination as directors. The
Nominating Committee will consider as prospective directors
persons suggested to them by any shareholder.
Messrs. Goodman, Kaiser, Lee, Miller, Mull and Olszowy are
members of the Audit Committee of the Bank and the Corporation.
The Audit Committee reviews the reports of the Bank's internal
auditor, the reports of the Corporation's independent Certified
Public Accountants, the adequacy of internal controls and
procedures, and reports to the Board of Directors of the
Corporation and the Bank. This Committee met five (5) times
during 1995.
The Bank also has a Trust Committee that met four (4) times in
1995 whose members are Ms. Haning and Messrs. Belot, Goddard,
Lewis, Sommer, Wallace, Wilson and Logan B. Sturgeon. The Trust
Committee of the Bank approves the operations of the Trust
Department and reports to the Board of Directors.
Directors who are not employees of the Corporation or the Bank
receive an annual retainer fee of Two Thousand Dollars, payable
quarterly in arrears, plus an attendance fee of Two Hundred
Dollars for each Bank or Committee Meeting attended. Also,
Directors receive an attendance fee of One Hundred Dollars per
regularly scheduled quarterly Bancorp. Meeting, not to exceed
Four Hundred Dollars. During 1995, a total of $76,533.50 was
paid to Directors.
In addition to the fees paid to Directors, Mr. Richard G.
Anderson and Mr. Wilbur L. Terhune, each of whom is a retired
Chairman of the Board, received payments under a Deferred
Compensation Plan adopted by the Board of Directors on December
15, 1983. Mr. Anderson received $2,747.04 and Mr. Terhune
received $5,567.04 during 1995 under this plan. The Deferred
Compensation Plan provided an early retirement benefit to covered
individuals equal to eighty percent (80%) of a factor
corresponding to the number of years the employee's early
retirement date preceded his normal retirement date, multiplied
by the employee's average compensation as defined under the
Bank's retirement plan, minus the employee's monthly accrued
benefit under the Bank's retirement plan on a straight life
annuity basis. This amount is further reduced by the employee's
primary social security benefit. Mr. Terhune's benefit is
further reduced by a pension which he receives from a plan
unrelated to the Corporation or the Bank.
EXECUTIVE COMPENSATION
The Executive Committee without the executive officers serves
as the Compensation Committee for Belmont National Bank. The
officers of the Corporation are currently serving without
compensation from Belmont Bancorp. They are, however,
compensated by Belmont National Bank for services rendered as
officers of the Bank. This Committee is responsible for setting
compensation levels for the President and CEO, J. Vincent Ciroli,
Jr.; the Executive Vice President and COO, William Wallace; and
the Senior Vice President, Controller and Cashier, Jane R. Marsh.
The Committee also consults with senior officers with respect to
the compensation and benefits of other officers and employees of
the Corporation.
Compensation Philosophy
The Corporation bases different portions of its executive
compensation program on differing measures of corporate
performance. As a result, the Corporation's compensation program
currently reflects the following themes:
A material portion of compensation should be meaningfully
related to corporate performance.
Since the Corporation has chosen a senior executive team to
manage the operations of the Corporation, bonus compensation
for these senior executives should be based on team effort
and performance of the Corporation as a whole.
Bonus compensation should be related to the return on
shareholders' equity and should be payable only if
the shareholders have received a reasonable return on
the equity.
Compensation should play a critical role in attracting and
retaining executives whom the Corporation deemsmost able to
further its goals and,therefore, should be comparable to
compensation paid by comparable peer organizations.
Summary Compensation Table
For the year ended December 31, 1995, J. Vincent Ciroli, Jr.,
William Wallace and Jane R. Marsh were the only officers
compensated in excess of $100,000. Their compensation is
summarized in the following table:
Name and All Other
Principal Position Year Salary Bonus Compensation
J. Vincent Ciroli, Jr. 1995 $145,000.00 $116,000.00 $14,159.04
President & 1994 $129,900.06 $88,181.00 $9,439.38
Chief Executive 1993 $126,600.00 $41,143.00 $8,488.62
Officer;
Belmont Bancorp. and
Belmont National Bank
William Wallace 1995 $105,000.00 $84,000.00 $11,162.44
Vice President, 1994 $94,734.91 $64,303.00 $6,685.09
Belmont Bancorp. and 1993 $92,365.56 $30,021.00 $5,703.84
Executive Vice
President & Chief
Operating Officer,
Belmont National Bank
Jane R. Marsh 1995 $58,000.02 $46,400.00 $6,097.44
Secretary, Belmont 1994 $51,877.20 $35,212.00 $3,665.09
Bancorp. and Senior 1993 $50,572.80 $16,437.00 $3,063.22
Vice President,
Controller,and
Cashier, Belmont
National Bank
Pay Mix and Measurement
The Corporation's executive compensation program is based on
three components, each of which is intended to serve the overall
compensation philosophy.
Base Salary is targeted at the competitive median for peer
banking organizations. In order to determine these amounts, the
Committee utilizes the Sheshunoff tables, the Executive Studies
Group (a division of Ben S. Cole Financial, Inc.), and the Bank
Wage-Hour & Personnel Service. Salaries for the executive
officers named in the Summary Compensation Table are reviewed by
the Committee on an annual basis and may be increased or
decreased at that time based on the Committee's agreement of how
the management team and the respective individual contributes to
the Corporation, as well as increases in median competitive pay
levels.
Annual Bonus Incentives for executive officers are intended to
reflect the Corporation's belief that management's contribution
to corporate performance comes, in part, from maximizing the
Corporation's return on common shareholders' equity.
Accordingly, the Board of Directors adopted an Executive
Incentive Compensation Plan in 1989 to provide incentive
compensation based upon the earnings of Belmont National Bank.
Amounts paid under the Plan are included in the "Bonus" column in
the Summary Compensation Table above. The individuals covered by
the Plan are J. Vincent Ciroli, Jr., William Wallace and Jane R.
Marsh. Since 1990, the formula for calculating the Executive
Incentive Compensation Plan bonus was based upon the return on
equity (ROE) achieved by Belmont National Bank. Twenty percent
(20%) of earnings in excess of a selected rate of return on
shareholders' equity as of the beginning of each year comprised
the bonus pool. The selected rate of return on shareholders'
equity is established annually by the Board of Directors. The
bonus pool is allocated among the executive officers based upon
the ratio of the participant's salary to total participants'
salaries. For the year 1995, the formula was altered to
correlate the return on equity base to ninety percent (90%) of
the December 31, 1995, Uniform Bank Performance Report's
calculation of net income as a percent of average total equity
for the peer group of which the Bank is a part. Since the
information will not be available until March of the following
year, the bonus was calculated and paid based upon the September
1995 peer numbers and final adjustments made when the final
information is received. Ninety percent of the peer group's
return on average equity at September 30, 1995 was 13.15%. The
selected rates of return on beginning shareholders' equity was
thirteen percent (13.00%) for 1994 and 1993. The Committee
believes that this program provides an appropriate link between
the Corporation's performance and the incentives paid to the
executive officers. The return on equity goal is established by
the Committee annually.
Other Compensation is provided so that the Corporation's overall
benefits are comparable with other similar organizations so as to
attract and retain competent management.
The Bank has a Defined Contribution 401(k) Savings Plan which
allows employees who work over 1,000 hours per year to defer up
to 10% of their pre-tax salary to the Plan. The Bank matches
fifty percent (50%) of the first four percent (4%) deferred. The
Bank may also make voluntary contributions to the Plan. In 1995,
the Bank paid $33,314.54 in matching funds and made a voluntary
contribution of $131,515.05, or seven and one tenth percent (7
1/10%) of annual salary. In 1995, the profit sharing
contribution attributed to Mr. Ciroli was $10,650.00; the
matching funds contribution was $2,900.04. The profit sharing
contribution paid for Mr. Wallace was $8,857.67; the matching
funds contribution was $2,100.02. The profit sharing
contribution paid for Mrs. Marsh was $4,850.32 and the matching
funds contribution was $1,160.12. This compensation is
included in the "All Other Compensation" column in the Summary
Compensation Table above.
The Bank provides reimbursement for club fees, membership dues
and entertainment expenses for business use by Mr. Ciroli and Mr.
Wallace. The Bank also provides Mr. Ciroli and Mr. Wallace with
the use of a company car. Personal benefits from such
expenditures are less than 10% of salary and bonus and,
therefore, have been excluded from the Summary Compensation Table
above.
The Bank maintains a split-dollar life insurance plan for
several of its officers. Under the plan, the Bank maintains
ownership of all cash value in the insurance policies and a
portion of the death benefits. The participant's named
beneficiary is entitled to three times the participant's annual
salary at his death. Annually, the participant recognizes taxable
income to the extent of the assumed term cost of the coverage.
At the death of the participant, the Bank's share of the death
benefit will be sufficient to recover all costs associated with
the plan. For 1995, the amount of income attributable for a
split-dollar insurance plan was $609.00, $204.75 and $87.00 for
Mr. Ciroli, Mr. Wallace and Mrs. Marsh respectively. These
amounts are included in the "All Other Compensation" column in
the Summary Compensation Table above.
The Corporation adopted a Supplemental Retirement Plan for the
three executive officers at its meeting on January 18, 1994, and
subsequently amended the plan on December 19, 1995, in order to
augment the retirement benefits payable to these officers and
make them more comparable to the benefits provided under the
defined benefit plan which was terminated in 1990. The persons
covered under the plan are J. Vincent Ciroli, Jr., President and
Chief Executive Officer; William Wallace, Vice President of the
Corporation and Executive Vice President and Chief Operating
Officer of the Bank; and Jane R. Marsh, Secretary of the
Corporation and Senior Vice President, Controller and Cashier of
the Bank. Under the Plan the Corporation credited the sum of
$163,000 to a book reserve account for the benefit of Mr. Ciroli,
the sum of $19,000 for Mr. Wallace and the sum of $3,000 for Ms.
Marsh. The balance in the book reserve account will be invested
as directed by the Board and distributed to the officer over a
ten (10) year period following retirement. The officer will bear
the risk of earnings in the book reserve account. Under the Plan
the maximum amount that can be paid to Mr. Ciroli is $43,000 per
annum; to Mr. Wallace $40,000 per annum; and to Ms. Marsh $11,250
per annum. The supplemental retirement benefits may be forfeited
if the employee is terminated for cause.
COMPENSATION COMMITTEE
John H. Goodman, II Thomas Olszowy
Charles J. Kaiser, Jr. W. Quay Mull, II
Terrence A. Lee Charles A. Wilson, Jr.
Stock Price Performance Graph
The following graph compares for each of the last five years
ending December 31 the cumulative total return of the
Corporation's Common Stock, All Nasdaq U.S. Stocks Index and SNL
Securities' Index of Banks with Assets Size less than $500
million. The cumulative total return of the Corporation's Common
Stock assumes $100 invested on December 31, 1990 and assumes
reinvestment of dividends.
Belmont Bancorp. Stock Price Performance
SNL SECURITIES'
INDEX OF BANKS WITH ALL NASDAQ U.S.
BELMONT BANCORP. ASSETS LESS THAN $500M STOCKS
MEASUREMENT POINT-
12/31/90 $100.00 $100.00 $100.00
YEAR ENDED 12/31/91 104.70 138.00 160.56
YEAR ENDED 12/31/92 114.73 194.18 186.86
YEAR ENDED 12/31/93 125.43 226.91 214.51
YEAR ENDED 12/31/94 234.90 230.34 209.68
YEAR ENDED 12/31/95 439.46 297.62 296.30
PROPOSAL NUMBER 2: SELECTION OF AUDITORS
The Board of Directors has retained S.R. Snodgrass A.C. as
independent auditors for both the Corporation and the Bank for
the year ending December 31, 1996. There will be presented to
the shareholders at the Annual Meeting a proposal that this
selection be ratified by the shareholders. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THIS SELECTION BE SO
RATIFIED. The services rendered by S.R. Snodgrass A.C. during
the year 1995 involved auditing services primarily and consisted
of the examination of the financial statements of the Corporation
and its subsidiaries, principally the Bank. It is expected that
a representative of the accounting firm will be present at the
shareholders' meeting. Such representative will be given the
opportunity to make a statement if he desires to do so, and will
be available to respond to appropriate questions from the
shareholders who are present.
Compliance with Section 16(a) of the Securities Exchange Act of
1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's directors, executive officers, and persons who
own more than 10% of a registered class of the Corporation's
equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Corporation. Officers,
directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Corporation's knowledge, based
solely on a review of the copies of such reports furnished to the
Corporation and written representations that no other reports
were required, during the two fiscal years ended December 31,
1995, all section 16(a) filing requirements applicable to the
Corporation's officers, directors, and greater than 10%
beneficial owners were complied with.
Other Matters
As of the date of this Proxy Statement, the Board of Directors
and Management were unaware of any matters not referred to in
this proxy statement for action at the meeting. If any other
business comes before the meeting, the persons named in the proxy
will have the authority to vote the shares represented by them in
accordance with their best judgment.
Method and Cost of Solicitation
The solicitation of proxies will be made primarily by mail.
Proxies may also be solicited personally and by telephone by
regular employees and Directors of the Corporation and the Bank
without any additional remuneration and at minimal cost.
Management intends to request banks, brokerage houses,
custodians, nominees, and fiduciaries to obtain authorization for
the execution of proxies. The Corporation will bear the entire
cost of soliciting proxies.
Shareholder Proposals for Next Year's Annual Meeting
Proposals which shareholders intend to present at next year's
annual meeting, now scheduled to be held on April 15, 1997, will
be eligible for inclusion in the Corporation's proxy material for
that meeting if they are submitted to the Corporation in writing
no later than November 8, 1996. A proponent may submit a maximum
of two proposals of not more than 300 words each for inclusion in
the proxy material. At the time of the submission of the
proposal, a shareholder may also submit a written statement of
not more than 200 words in support thereof for inclusion in the
proxy material for the meeting, if requested by the proponent, in
the event that the proposal is opposed by the Corporation. When
submitted to the Corporation, a proposal should be accompanied by
a written notice of the proponent's intention to appear
personally at the meeting for the purpose of presenting the
proposal for action.
Bridgeport, Ohio BY ORDER OF THE BOARD
March 15, 1996 OF DIRECTORS
J. VINCENT CIROLI, JR.,
PRESIDENT & CEO
APPENDIX A
PROXY
BELMONT BANCORP., BRIDGEPORT, OHIO
ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1996
KNOW ALL MEN BY THESE PRESENT that I the undersigned Shareholder of
BELMONT BANCORP. do hereby nominate, constitute and appoint David L. Barnes
and Kelley Archer, or either of them, my true and lawful attorney with full
power of substitution, for me and in my name, place and stead to vote all
of the Common Stock of said Corporation standing in my name at the Annual
Meeting of its Shareholders to be held at Belmont National Bank, 980
National Road, Wheeling, West Virginia, on April 16, 1996, at 1:00 P.M., or
at any adjournments thereof with all the powers the undersigned would
possess if personally present as follows:
1. For the election to the Board of Directors, except as otherwise
specified below, of the following nominees, or any one or more of them to
serve a three-year term expiring at the annual shareholders' meeting in
1999:
Mary L. Holloway Haning Thomas Olszowy
Charles J. Kaiser, Jr. Charles A. Wilson, Jr.
Samuel A. Mumley
with full authority to cumulate the votes represented by such shares and to
distribute the same among the nominees in such manner and numbers as said
proxies in their discretion may determine.
THE AUTHORITY TO VOTE FOR THE ELECTION OF ANY OF THE NOMINEES LISTED ABOVE
MAY BE WITHHELD BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF THE
NOMINEE.
For 2. To consider and act upon a proposal to ratify the
Against appointment of S.R. Snodgrass A.C. as independent auditors
Abstain for the year ending December 31, 1996.
For 3. In accordance with the judgment of the said proxies to vote
Against upon such other matters as may be presented for
Abstain consideration and action.
DATED ___________________ ________________________________________
________________________________________
Signature(s)
When signing in a fiduciary capacity,
please give full title.
All joint owners should sign.
Please sign, date and return your Proxy promptly in the enclosed envelope
to BELMONT NATIONAL BANK, 154 West Main Street, St. Clairsville, Ohio
43950.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
ALL OF THE ABOVE ITEMS.
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT AND FORM 10-K OF BELMONT BANCORP. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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