U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended September 30, 1996
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________________ to
__________________
Commission file number 0-12724
Belmont Bancorp.
An Ohio Corporation
IRS Employer ID number - 34-1376776
325 Main Street
Bridgeport, Ohio 43912
Telephone (614) 695-3323
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
The number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $0.50 par value,
2,114,644 shares outstanding
as of October 24, 1996
FORM 10-Q
BELMONT BANCORP.
Quarter Ending September 30,1996
INDEX
Part I. Financial information
Management's report on financial statements
Financial highlights
Consolidated Statements of Condition - September 30, 1996,
December 31, 1995, and September 30, 1995
Consolidated Statements of Income-Three Months
Ended September 30, 1996 and September 30, 1995
Consolidated Statements of Income-Nine Months
Ended September 30, 1996 and September 30, 1995
Consolidated Statements of Cash Flows-Nine Months
Ended September 30, 1996 and September 30, 1995
Consolidated Statements of Changes in Shareholders' Equity
Nine Months Ended September 30, 1996 and Year Ended
December 31, 1995
Notes to the Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II - Other Information
Legal Proceedings
Changes in Securities
Defaults upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Signature page
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The following consolidated financial statements and
related notes of Belmont Bancorp. and subsidiaries were
prepared by management which has the primary responsibility
for the integrity of the financial information. The
statements are prepared in conformity with generally
accepted accounting principles appropriate in the
circumstances, and include amounts that are based on
management's best estimates and judgments. Financial
information elsewhere in the quarterly report is prepared on
a basis consistent with that in the financial statements.
In meeting its responsibility for the accuracy of the
financial statements, management relies on the Corporation's
comprehensive system of internal accounting controls. This
system provides reasonable assurance that assets are
safeguarded and transactions are recorded to permit the
preparation of appropriate financial information. The
system of internal controls is characterized by an effective
control oriented environment within the Corporation which is
augmented by written policies and procedures, internal
audits and the careful selection and training of qualified
personnel.
The functioning of the accounting system and related
internal accounting controls is under the general oversight
of the Audit Committee of the Board of Directors which is
comprised of five outside directors. The accounting system
and related controls are reviewed by a program of internal
audits and by the Corporations' independent accountants.
The Audit Committee meets regularly with the contract
internal auditor and the independent public accountants to
review the work of each and ensure that each group is
properly discharging its responsibilities. In addition, the
Committee reviews and approves the scope and timing of the
internal and external audits and any findings with respect
to the system of internal controls. Reports of examinations
conducted by federal regulatory agencies are also reviewed
by the Committee.
The annual consolidated financial statements of Belmont
Bancorp. and subsidiaries will be examined by S.R. Snodgrass
A.C., the Corporation's independent certified public
accountants. Their examination will be conducted in
accordance with generally accepted auditing standards and
will include a review of internal controls and a test of
transactions in sufficient detail to allow them to report on
the fair presentation of the consolidated operating results
and financial condition of Belmont Bancorp. and
subsidiaries.
BASIS OF PRESENTATION
The consolidated financial statements include the
accounts of Belmont Bancorp. and its subsidiaries, Belmont
National Bank and Belmont Financial Network.
<TABLE>
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
<CAPTION>
September 30 1996 1995 % Change
<S> <C> <C> <C>
Earnings and dividends ($000's)
Net income 3,657 3,324 10.0
Operating earnings (1) 4,712 4,253 10.8
Cash dividends declared on
common stock 910 729 24.7
Per common share (2):
Net income 1.70 1.54 10.4
Cash dividends declared 0.430 0.345 24.6
Book value 12.00 10.89 10.2
Market price for the quarter:
High 28.00 25.00 12.0
Low 26.00 18.50 40.5
At quarter-end ($000's)
Assets 349,315 321,386 8.7
Loans and leases 181,465 157,975 14.9
Deposits 256,309 245,977 4.2
Stockholders' equity 26,380 24,030 9.8
Key Ratios
Return on average assets 1.45% 1.43% 1.5
Return on average common
shareholders' equity 19.22% 20.48% (6.2)
Net interest margin (TE) 4.42% 4.58% (3.5)
Number of shares (2) 2,114,644 2,114,644 0.0
Number of full time equivalent
employees 120.0 111.0 8.1
Total assets per FTE employee 2,911 2,895 0.5
</TABLE>
(1) Operating earnings are defined as earnings before income taxes
minus securities and trading gains or plus securities and trading losses.
(2) Per common share amounts have been restated for the effect of a 100%
common stock dividend paid May 8, 1995.
<TABLE>
Consolidated Condensed Balance Sheet
(Unaudited) ($000s except per share amounts)
<CAPTION>
September December September
30, 31, 30,
1996 1995 1995
<S> <C> <C> <C>
ASSETS
Cash and due from banks 11,970 10,175 9,458
Federal funds sold 665 0 0
Securities available for
sale at market value 122,516 112,109 58,456
Securities held to
maturity (1) 20,056 23,726 83,931
Loans 181,465 159,957 157,975
Less allowance for possible
loan losses 3,060 2,703 2,464
Net Loans 178,405 157,254 155,511
Premises and equipment, net 6,272 5,090 4,881
Other real estate owned 645 579 579
Accrued income receivable 2,547 2,150 2,392
Other assets 6,239 6,196 6,178
Total Assets 349,315 317,279 321,386
LIABILITIES
Non-interest bearing
deposits
Demand 28,499 26,494 25,703
Interest-bearing deposits:
Demand 40,285 27,193 25,986
Savings 79,070 78,883 77,264
Time 108,455 114,280 117,024
Total deposits 256,309 246,850 245,977
Short-term borrowings 42,924 38,665 50,097
Long term debt 21,910 4,802 -
Accrued int on deposits
and other borrowings 700 661 736
Other liabilities 1,092 1,137 546
Total liabilities 322,935 292,115 297,356
SHAREHOLDERS' EQUITY
Preferred stock -
authorized 90,000 shares with
no par value; issued and
outstanding, none - - -
Senior cumulative preferred
stock - authorized, issued and
outstanding 10,000 shares with
a $100 par value 1,000 1,000 1,000
Common stock - $0.50 par
value, 8,900,000
shares authorized;2,115,476
issued in 1996 and 1995 1,057 1,057 1,057
Surplus 7,781 7,781 7,781
Treas stock (832 shares) (8) (8) (8)
Retained earnings:
Unappropriated 16,835 14,148 13,561
Appropriated for
contingencies 850 850 850
Net unrealized loss on
securities avail. for sale (1,135) 336 (211)
Total shareholders'
equity 26,380 25,164 24,030
Total liabilities and
shareholders' equity 349,315 317,279 321,386
</TABLE>
(1) Market value at September 30, 1996, $19,813; December 31,1995,
$23,758, September 30, 1995, $83,148.
<TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
<CAPTION>
Three months ended September 30, Increase
1996 1995 (Decrease)
<S> <C> <C> <C>
INTEREST INCOME
Loans and lease financing
Taxable 4,079 3,565 514
Tax-exempt 83 80 3
Investment securities:
Taxable 2,001 1,883 118
Tax-exempt 363 380 (17)
Dividends 50 31 19
Interest on fed funds
sold - 16 (16)
Total interest income 6,576 5,955 621
INTEREST EXPENSE
Deposits 2,384 2,203 181
Borrowings 817 588 229
Total interest
expense 3,201 2,791 410
Net interest income 3,375 3,164 211
Provision for possible
loan losses 105 200 (95)
Net interest income
after provision
for possible loan
losses 3,270 2,964 306
NON-INTEREST INCOME
Trust fees 111 54 57
Service charges on
deposits 166 135 31
Other operating income 150 128 22
Investment securities
gains (losses) - (23) 23
Trading profits
(losses) - - -
Gains (losses) on
securities avail for sale 34 41 (7)
Total non-interest
income 461 335 126
NON-INTEREST EXPENSE
Salary and employee
benefits 843 701 142
Net occupancy expense
of premises 175 140 35
Equipment expenses 206 186 20
Other operating
expenses 1,100 667 433
Total non-interest
expense 2,324 1,694 630
Income before
income taxes 1,407 1,605 (198)
INCOME TAXES 324 385 (61)
Net income 1,083 1,220 (137)
PER COMMON SHARE DATA
Net income per share 0.50 0.57
Cash dividend per share 0.150 0.130
Book value per share
Weighted average
shares outstanding 2,114,644 2,114,644
</TABLE>
<TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
<CAPTION>
Nine Months Ended September 30, Increase
1996 1995 (Decrease)
<S> <C> <C> <C>
INTEREST INCOME
Loans and lease
financing
Taxable 11,647 10,357 1,290
Tax-exempt 244 212 32
Investment securities:
Taxable 6,029 5,838 191
Tax-exempt 1,005 1,073 (68)
Dividends 125 90 35
Interest on fed funds
sold 7 46 (39)
Total interest
income 19,057 17,616 1,441
INTEREST EXPENSE
Deposits 6,997 6,791 206
Borrowings 2,111 1,394 717
Total interest
expense 9,108 8,185 923
Net interest
income 9,949 9,431 518
Provision for
possible loan losses 360 900 (540)
Net interest
income after provision
for possible loan
losses 9,589 8,531 1,058
NON-INTEREST INCOME
Trust fees 374 350 24
Service charges on
deposits 481 409 72
Other operating
income 458 354 104
Investment securities
gains (losses) (1) (22) 21
Trading profits
(losses) - - -
Gains (losses) on
securities available
for sale 268 204 64
Total non-
interest income 1,580 1,295 285
NON-INTEREST EXPENSE
Salary and employee
benefits 2,463 2,206 257
Net occupancy expense
of premises 515 414 101
Equipment expenses 593 563 30
Other operating
expenses 2,619 2,208 411
Total non-
interest expense 6,190 5,391 799
Income before
income taxes 4,979 4,435 544
INCOME TAXES 1,322 1,111 211
Net income 3,657 3,324 333
PER COMMON SHARE DATA
Net income per
share 1.70 1.54
Cash dividend per
share 0.430 0.345
Book value per
share 12.00 10.89
Weighted average
shares outstanding 2,114,644 2,114,641
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30
(Unaudited) ($ expressed in 000s)
<CAPTION>
BELMONT BANCORP.
1996 1995
<S> <C> <C>
Operating Activities:
Net income 3,657 3,324
Adjustments to reconcile net income
to net cash flows provided by
operating activities:
Provision for loan losses 360 900
Depreciation expense 483 450
Amortization of investment security
premiums 1,147 774
Accretion of investment security
discounts (294) (249)
Investment and trading securities
(gains) losses (267) (182)
Proceeds on sale of securities
available for sale 60,003 60,759
Purchase of securities available for
sale (90,103) (77,444)
Loss (gain) on sale of fixed assets 7 23
Gain on sale of loans (50) (90)
(Increase) decrease in interest
receivable (397) (259)
Increase (decrease) in interest
payable 39 146
Others, net 668 (359)
Net cash provided by
operating activities (24,747) (12,207)
Investing Activities:
Proceeds from maturities and calls of
investment securities 1,198 6,322
Proceeds from sale of investment
securities (1) 551 0
Purchases of investment securities 0 (2,321)
Principal collected on mortgage-
backed securities 18,800 13,492
Net (increase) decrease in loans and
leases, net of charge offs (28,359) (17,021)
Proceeds on loans sold 6,787 6,298
Loans purchased 0 (94)
Recoveries on loans previously
charged off 45 62
Purchases of fixed assets (1,679) (711)
Proceeds on sale of fixed assets 8 4
Net cash used by
investing activities (2,649) 6,031
Financing Activities:
Net increase (decrease) in deposits 9,459 (9,946)
Net increase (decrease) in short-term
borrowings 4,259 14,599
Dividends paid on common and
preferred stock (970) (789)
Proceeds on long term borrowings 17,225 0
Repayments on long term borrowings (117) 0
Net cash provided by financing
activities 29,856 3,864
Increase (decrease) in cash and
cash equivalents 2,460 (2,312)
Cash and equivalents, beginning 10,175 11,770
Cash and equivalents, ending 12,635 9,458
</TABLE>
(1) The sale of investment securities occurred after the Corporation had
already collected a substantial portion of the principal outstanding at
acquisition.
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited) ($ expressed in 000s)
<CAPTION>
BELMONT BANCORP.
Year Ended December 31, 1995 and
Nine Months Ended September 30, 1996
Unrealized
Loss on
Retained
Earnings Securities
Preferr Common Unappro- Appro- Treasury Available
Stock Stock Surplus priated priated Stock for sale
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1994 1,000 3,777 5,061 11,026 850 (8) (1,492)
Transfer to surplus
resulting from
change in par value of
common stock (3,248) 3,248
2 for 1 stock split 528 (528)
1995 Net income 4,206
Cash dividends
declared:
Preferred stock (80)
Common stock ($475
per share) (1,004)
Change in unrealized
loss-securities
available for sale 1,828
Balance, December 31,
1995 1,000 1,057 7,781 14,148 850 (8) 336
Year to date 1996 Net
income 3,657
Cash dividends
declared:
Preferred stock (60)
Common stock ($.43
per share) (910)
Change in unrealized
loss- securities
available-for-sale (1,471)
Balance, Sept. 30, 1996 1,000 1,057 7,781 16,835 850 (8) (1,135)
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The foregoing financial statements are unaudited,
however, in the opinion of Management, all adjustments
necessary for a fair presentation of the financial
statements have been included. A summary of the
Corporation's significant accounting policies is set forth
in Note 1 to the Consolidated Financial Statements in the
Corporation's Annual Report on Form 10-K for 1995.
Related party transactions - The Corporation's and it
Subsidiaries' directors and officers and their associates
were customers of, and had other transactions with, the
subsidiary bank in the ordinary course of business during
1996. All loans and commitments included in such
transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons
and did not involve more than the normal risk of
collectibility.
Per share data has been restated in previous periods
for a 100% common stock dividend paid in May 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The third quarter of 1996 added another quarter of
solid earnings to Belmont Bancorp.'s year to date
performance despite the federal government's assessment of a
"one time" deposit premium on about 30% of our deposits that
are insured by the Savings Association Insurance Fund (SAIF)
of the Federal Deposit Insurance Corporation (FDIC). In
1992, Belmont National Bank purchased three branches of a
savings and loan. These deposits are insured under the SAIF
fund because moving the deposit insurance to the Bank
Insurance Fund where the Bank's other deposits are insured
would have been quite expensive. The deposit insurance
assessment recognized during the third quarter was $397,000,
or $262,000 after the effect of income taxes. Results for
the third quarter remained strong with return on common
shareholders' equity (ROE) at 16.89% and ROE for the year
to date period at 19.22%. Without the SAIF assessment, ROE
would have been 21.06% for the quarter and 20.27% for the
nine months ended September 30, 1996.
Earnings per common share for the nine months were
$1.70, up $0.16 per share or 10.4% from the first nine
months of 1995. Earnings per common share were $0.50 for the
quarter, down from $0.57 per share during the comparable
quarter last year. The SAIF assessment reduced earnings per
share by $0.12.
For the nine months ended September 30, 1996, net
income increased 10.0% to $3,657,000, compared to $3,324,000
for the first nine months of 1995. The net income of
Belmont Bancorp. for the third quarter of 1996 decreased
11.2% to $1,083,000, compared to $1,220,000 in the third
quarter of 1995.
Operating earnings increased to $4,712,000 for the nine
months ended September 30, 1996, up 10.8% from $4,253,000
for the same period last year. For the third quarter of
1996, operating earnings were $1,373,000, down 13.5% from
$1,587,000 during the year ago quarter.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
($000s) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Return on average
assets 1.25% 1.55% 1.45% 1.43%
Return on
shareholders' equity 16.55% 20.78% 18.78% 19.92%
Return on average
common equity 16.89% 21.34% 19.22% 20.48%
Average assets $346,453 $314,108 $336,798 $310,811
Average shareholders'
equity $ 26,171 $ 23,489 $ 25,959 $ 22,249
</TABLE>
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Tables 1 and 3, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the nine months and three
months ended September 30, 1996, 1995, and 1994. The tables
contain net interest income, net interest margin and net
interest rate spread for each period. All three of these
measures are reported on a taxable equivalent basis.
The taxable equivalent yield on interest earning assets
declined from 8.32% during the first nine months of 1995 to
8.26% in 1996, a decrease of 6 basis points. (A basis point
(bp) is equivalent to .01%.) The cost of interest bearing
liabilities increased 15 basis points from 4.18% during the
first nine months of 1995 to 4.33% in 1996. The net
interest margin (net interest income divided by interest
earning assets) declined from 4.58% to 4.42% during the
comparative year-to-date periods.
The taxable equivalent yield on interest earning assets
decreased from 8.27% during the third quarter of 1995 to
8.21% in 1996, a decrease of 6 basis points. The cost of
interest bearing liabilities rose 18 basis points from 4.21%
during the third quarter of 1995 to 4.39% in 1996. The net
interest margin decreased 20 basis points from 4.53% to
4.33% during the comparative quarters.
Tables 2 and 4, Analysis of Net Interest Income
Changes, separates the dollar change in the Corporation's
net interest income into three components: changes caused
by (1) an increase or decrease in the average asset and
liability balances outstanding (volume); (2) the changes in
average yields on interest earning assets and average rates
for interest bearing liabilities (yield/rate); and (3)
combined volume and yield/rate effects (mix).
<TABLE>
TABLE 1. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET
INTEREST INCOME (Fully Taxable Equivalent Basis) ($000's)
<CAPTION>
Nine Months Ended September 30,
1996 1995 1994
Average Average Average Average Average Average
Out- Revenue/ Yield/ Out- Revenue/ Yield/ Out- Revenue/Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning
assets
Loans and
leases $171,028 $11,987 9.37% $151,005 $10,668 9.45% $132,316 $8,551 8.64%
Securities
Taxable 121,267 6,150 6.78% 114,616 5,926 6.91% 110,310 4,761 5.77%
Exempt from
income tax 24,952 1,466 7.86% 25,757 1,554 8.07% 22,750 1,392 8.18%
Trading
account assets 0 0 0.00% 0 0 0.00% 184 1 0.73%
Federal funds
sold 188 7 4.98% 1,054 46 5.84% 166 3 2.42%
Total interest
earning assets 317,435 19,610 8.26% 292,432 18,194 8.32% 265,726 14,708 7.40%
Cash and due
from banks 8,860 8,424 8,153
Other assets 14,100 12,926 11,906
Valuation
allowance-
available for
sale securit (725) (955) (642)
Allowance for
possible loan
loss (2,872) (2,016) (1,427)
Total assets 336,798 310,811 283,716
Liabilities
Interest bearing
liabilities
Interest
checking 37,639 888 3.15% 25,570 450 2.35% 27,014 435 2.15%
Savings 79,272 1,808 3.05% 79,067 1,771 2.99% 98,573 2,198 2.98%
Other time
deposits 112,334 4,301 5.12% 123,089 4,570 4.96% 94,954 3,093 4.36%
Other
borrowings 52,198 2,111 5.41% 33,840 1,393 5.50% 17,574 531 4.04%
Total interest
bearing
liabilities 281,443 9,108 4.33% 261,566 8,184 4.18% 238,115 6,257 3.51%
Demand deposits 27,144 25,377 24,390
Other
liabilities 2,252 1,619 1,513
Total
liabilities 310,839 288,562 264,018
Shareholders'
equity 25,959 22,249 19,698
Liabilities &
shareholders'
equity 336,798 310,811 283,716
Net interest
income
Margin on a
taxable
equivalent
basis 10,502 4.42% 10,010 4.58% 8,451 4.25%
Net interest
rate spread 3.93% 4.14% 3.89%
Interest bearing
liabilities
to interest
earning assets 88.66% 89.45% 89.61%
</TABLE>
<TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis)($000's)
<CAPTION>
Nine Months Ended September 30, 1995
1996 Compared to 1995 1995 Compared to 1994
Volume Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in
Interest Income
Loans and Leases $1,415 ($84) ($12) $1,319 $1,208 $797 $113 $2,118
Securities
Taxable 344 (113) (7) 224 186 942 37 1,165
Exempt from
income taxes (49) (41) 1 (89) 184 (19) (3) 162
Trading Account
Assets 0 0 0 0 (1) (1) 0 (2)
Federal Funds Sold (38) (7) 6 (39) 16 4 23 43
Total Interest
Income Change 1,672 (245) (12) 1,415 1,593 1,723 170 3,486
Increase
(Decrease) in
Interest Expense
Interest
Checking 212 153 72 437 (23) 40 (2) 15
Savings 5 32 0 37 (435) 10 (2) (427)
Other Time
Deposits (399) 143 (12) (268) 916 432 129 1,477
Other
Borrowings 756 (24) (15) 717 491 192 180 863
Total Interest
Expense Change 574 304 45 923 949 674 305 1,928
Increase
(Decrease) in Net
Interest Income
on a Taxable
Equivalent Basis $1,098 ($549) ($57) $492 $644 $1,049 ($135) $1,558
(Increase)
Decrease in
Taxable
Equivalent
Adjustment 26 (72)
Net Interest
Income Change $518 $1,486
</TABLE>
<TABLE>
TABLE 3. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET
INTEREST INCOME (Fully Taxable Equivalent Basis) ($000's)
<CAPTION>
Three Months Ended September 30,
1996 1995 1994
Average Average Average Average Average Average
Out- Revenue Yield/ Out- Revenue Yield/ Out- Revenue Yield/
standing Cost Rate standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning
assets
Loans and
leases $178,969 $4,182 9.27% $155,384 $3,682 9.40% $135,934 $3,016 8.80%
Securities
Taxable 121,462 2,049 6.69% 111,329 1,914 6.82% 118,511 1,837 6.15%
Exempt from
income tax 26,892 541 7.98% 27,588 550 7.91% 26,138 593 9.00%
Federal funds
sold 25 0 0.00% 1,158 16 5.48% 5 0 0.00%
Total interest
earning assets 327,348 6,772 8.21% 295,459 6,162 8.27% 280,588 5,446 7.70%
Cash and due
from banks 9,064 8,575 8,139
Other assets 14,933 12,808 11,950
Valuation
allowance-
available for
sale
securities (1,899) (416) (911)
Allowance for
possible loan
loss (2,993) (2,318) (1,315)
Total assets 346,453 314,108 298,451
Liabilities
Interest bearing
liabilities
Interest
checking 42,131 356 3.35% 25,618 153 2.37% 26,363 146 2.20%
Savings 79,844 618 3.07% 79,033 598 3.00% 94,612 709 2.97%
Other time
deposits 108,970 1,410 5.13% 115,916 1,452 4.97% 101,732 1,144 4.46%
Short term
borrowings 58,430 817 5.55% 42,522 587 5.48% 29,235 332 4.51%
Total interest
bearing
liabilities 289,375 3,201 4.39% 263,089 2,790 4.21% 251,942 2,331 3.67%
Demand deposits 28,594 26,082 24,737
Other liabilities 2,313 1,448 1,593
Total liabilities 320,282 290,619 278,272
Shareholders'
equity 26,171 23,489 20,179
Liabilities &
Shareholders'
Equity 346,453 314,108 298,451
Net interest
income
Margin on a
taxable
equivalent basis 3,571 4.33% 3,372 4.53% 3,115 4.40%
Net interest rate
spread 3.82% 4.07% 4.03%
Interest bearing
liabilities
to interest
earning assets 88.40% 89.04% 89.79%
</TABLE>
<TABLE>
TABLE 4. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis)($000's)
<CAPTION>
Three Months Ended September 30,
1996 Compared to 1995 1995 Compared to 1994
Volum Yield Mix Total Volume Yield Mix Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease)
in Interest Income
Loans and Leases $559 ($51) ($8) $500 $432 $205 $29 $666
Securities
Taxable 174 (36) (3) 135 (111) 200 (12) 77
Exempt from
Income Taxes (14) 5 0 (9) 33 (72) (4) (43)
Federal Funds
Sold (16) (16) 16 (16) 0 0 16 16
Total Interest
Income Change 703 (98) 5 610 354 333 29 716
Increase (Decrease)
in Interest Expense
Interest Checking 99 63 41 203 (4) 11 0 7
Savings 6 14 0 20 (117) 7 (1) (111)
Other Time
Deposits (87) 48 (3) (42) 160 130 18 308
Short Term
Borrowings 220 8 1 229 151 72 33 256
Total Interest
Expense Change 238 133 39 410 190 220 50 460
Increase (Decrease)
in Net Interest
Income on a Taxable
Equivalent Basis $465 ($231) ($34) $200 $164 $113 ($21) $256
(Increase) Decrease
in Taxable
Equivalent
Adjustment 11 (11)
Net Interest Income
Change $211 $245
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 18.0%, or $200,000, and totaled $1,313,000
for the first nine months of 1996, compared to $1,113,000
for the respective period last year. Changes in various
categories of other income are depicted in the table below.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
($000s) 1996 1995 %Change 1996 1995 % Change
(S> <C> <C> <C> <C> <C> <C>
Trust fees 111 54 105.6% $ 374 $ 350 6.9%
Service charges on
deposits 166 135 23.0% 481 409 17.6%
Other income 150 128 17.2% 458 354 29.4%
Subtotal 427 317 34.7% 1,313 1,113 18.0%
Security gains
(Losses) 0 (23) 100.0% (1) (22) 95.5%
Gains (losses)
securities
available for
sale 34 41 -17.1% 268 204 31.4%
Total $461 $335 37.6% $1,580 $1,295 22.0%
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated market values of
securities held to maturity at September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of
U.S. Government
corporation and agencies $ 2,265 $ 0 $134 $ 2,131
Obligations of states and
political subdivisions 4,845 95 88 4,852
Mortgage-backed securities 12,946 52 168 12,830
Total $20,056 $147 $390 $19,813
</TABLE>
Included above in U.S. Government corporations and
agencies is a structured note with a book value of
$2,265,000 and a market value of $2,132,000 which matures in
the year 2000.
The amortized cost and estimated market values of
securities available for sale at September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of
U.S. Government
corporations and agencies $ 11,742 $ 0 $ 339 $ 11,403
Obligations of states and
political subdivisions 20,915 105 370 20,650
Mortgage-backed securities 51,893 276 608 51,561
Mortgage derivatives 36,464 88 872 35,680
Marketable equity securities 3,222 3,222
Total $124,236 $469 $2,189 $122,516
</TABLE>
The mortgage derivatives are comprised solely of
collateralized mortgage obligations (CMOs) including one
principal only CMO issued by FNMA with a book value of
$199,000 and an estimated market value of $154,000.
Privately issued CMOs included in the table above have a
book value of $11,863,000 and an estimated market value of
$11,846,000. Credit risk on privately issued CMOs is
evaluated based upon independent rating agencies and on the
underlying collateral of the obligation. At September 30,
1996, the Corporation held two CMOs issued by Prudential
Home Mortgage with an aggregate book value of $6,783,000 and
an estimated market value of $6,847,000 and one CMO issued
by Ryland Acceptance Corporation with a book value of
$2,799,000 and an estimated market value of $2,783,000.
Market factors and prepayment speeds can have an impact
on the yield and average lives of mortgage-backed securities
including mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically,
when comparing the Corporation to various peer groups, the
overhead costs of the Corporation have been significantly
lower than peer. The following table shows the dollar
amounts and growth in various components of operating
expenses.
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
($000s) 1996 1995 %Change 1996 1995 %Change
<S> <C> <C> <C> <C> <C> <C>
Salaries and Wages $ 654 $ 552 18.5% $1,856 $1,665 11.5%
Employee benefits 189 149 26.8% 607 541 12.2%
Net occupancy expense 175 140 25.0% 515 414 24.4%
Equipment expense 206 186 10.8% 593 563 5.3%
Other operating expenses 1,100 667 64.9% 2,619 2,208 18.6%
Total $2,324 $1,694 37.2% $6,190 $5,391 14.8%
</TABLE>
Year-to-date operating expenses have increased 14.8%
during 1996 compared to the same period last year. The
subsidiary bank opened a new headquarters office in the
Woodsdale section of Wheeling, WV in January 1996 and a new
branch in the Elm Grove section of Wheeling, WV in September
1996. Expenses attributed to these offices included $99,000
for salaries, $26,000 for benefits, $78,000 for occupancy
expenses, $17,000 for equipment expense and $57,000 for
other operating expenses.
As discussed above during the third quarter of 1996,
the subsidiary bank was assessed $397,000 in insurance
premiums on deposits insured through the Savings Association
Insurance Fund ("SAIF"), included in other operating expense
in the table above. During the third quarter of 1995, the
Bank received a refund of $113,000 from the Bank Insurance
Fund ("BIF") for FDIC premiums previously paid during 1995
which reduced other operating expense. Eliminating the
impact of the both the SAIF assessment and the BIF refund in
1996 and 1995, respectively, other operating expense
declined $99,000 for the comparative nine month period.
Also, total operating expenses would have reflected an
increase of $289,000, or 5.4%.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of
Income. Actual losses on loans and leases are charged
against the allowance built up on the Consolidated Balance
Sheet through the allowance for possible loan losses. The
amount of loans and leases actually removed as assets from
the Consolidated Balance Sheets is referred to as charge-
offs and, after netting out recoveries previously charged-
off assets, becomes net charge-offs.
For the nine months of 1996, $360,000 was added to the
allowance and charged to expense compared to $900,000 in
1995. At September 30, 1996, the allowance for possible
loan losses to total loans and leases was 1.94% compared to
1.56% last year. The ratio of the Allowance for Possible
Loan Losses to underperforming assets was 332.6% at
September 30, 1996. The following table details the
Allowance for Possible Loan Losses and also includes various
loan charge off statistics for 1996 and 1995.
<TABLE>
Allowance for Possible Loan Losses
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
($000s) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Balance, beginning of period $ 2,945 $ 2,228 $ 2,703 $ 1,537
Provision for possible loan
losses 105 200 360 900
Loans charged-off 2 14 48 35
Recoveries on loans
previously charged-off 12 50 45 62
Net charge offs (10) (36) 3 (27)
Balance, end of period $ 3,060 $ 2,464 $ 3,060 $ 2,464
Loans and leases outstanding
at period $157,975 $157,975
Average loans and leases $178,969 $155,384 $171,028 $151,005
Annualized net charge offs
as a percent of:
Average loans and leases -0.02% -0.09% 0.00% -0.02%
Total loans at end of
period 0.00% -0.02%
Reserve for possible loan
losses -1.31% -5.84% 0.13% -1.46%
Reserve for possible loan
losses to:
Average loans and leases 1.71% 1.59% 1.79% 1.63%
Total loans at end of
period 1.94% 1.56%
Under-performing assets 332.61% 338.00%
</TABLE>
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at September 30 follows:
<TABLE>
<CAPTION>
Under-performing assets September 30,
($000s) 1996 1995
<S> <C> <C>
Non-accrual loans and leases $238 $133
Ninety days past due loans
and leases still accuring
interest 37 17
Other real estate owned 645 579
Total $920 $729
Restructured loans and
leases included
in above totals $ 0 $ 0
Restructured loans and
leases in
compliance with
modified terms 641 107
</TABLE>
CAPITAL RESOURCES
At September 30, 1996, shareholders' equity was
$26,380,000 compared to $25,164,000 at December 31, 1995 and
$24,030,000 at September 30, 1995. The following table
presents various capital ratios as of September 30:
<TABLE>
<CAPTION>
September 30, 1996 1995
<S> <C> <C>
Average shareholder's
equity to :
Average assets 7.7% 7.2%
Average deposits 10.1% 8.8%
Average loans and
leases 15.2% 14.7%
Primary capital 8.4% 8.2%
Risk-based capital
ratio:
Tier 1 12.0% 12.6%
Total 13.3% 13.9%
Leverage ratio 7.5% 7.1%
</TABLE>
The Federal Reserve Board has adopted risk-based
capital guidelines that assign risk weightings to assets and
off-balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% 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 possible loan losses. At
September 30, 1996, the Corporation had a Tier 1 capital
ratio of 12.0% and a total capital ratio of 13.3%, well
above regulatory minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total
assets, referred to as a total assets leverage ratio. At
September 30, 1996, the Corporation's leverage ratio was
7.5%.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security
shareholders
None
Item 5. Other information
None
Item 6. Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Belmont Bancorp.
(Registrant)
November 4, 1996 s/J. Vincent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,970
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 665
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 112,516
<INVESTMENTS-CARRYING> 20,056
<INVESTMENTS-MARKET> 19,813
<LOANS> 181,465
<ALLOWANCE> 3,060
<TOTAL-ASSETS> 349,315
<DEPOSITS> 256,309
<SHORT-TERM> 42,924
<LIABILITIES-OTHER> 1,792
<LONG-TERM> 21,910
0
1,000
<COMMON> 1,057
<OTHER-SE> 24,323
<TOTAL-LIABILITIES-AND-EQUITY> 349,315
<INTEREST-LOAN> 11,891
<INTEREST-INVEST> 7,166
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 19,057
<INTEREST-DEPOSIT> 6,997
<INTEREST-EXPENSE> 9,108
<INTEREST-INCOME-NET> 9,949
<LOAN-LOSSES> 360
<SECURITIES-GAINS> 267
<EXPENSE-OTHER> 6,190
<INCOME-PRETAX> 4,979
<INCOME-PRE-EXTRAORDINARY> 3,657
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,657
<EPS-PRIMARY> 1.70
<EPS-DILUTED> 1.70
<YIELD-ACTUAL> 4.42
<LOANS-NON> 238
<LOANS-PAST> 37
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,327
<ALLOWANCE-OPEN> 2,703
<CHARGE-OFFS> 48
<RECOVERIES> 45
<ALLOWANCE-CLOSE> 3,060
<ALLOWANCE-DOMESTIC> 3,060
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,180
</TABLE>
