U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended March 31, 1997
[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,
2,113,644 shares outstanding
as of April 30, 1997
<PAGE>
FORM 10-Q
BELMONT BANCORP.
Quarter Ending March 31, 1997
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - March 31, 1997,
December 31, 1996, and March 31, 1996
Consolidated Statements of Income-Three Months
Ended March 31, 1997 and March 31, 1996
Consolidated Statements of Cash Flows-Three Months
Ended March 31, 1997 and March 31, 1996
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended March 31, 1997 and Year Ended
December 31, 1996
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
<PAGE>
BELMONT BANCORP. AND
SUBSIDIARIES
Financial Highlights
March 31 1997 1996 % Change
Earnings and dividends
($000's)
Net income $ 1,421 $ 1,409 0.9
Operating earnings (1) 1,832 1,728 6.0
Cash dividends declared on
common stock 361 275 31.3
Per common share (2):
Net income $ 0.67 $0.66 1.5
Cash dividends declared 0.170 0.130 30.8
Book value 13.09 11.66 12.2
Market price :
High 28.00 27.50 1.8
Low 25.50 25.00 2.0
At quarter-end ($000's)
Assets $ 371,963 $ 323,141 15.1
Loans and leases 199,085 167,563 18.8
Deposits 266,310 260,558 2.2
Stockholders' equity 27,673 25,664 7.8
Key Ratios
Return on average assets 1.68% 1.74% (4.0)
Return on average common
shareholders' equity 20.42% 22.35% (8.6)
Net interest margin (TE) 4.65% 4.66% (0.2)
Number of shares 2,114,644 2,114,644 0.0
Number of full time equivalent
employees 128.0 112.5 13.8
Total assets per FTE employee $ 2,906 $ 2,872 1.2
(1) Operating earnings are defined as earnings before income taxes
minus securities and trading gains or plus securities and
trading losses.
<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. Consolidated Balance Sheets
<CAPTION>
March 31, December 31, March 31,
1997 1996 1996
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 12,917 $ 10,948 $ 9,283
Federal funds sold 0 24,450 0
Securities available for sale at market value 123,755 78,728 111,827
Securities held to maturity (1) 18,207 19,299 22,912
Loans 199,085 188,783 167,563
Less allowance for possible loan losses (3,263) (3,153) (2,853)
Net loans 195,822 185,630 164,710
Premises and equipment, net 7,191 7,260 5,290
Other real estate owned 0 66 579
Accrued income receivable 2,957 1,921 2,430
Other assets 11,114 5,601 6,110
Total Assets $371,963 $333,903 $323,141
LIABILITIES
Non-interest bearing deposits
Demand $ 30,329 $ 29,232 $ 25,309
Interest-bearing deposits:
Demand 43,653 40,569 41,468
Savings 79,471 80,961 79,379
Time 112,857 110,777 114,402
Total deposits 266,310 261,539 260,558
Securities sold under repurchase agreements 8,815 8,280 5,345
Short-term borrowings 47,609 10,000 15,087
Long term debt 19,514 19,676 14,772
Accrued interest on deposits and other
borrowings 736 664 706
Other liabilities 1,306 6,412 1,009
Total liabilities $344,290 $306,571 $297,477
SHAREHOLDERS' EQUITY
Preferred stock - authorized 90,000 shares with
no par value; issued and outstanding, none - - -
Senior cumulative preferred stock - authorized,
issued and outstanding, no shares at March 31,
1997 and December 31,1996; 10,000 shares of
$100 par value at March 31, 1996 $ 0 $ 0 $ 1,000
Common stock - $0.50 par value, 8,900,000
shares authorized; 2,115,476 issued in 1997
and 1996 1,057 1,057 1,057
Surplus 7,781 7,781 7,781
Treasury stock (832 shares) (8) (8) (8)
Retained earnings:
Unappropriated 18,880 17,820 15,262
Appropriated for contingencies 850 850 850
Net unrealized loss on securities available for
sale (887) (168) (278)
Total shareholders' equity $ 27,673 $ 27,332 $ 25,664
Total liabilities and shareholders' equity $371,963 $333,903 $323,141
(1) Market value at March 31, 1997, $18,061; December 31, 1996, $19,302;
March 31, 1996, $22,789.
(2) Performance ratios are presented on an annualized basis.
Net interest margins are presented on a fully taxable equivalent basis.
</TABLE>
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
For the Three Months Ended March 31,
1997 1996
INTEREST INCOME
Loans and lease financing
Taxable $ 4,354 $ 3,669
Tax-exempt 89 78
Investment securities:
Taxable 1,703 2,039
Tax-exempt 276 321
Dividends 54 37
Interest on fed funds sold 52 6
Total interest income 6,528 6,150
INTEREST EXPENSE
Deposits 2,444 2,282
Borrowings 607 567
Total interest expense 3,051 2,849
Net interest income 3,477 3,301
Provision for possible loan losses 105 150
Net interest income after provision
for possible loan losses 3,372 3,151
NON-INTEREST INCOME
Trust fees 78 160
Service charges on deposits 171 156
Other operating income 197 154
Investment securities gains (losses) (1) (1)
Trading profits (losses) 0 0
Gains (losses) on securities available
for sale 156 230
Total non-interest income 601 699
NON-INTEREST EXPENSE
Salary and employee benefits 835 826
Net occupancy expense of premises 190 170
Equipment expenses 229 182
Other operating expenses 732 715
Total non-interest expense 1,986 1,893
Income before income taxes 1,987 1,957
INCOME TAXES 566 548
Net income $ 1,421 $ 1,409
PER COMMON SHARE DATA
Net income per share $ 0.67 $ 0.66
Cash dividend per share $ 0.17 $ 0.13
Book value per share $ 13.09 $ 11.66
Weighted average shares outstanding 2,114,644 2,114,644
<TABLE>
Belmont Bancorp. and Subsidiaries
Consolidated Statements of Shareholders' Equity
For the Year Ended December 31, 1996 and Three Months Ended March 31, 1997($000s)
<CAPTION>
Unrealized
Loss On
Retained Earnings 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, 1995 $ 1,000 $1,057 $7,781 $14,148 $850 ($8) $336
1996 Net income 5,002
Cash dividends declared:
Preferred stock (61)
Common stock ($.60 per
share) (1,269)
Redemption of preferred
stock (1,000)
Change in unrealized loss-
securities available-
for-sale (504)
Balance, December 31, 1996 $ 0 $1,057 $7,781 $17,820 $850 ($8) ($168)
1997 YTD Net income 1,421
Cash dividends declared:
Common stock ($.17 per
share) (361)
Change in unrealized loss-
securities available-
for-sale (719)
Balance, March 31, 1997 $ 0 $1,057 $7,781 $18,880 $850 ($8) ($887)
</TABLE>
Belmont Bancorp.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1997
(Unaudited)
1997 1996
Operating Activities
Net income $ 1,421 $ 1,409
Adjustments to reconcile net income to net
cash flows provided by operating
activities:
Provision for possible loan losses 105 150
Depreciation and amortization expense 199 155
Amortization of investment security
premiums 255 301
Accretion of investment security discounts
and interest recorded on zero-coupon
securities (51) (50)
Investment securities (gains) losses 1 1
(Gains) losses on securities available for
sale (156) (230)
Purchase of securities for trading account - -
Loss (gain) on sale of fixed assets - -
Gain on sale of loans (6) -
(Increase) decrease in interest receivable (1,036) (280)
Increase (decrease) in interest payable 72 45
Others, net (10,247) 273
Net cash provided (used) by operating
activities (9,443) 1,774
Investing Activities
Net (increase) decrease in federal funds
sold 24,450 -
Proceeds on sale of securities available
for sale 13,397 42,197
Proceeds from maturities and calls of
investment securities 172 1,065
Purchase of securities available for sale (61,922) (48,463)
Principal collected on mortgage-backed
securities 3,279 5,345
Net (increase) decrease in loans and
leases, net of charge offs (13,583) (10,037)
Proceeds on sale of loans 3,277 2,427
Recoveries on loans previously charged off 14 4
Purchases of premises and equipment (130) (355)
Proceeds on sale of other real estate
owned 66 0
Net cash provided (used) by investing
activities (30,980) (7,817)
Financing Activities
Net increase (decrease) in deposits 4,771 13,708
Net increase (decrease) in repurchase
agreements 535 (9,194)
Net increase (decrease) in short-term
borrowings 37,609 (9,039)
Proceeds on long-term debt - 10,000
Payments on long-term debt (162) (30)
Dividends paid on common and preferred
stock (361) (294)
Net cash provided (used) by financing
activities 42,392 5,151
Increase (Decrease) in Cash and Cash
Equivalents 1,969 (892)
Cash and Equivalents at Beginning of Year 10,948 10,175
Cash and Equivalents at March 31 $ 12,917 $ 9,283
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 1996.
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
1997. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The net income of Belmont Bancorp. for the three months
ended March 31, 1997 increased 0.9% to $1,421,000, compared
to $1,409,000 for the first three months of 1996. Earnings
per common share were $0.67 for the first three months of
1997, compared to $0.66 for the corresponding period last
year, an increase of 1.5%. Operating earnings increased to
$1,832,000 for the three months of 1997, up 6.0% from
$1,728,000 for the same period last year.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1997 and 1996.
March 31,
($000s) 1997 1996
Return on average assets 1.68% 1.74%
Return on shareholders'
equity 20.42% 21.80%
Return on average common
equity 20.42% 22.35%
Average assets $339,316 $322,997
Average shareholders'
equity $ 27,831 $ 25,859
Average assets increased $16.3 million from $323.0
million to $339.3 million from March 31, 1996 to March 31,
1997. Average shareholders' equity increased $2.0 million
primarily through the retention of earnings.
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Table 1, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the three months ended March
31, 1997, 1996 and 1995. The table contains net interest
income, net interest margin and net interest rate spread for
each period. All three of these measures are reported on a
taxable equivalent basis.
The taxable equivalent yield on interest earning assets
increased from 8.47% during the first quarter of 1996 to
8.54% in 1997, an increase of 7 basis points. (A basis point
(bp) is equivalent to .01%.) The cost of interest bearing
liabilities rose 12 basis points from 4.29% during the first
quarter of 1996 to 4.41% in 1997. The net interest margin
decreased from 4.66% to 4.65% during the comparative
quarters. The net interest margin for the first quarter of
1995 was 4.58%.
Table 2, Analysis of Net Interest Income Changes,
separates the dollar change in the Corporation's net interest
income into three components: changes caused by (1) an
increase or decrease in the average asset and liability
balances outstanding (volume); (2) the changes in average
yields on interest earning assets and average rates for
interest bearing liabilities (yield/rate); and (3) combined
volume and yield/rate effects (mix).
TABLE 1. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF
NET INTEREST INCOME
(Fully Taxable Equivalent Basis) ($000's)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
Average Average Average Average
Out- Revenue Yield/ Out- Revenue Yield/
standing Cost Rate standing Cost Rate
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets
Loans and leases $193,184 $4,484 9.41% $161,434 $3,783 9.50%
Securities
Taxable 99,570 1,757 7.16% 117,365 2,074 7.17%
Exempt from income tax 21,211 400 7.65% 23,867 467 7.94%
Trading account assets 0 0 0.00% 0 0 0.00%
Federal funds sold 4,001 52 5.27% 469 6 5.19%
Total interest earning assets 317,966 6,693 8.54% 303,135 6,330 8.47%
Cash and due from banks 10,024 8,664
Other assets 15,095 13,311
Valuation allowance-available
for sale securities (577) 627
Allowance for possible loan
loss (3,192) (2,740)
Total assets 339,316 322,997
Liabilities
Interest bearing liabilities
Interest checking 46,197 392 3.44% 33,229 242 2.95%
Savings 79,435 597 3.05% 78,320 588 3.04%
Other time deposits 111,871 1,455 5.27% 114,449 1,452 5.15%
Other Borrowings 43,310 607 5.68% 43,244 567 5.32%
Total interest bearing
liabilities 280,813 3,051 4.41% 269,242 2,849 4.29%
Demand deposits 28,540 25,820
Other liabilities 2,132 2,077
Total liabilities 311,485 297,139
Shareholders' equity 27,831 25,858
Liabilities & shareholders'
equity 339,316 322,997
Net interest income
Margin on a taxable
equivalent basis 3,642 4.65% 3,481 4.66%
Net interest rate spread 4.13% 4.18%
Interest bearing liabilities
to interest earning assets 88.32% 88.82%
1995
Average Average
Out- Revenue Yield/
standing Cost Rate
Assets
Interest earning assets
Loans and leases $147,013 $3,453 9.53%
Securities
Taxable 122,429 2,099 6.95%
Exempt from income tax 25,177 516 8.31%
Trading account assets 0 0 0.00%
Federal funds sold 1,191 17 5.79%
Interest bearing deposits 0 0 0.00%
Total interest earning assets 295,810 6,085 8.34%
Cash and due from banks 8,472
Other assets 13,165
Valuation allowance-available
for sale securities (1,869)
Allowance for possible loan
loss (1,688)
Total assets 313,890
Liabilities
Interest bearing liabilities
Interest checking 25,070 144 2.33%
Savings 80,203 590 2.98%
Other time deposits 125,391 1,515 4.90%
Other Borrowings 35,507 497 5.68%
Total interest bearing
liabilities 266,171 2,746 4.18%
Demand deposits 25,274
Other liabilities 1,591
Total liabilities 293,036
Shareholders' equity 20,854
Liabilities & shareholders'
equity 313,890
Net interest income
Margin on a taxable
equivalent basis 3,339 4.58%
Net interest rate spread 4.16%
Interest bearing liabilities
to interest earning assets 89.98%
</TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
<TABLE>
<CAPTION>
Three Months Ended March 31
1997 Compared to 1996 1996 Compared to 1995
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 $ 744 ($36) ($7) $ 701 $ 339 ($8) $0 $ 331
Securities
Taxable (314) (3) 0 (317) (87) 64 (3) (26)
Exempt from Income Taxes (52) (17) 2 (67) (27) (23) 1 (49)
Trading Account Assets 0 0 0 0 0 0 0 0
Federal Funds Sold 45 0 1 46 (10) (2) 1 (11)
Total Interest Income Change 423 (56) (4) 363 215 31 (1) 245
Increase (Decrease) in
Interest Expense
Interest Checking 94 40 16 150 47 39 12 98
Savings 8 1 0 9 (14) 12 0 (2)
Other Time Deposits (33) 37 (1) 3 (132) 76 (7) (63)
Short Term Borrowings 1 39 0 40 108 (31) (7) 70
Total Interest Expense Change 70 117 15 202 9 96 (2) 103
Increase (Decrease) in Net
Interest
Income on a Taxable Equivalent
Basis $ 353 ($173) ($19) $ 161 $ 206 ($65) $1 $ 142
(Increase) Decrease in Taxable
Equivalent Adjustment 15 7
Net Interest Income Change $ 176 $ 149
</TABLE>
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, declined 5.1%, or $24,000, and totaled $446,000 for
the first three months of 1997, compared to $470,000 for the
respective period last year. Changes in various categories
of other income are depicted in the table below.
Three months ended March 31,
($000s) 1997 1996 % Change
Trust fees $ 78 $160 -51.3%
Service charges on
deposits 171 156 9.6%
Gain on sale of loans 6 16 -62.5%
Other income 191 138 38.4%
Subtotal 446 470 -5.1%
Security gains (losses) (1) (1) 0.0%
Gains (losses) securities
held for sale 156 230 -32.2%
Total $601 $699 -14.0%
Trust fees were down 51.3% during the first quarter of 1997 compared
to the first quarter of 1996 due to a change in the method of fee recognition
from cash basis used during the first quarter of 1996 to accrual basis for
and subsequent to the fourth quarter of 1996.
INVESTMENT SECURITIES
<TABLE>
The amortized cost and estimated market values of
securities held to maturity at March 31, 1997 are as follows:
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. Government corporations and
agencies $2,263 $ 0 $115 $ 2,148
Obligations of states and political
subdivisions 4,781 94 67 4,808
Mortgage-backed securities 11,163 64 122 11,105
Total $18,207 $158 $304 $18,061
</TABLE>
Obligations of U.S. Government corporations and agencies
consist of one floating rate structured note.
<TABLE>
The amortized cost and estimated market values of
securities available for sale at March 31, 1997 are as
follows:
<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 $ 20,052 $ 18 $ 143 $ 19,927
Obligations of states and political
subdivisions 22,179 9 389 21,799
Mortgage-backed securities 60,690 270 645 60,315
Mortgage derivatives 18,513 0 464 18,049
Marketable equity securities 3,665 0 0 3,665
Total $125,099 $297 $1,641 $123,755
</TABLE>
Obligations of U.S. Government corporations and
agencies include a structured note with a book value and an
estimated market value $2,099,000.
The mortgage derivatives are comprised solely of
collateralized mortgage obligations (CMOs) including one
principal only CMO issued by FNMA with a book value of
$129,000 and an estimated market value of $87,000. Privately
issued CMOs included in the table above have a book value of
$1,649,000 and an estimated market value of $1,592,000.
Credit risk on privately issued CMOs is evaluated based upon
independent rating agencies and on the underlying collateral
of the obligation.
Market factors and prepayment speeds can have an impact
on the yield and average lives of mortgage-backed securities
including mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically,
when comparing the Corporation to various peer groups, the
overhead costs of the Corporation have been significantly
lower than peer. The following table shows the dollar
amounts and growth in various components of operating
expenses.
Three months ended March 31,
($000s) 1997 1996 % Change
Salaries and wages $ 625 $ 614 1.8%
Employee benefits 210 212 -0.9%
Net occupancy expense 190 170 11.8%
Equipment expense 229 182 25.8%
Other operating
expenses 732 715 2.4%
Total $1,986 $1,893 4.9%
Occupancy and equipment expenses were impacted by the
expansion of the branch network and by the acceleration of
depreciation on some data processing equipment by shortening
its useful life.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of Income.
Actual losses on loans and leases are charged against the
allowance built up on the Consolidated Balance Sheet through
the allowance for possible loan losses. The amount of loans
and leases actually removed as assets from the Consolidated
Balance Sheets is referred to as charge-offs and, after
netting out recoveries previously charged-off assets, becomes
net charge-offs.
For the first three months of 1997, $105,000 was added
to the allowance and charged to expense compared to $150,000
in 1996. At March 31, 1997, the allowance for possible loan
losses to total loans and leases was 1.64% compared to 1.70%
last year. The ratio of the Allowance for Possible Loan
Losses to underperforming assets increased to 1169.53% at
March 31, 1997, up from 295.04% last year. The following
table details the Allowance for Possible Loan Losses and also
includes various loan charge off statistics for 1997 and
1996.
Allowance for Possible Loan Losses
Three months ended March 31,
($000s) 1997 1996
Balance, beginning of period $ 3,153 $ 2,703
Provision for possible loan losses 105 150
Loans charged-off 9 5
Recoveries on loans previously
charged-off 14 5
Net charge offs (5) 0
Balance, end of period $ 3,263 $ 2,853
Loans and leases outstanding at
period $ 199,085 $167,563
Average loans and leases $ 193,184 $161,434
Annualized net charge offs as a
percent of:
Average loans and leases -0.01% 0.00%
Total loans at end of period -0.01% 0.00%
Reserve for possible loan losses -0.61% 0.00%
Reserve for possible loan losses to:
Average loans and leases 1.69% 1.77%
Total loans at end of period 1.64% 1.70%
Under-performing assets 1169.53% 295.04%
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at March 31 follows:
Under-performing assets
March 31,
($000s) 1997 1996
Non-accrual loans and leases $252 $206
Ninety days past due loans and
leases still accruing interest 27 182
Other real estate owned 0 579
Total $279 $967
Loans restructured and in compliance with modified terms
are not included in total nonperforming assets.
Asset quality remained excellent at March 31, 1997.
Total under-performing assets were $279,000 or 0.07% of total
assets at March 31, 1997 compared to $967,000 or 0.30% of
total assets at March 31, 1996.
LONG TERM DEBT
Long term debt consists of advances from the Federal
Home Loan Bank as follows:
Amount Current
Type ($000s) Rate Maturity
Fixed rate, non-amortizing
advance $ 1,000 7.00% 04/11/97
Fixed rate, non-amortizing
advance 1,000 6.15% 06/01/97
Fixed rate, non-amortizing
advance 10,000 5.40% 01/04/98
Fixed rate, non-amortizing
advance 2,000 5.90% 06/02/98
Fixed rate, amortizing
advance 181 5.55% 12/22/98
Fixed rate, amortizing
advance 2,262 6.05% 11/18/01
Fixed rate, amortizing
advance 166 5.80% 12/01/05
Fixed rate, amortizing
advance 1,456 6.85% 06/06/11
Fixed rate, amortizing
advance 121 6.75% 06/06/11
Fixed rate, amortizing
advance 1,068 6.85% 06/12/11
Fixed rate, amortizing
advance 260 6.95% 08/31/15
$19,514
CAPITAL RESOURCES
The Corporation maintains a relatively high level of
capital as a margin of safety for its depositors and
shareholders. At March 31, 1997, shareholders' equity was
$27,673,000 compared to $27,332,000 at December 31, 1996 and
$25,664,000 at March 31, 1996. The following table presents
various capital ratios as of March 31:
March 31, 1997 1996
Average shareholder's
equity to :
Average assets 8.2% 8.0%
Average deposits 10.5% 10.3%
Average loans and leases 14.4% 16.0%
Primary capital 8.3% 8.8%
Risk-based capital ratio:
Tier 1 11.8% 13.2%
Total 13.1% 14.5%
Leverage ratio 7.4% 7.6%
The Federal Reserve Board has adopted risk-based capital
guidelines that assign risk weightings to assets and off-
balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% or risk-weighted assets and total capital of 8.0% or
risk-weighted assets. Tier 1 capital consists principally
of shareholders' equity less goodwill, while total capital
consists of core capital, certain debt instruments and a
portion of the reserve for possible loan losses. At March
31, 1997, the Corporation had a Tier 1 capital ratio of 11.8%
and a total capital ratio of 13.1%, well above regulatory
minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total assets,
referred to as a total assets leverage ratio. At March 31,
1997, the Corporation's leverage ratio was 7.4%.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security
shareholders
The annual meeting of Belmont Bancorp. was held April
21, 1997. The following items were submitted to a vote of
the shareholders:
Proposal Number 1: Election of Directors
The following individuals were elected to serve on the Board
of Directors Election of Directors for a three-year term
expiring at the annual shareholders' meeting in 2000:
John A. Belot, President, Walden Industries, Inc.
For: 1,368,090
Against: 0
Terrence A. Lee, CPA, Chairman, Belmont Bancorp. and Belmont
National Bank; Partner, Lee & Associates
For: 1,407,492
Against: 0
Dana J. Lewis, President, Zanco Enterprises, Inc.;
owner/operator of McDonalds restaurants
For: 1,406,492
Against: 0
W. Quay Mull, II, Chairman of the Board, Mull Industries,
Inc.
For: 1,405,679
Against: 0
William Wallace, Executive Vice President & Chief Operating
Officer, Belmont National Bank; Vice President, Belmont
Bancorp.
For: 1,407,384
Against: 0
Other members of the Board of Directors are listed in the
Corporation's proxy statement dated March 21, 1997 and which
is hereby incorporated by reference.
Proposal Number 2: To ratify the appointment of S. R.
Snodgrass A.C. as independent auditors for the year ending
December 31, 1997.
This proposal was approved as follows:
For 1,391,038
Against 15,130
Abstain 1,764
Proposal Number 3: To transact other such business as may
come before the meeting.
This proposal was approved as follows:
For 1,386,224
Against 17,508
Abstain 4,200
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)
May 12, 1997 s/J. Vinent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
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