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 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 6, 1997 - $58,417,000
There were 2,114,644 shares of $0.50 par value, common stock
outstanding as of March 3, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement of the Registrant dated March 21,
1997 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 eleven branches
located in Belmont, Harrison and Tuscarawas Counties in Ohio and
Ohio County in West Virginia. The main office is located in the
Woodsdale section of Wheeling, West Virginia. In addition to its
main office in West Virginia, the Bank operates a branch in the
Elm Grove section of Wheeling. Branch locations in Belmont
County, Ohio include St. Clairsville, 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 branches in Elm Grove, Cadiz, the Ohio
Valley Mall and New Philadelphia 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 1996. During 1997, BFN will
act as a community development corporation investing in a low
income housing project that also includes historic renovation.
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 16 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
In January 1996, the Bank relocated its corporate
headquarters to Wheeling, WV. The office is located at 980
National Road and consists of a 14,000 square floor combination
one and two story masonry block building. Approximately half of
the space is leased to a tenant. In addition, the Bank transacts
business in the following branch locations:
St. Clairsville Office-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 and human resources offices.
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.
Elm Grove Office-This office is located at 2066 National
Road in Wheeling, WV, and includes a drive-thru facility and an ATM.
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. The land for the Elm
Grove office is also leased.
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
1996
Dividend
Quarter High Low per Share
1st $27.50 $25.00 $ 0.130
2nd 28.00 26.00 0.150
3rd 28.00 26.00 0.150
4th 27.50 25.50 0.170
Total $0.600
1995
Dividend
Quarter High Low per Share
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
The number of shareholders of record for the Corporation's stock
as of March 5, 1997 was 614. The closing price of Belmont
Bancorp. stock on March 6, 1997 was $27.625 per share.
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. Market prices and
cash dividends paid per share have been restated to reflect the
effect of a 2-for 1 split paid in May 1995.
Information regarding the limitations on dividends available
to be paid can be located in Footnote 16 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, 1996 and
1995.
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 1996, net income increased 18.93% from the previous
year; net income for the year ended 1995 increased 30.06%
compared to 1994. Net income per common share for 1996 was $2.34
compared to $1.95 per common share in 1995 and $1.49 in 1994.
The Corporation's net income to average assets, referred to as
return on assets, increased to 1.49% for the year ended 1996 from
1.35% last year and 1.12% during 1994. 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 $945,000 or 17.38% from 1995 to 1996. The
table below summarizes earnings performance for the past three
years.
($000s) except per share data 1996 1995 1994
Operating income $6,382 $5,437 $4,324
Net income 5,002 4,206 3,234
Net income per share $ 2.34 $ 1.95 $ 1.49
Return on average assets 1.49% 1.35% 1.12%
Return on average common
equity 19.55% 18.90% 16.71%
Return on average total
equity 19.05% 18.42% 16.27%
1996 1995
compared compared
% Increase from previous year to 1995 to 1994
Operating income 17.38% 25.74%
Net income 18.93% 30.06%
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, 1996, 1995, and 1994, 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 $776,000 on a
taxable equivalent basis during 1996 compared to the same period
last year, a 5.84% increase. The increase in net interest income
was attributable to an increase in average earning assets.
During 1996, the Corporation's average interest-earning assets
grew by approximately $23.9 million, up 8.18% from 1995.
The yield on interest earning assets was unchanged at 8.28%
from 1995 to 1996. However the cost of interest bearing
liabilities rose 14 basis points from 1995 to 1996. Consequently,
the net interest rate spread decreased from 4.09% during 1995 to
3.95% during 1996. The taxable equivalent net interest margin
was 4.45% during 1996 compared to 4.55% for 1995 and 4.25% during
1994.
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
1995 to 1996 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 10.58% and totaled $1,861,000 in 1996, compared
to $1,683,000 in 1995 and $1,290,000 in 1994. The table below
shows the dollar amounts and growth rates of the components of
other operating income.
1996 1995 1994
($000s) Total Change Total Change Total
Trust income $ 502 21.55% $ 413 21.11% $ 341
Service charges on deposits 660 18.92% 555 5.31% 527
Gain on sale of loans 72 -47.06% 136 491.30% 23
Recovery on class action lawsuit 27 -85.71% 189 na -
Other income 600 53.85% 390 -2.26% 399
Subtotal 1,861 10.58% 1,683 30.47% 1,290
Investment securities gains
(losses) (1) 90.91% (11) -22.22% (9)
Gains (losses) on securities
available for sale 397 251.33% 113 305.45% (55)
Trading gains (losses) - na - -100.00% 1
Total $2,257 26.44% $1,785 45.48% $1,227
During the fourth quarters of 1996 and 1995, the Corporation
recovered $27,000 and $189,000, respectively for settlement of a
class action lawsuit arising out of the issuance and sale of
taxable municipal bonds.
Another significant increase in Noninterest income is
attributable to gains on sale of loans which increased $113,000
from 1994 to 1995 and contributed $72,000 to noninterest income
during 1996. The Corporation utilized the secondary mortgage
market 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 21.55% from 1995 to 1996 and 21.11%
from 1994 to 1995. This is an area that the Corporation expects
to continue to develop in the future.
Losses on investments held in the maturity portfolio during
1996 and 1995 occurred as a result of calls on municipal bonds in
the portfolio. These losses totaled $1,000 during 1996 and
11,000 during 1995. Net gains were realized on securities
available for sale during 1996 totaling $397,000 compared to
gains of $113,000 during 1995 and losses of $55,000 during 1994.
The related income taxes on securities transactions, including
trading and securities available for sale, were $104,000 and
$25,000 for the years ended 1996 and 1995, 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 1996, 1995, and 1994.
($000s) % %
1996 Change 1995 Change 1994
Salaries and wages $2,646 3.56% $2,555 12.01% $2,281
Employee benefits 790 -1.50% 802 20.60% 665
Net occupancy expense 686 24.28% 552 3.56% 533
Equipment expense 817 6.94% 764 23.62% 618
Other operating
expenses 3,449 16.92% 2,950 -0.74% 2,972
Total $8,388 10.04% $7,623 7.84% $7,069
Salaries and wages included incentive performance bonuses
tied to earnings performance totalling $243,000 in 1996, $343,000
during 1995 and $247,000 during 1994. Overall, operating
expenses were impacted by the addition of two new offices during
1996.
Other noninterest operating expense includes FDIC insurance
assessments. FDIC and other insurance included in other
operating expenses were $567,000, $430,000 and $616,000 in 1996,
1995 and 1994, respectively, including a one time, pre-tax
assessment on deposits insured through the Savings Association
Insurance Fund during the third quarter of 1996 totaling
$397,000.
Taxes, other than payroll and real estate taxes, included in
noninterest expense totaled $395,000 during 1996, up from
$287,000 in 1995. This includes the Ohio state corporate
franchise tax based on the equity of the subsidiary bank which
increased $82,000 from 1995 to 1996.
Other noninterest expense also includes expense associated
with other real estate owned. During 1996 this expense was
$143,000 compared to $3,000 during 1995. Expenses associated
with one property which was disposed of during the fourth quarter
of 1996 totaled $140,000.
FINANCIAL CONDITION
SECURITIES
The book values of investments as of December 31, 1996 and
1995 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>
<CAPTION>
Securities Held to Maturity at December 31, 1996 ($000s)
U.S. Government States and Agency mortgage-
agencies political backed
Maturity Period and corporations subdivisions(a) securities (b) Total
<S> <C> <C> <C> <C>
Less than 1 year $2,264 $31 $3,010 $5,305
Yield 4.80% 11.30% 6.21% 5.64%
1-5 Years 0 1,373 4,373 5,746
Yield 6.50% 7.38% 7.17%
6-10 Years 0 896 2,585 3,481
Yield 8.16% 7.69% 7.81%
Over 10 Years 0 2,512 2,255 4,767
Yield 10.74% 8.26% 9.57%
Total $2,264 $4,812 $12,223 $19,299
Yield 4.80% 9.05% 7.32% 7.46%
</TABLE>
<TABLE>
<CAPTION>
Securities Available for Sale at December 31, 1996
At estimated fair value
($000s)
U.S.
Government States and Agency Mortgage Total Total
Treasury agencies and political mortgage-backed derivative Fair Amortized
Maturity Period securities corporations subdivisions (a) securities (b) securities (b) Value Cost
<S> <C> <C> <C> <C> <C> <C>
Less than 1 year $100 $0 $1,083 $7,552 $525 $9,260 $9,295
Yield 5.89% 7.12% 6.36% 6.95% 6.48%
1-5 Years 0 3,958 2,731 18,185 1,872 26,746 26,696
Yield 6.35% 7.13% 7.05% 8.56% 7.06%
6-10 Years 0 0 2,891 7,256 10,445 20,592 20,677
Yield 7.42% 7.74% 7.85% 7.75%
Over 10 Years 0 0 2,839 6,463 9,561 18,863 19,047
Yield 8.37% 8.01% 8.13% 8.13%
Total fair value $100 $3,958 $9,544 $39,456 $22,403 $75,461 $75,715
Yield 5.89% 6.35% 7.59% 7.20% 8.01% 7.45%
</TABLE>
(a) Taxable equivalent yields
(b) Maturities of mortgage-backed securities are based on
estimated average life.
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. At December 31,
1996, there were no securities of a single issuer, other than
U.S. Treasury or other U.S. government agency securities, which
exceeded 10% of shareholders' equity.
The state and political subdivision portfolio includes
approximately $2.0 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, 1996. 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, 1996 and 1995, estimated market
values approximated original cost.
Taxable
Market Equivalent
December 31, 1996 ($000s) Cost Value Yield
Federal Home Loan Bank
stock $2,960 $2,960 7.00%
Corporate Stock 120 120 8.00%
Federal Reserve Bank
Stock 187 187 6.00%
Total $3,267 $3,267
Taxable
December 31, 1995 ($000s) Market Equivalent
Cost Value Yield
Federal Home Loan Bank
stock $1,844 $1,844 6.82%
Corporate Stock 215 215 4.57%
Federal Reserve Bank
Stock 187 187 6.00%
Total $2,246 $2,246
LOANS AND LEASES
The following table shows the history of commercial and
consumer loans and leases by major category at December 31.
($000s) 1996 1995 1994 1993 1992
Commercial loans:
Real estate construction $1,327 $1,530 $1,801 $2,081 $973
Acceptances of other banks 0 0 0 0 0
Real estate mortgage 25,954 28,744 23,701 21,211 19,184
Commercial, financial
and agricultural 80,554 50,532 38,983 25,317 19,568
Direct financing leases 0 3 5 9 58
Total commercial loans $107,835 $80,809 $64,490 $48,618 $39,783
Consumer loans:
Residential mortgage $71,715 $69,999 $76,094 $70,301 $65,536
Installment loans 7,626 6,959 5,116 5,281 7,535
Credit card and other 1,607 2,190 1,396 1,032 1,123
consumer
Total consumer loans $80,948 $79,148 $82,606 $76,614 $74,194
Total loans and leases $188,783 $159,957 $147,096 $125,232 $113,977
An analysis of maturity and interest rate sensitivity of business
loans at the end of 1996 follows:
Under 1 to 5 Over 5
($000s) 1 Year Years Years Total
Domestic loans:
Real estate construction $1,002 $20 $305 $1,327
Real estate mortgage 17,504 4,160 4,288 25,952
Commercial, financial
and agricultural 48,143 23,700 8,646 80,489
Direct financing leases 0 0 0 0
Total business loans (a) $66,649 $27,880 $13,239 $107,768
Rate sensitivity:
Predetermined rate $2,694 $13,248 $12,825 $28,767
Floating or adjustable rate 63,955 14,632 414 79,001
Total domestic business loans $66,649 $27,880 $13,239 $107,768
Foreign loans 0 0 0 0
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. The
adequacy of the allowance for possible loan losses is evaluated
based on an assessment of the losses inherent in the loan
portfolio. This assessment results in an allowance consisting of
two components, allocated and unallocated. The allocations are
made for analytical purposes. The total allowance is available
to absorb losses from any segment of the portfolio. Management
maintains a watch list of substandard loans for monthly review.
Although these loans may not be 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 $3,153,000,
or 1.67% of total loans and leases at December 31, 1996. At the
end of the previous year, the allowance for possible loan losses
was $2,703,000, or 1.69% of total loans and leases. The
provision charged to expense during 1996 was $465,000 compared to
$1,150,000 in the year ago period.
Management's allocation of the allowance for possible loan
losses for the past five years based on estimates of potential
future loan loss is set forth in the table below:
($000s) 1996 1995 1994 1993 1992
Specific reserves:
Commercial $330 $310 $10 $960 $370
Mortgage 10 10 5 38 51
Consumer 176 5 7 21 41
Criticized loans without
specific allocation 296 414 315 160 153
Provision for loan categories
based on historical loss
experience:
Commercial 1,607 1,344 687 335 284
Commercial real estate 269 152 103 7 10
Residential mortgage 328 325 298 28 29
Consumer 137 143 112 68 86
Total $3,153 $2,703 $1,537 $1,617 $1,024
Total loans and leases out-
standing $188,783 $159,957 $147,096 $125,232 $113,977
Reserves as a % of total loans
1996 1995 1994 1993 1992
Specific reserves:
Commercial 0.17% 0.19% 0.01% 0.77% 0.32%
Mortgage 0.01% 0.01% 0.00% 0.03% 0.04%
Consumer 0.09% 0.00% 0.00% 0.02% 0.04%
Criticized loans without
specific allocation 0.16% 0.26% 0.21% 0.13% 0.13%
Provision for loan categories
based on historical loss
experience:
Commercial 0.85% 0.84% 0.47% 0.27% 0.25%
Commercial real estate 0.14% 0.10% 0.07% 0.01% 0.01%
Residential mortgage 0.17% 0.20% 0.20% 0.02% 0.03%
Consumer 0.07% 0.09% 0.08% 0.05% 0.08%
Total 1.67% 1.69% 1.04% 1.29% 0.90%
The following table sets forth the five year historical
information on the reserve for loan losses:
ALLOWANCE FOR POSSIBLE LOAN LOSSES
Five year history
($000s) 1996 1995 1994 1993 1992
Balance as of January 1 $2,703 $1,537 $1,617 $1,024 $1,013
Provision of loan losses 465 1,150 805 577 405
Adjustment incident to
acquisition 0 0 0 0 4
Loans charged off:
Real estate 30 25 49 19 13
Commercial 0 0 806 0 59
Consumer 32 26 85 15 25
Direct financing leases 0 0 0 0 340
Total loans charged-off 62 51 940 34 437
Recoveries of loans
previously
charged-off:
Real estate 2 3 18 0 2
Commercial 0 1 29 21 22
Consumer 45 18 7 11 6
Direct financing leases 0 45 1 18 9
Total recoveries 47 67 55 50 39
Net charge-offs (recoveries) 15 (16) 885 (16) 398
Balance at December 31 $3,153 $2,703 $1,537 $1,617 $1,024
($000s) 1996 1995 1994 1993 1992
Loans and leases outstanding
at December 31 $188,783 $159,957 $147,096 $125,232 $113,977
Allowance as a percent
of loans and leases outstanding 1.67% 1.69% 1.04% 1.29% 0.90%
Average loans and leases $174,445 $152,502 $134,952 $120,218 $95,489
Net charge-offs as a percent
of average loans and leases 0.01% -0.01% 0.66% -0.01% 0.42%
The following schedule shows the amount of under-performing
assets and loans 90 days or more past due but accruing interest.
UNDER-PERFORMING ASSETS
($000s) 1996 1995 1994 1993 1992
Nonaccrual debt securities $0 $0 $0 $0 $1,500
Nonaccrual loans and leases 143 162 478 2,358 1,647
Loans 90 days or more past
due but accruing interest 74 14 11 436 11
Other real estate owned 66 579 586 69 155
Total $283 $755 $1,075 $2,863 $3,313
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 1996
and not included in the table above was $1,249,000. 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.
AVERAGE DEPOSITS ($000s) 1996 1995 1994
Demand $27,878 $25,819 $24,797
Interest bearing checking 38,576 25,953 26,764
Savings 79,341 78,679 95,655
Other time 99,649 108,578 89,431
Certificates-$100,000 and
over 12,008 12,751 10,229
Total average deposits $257,452 $251,780 $246,876
DISTRIBUTION OF AVERAGE
DEPOSITS
1996 1995 1994
Demand 10.83% 10.26% 10.04%
Interest bearing checking 14.98% 10.31% 10.84%
Savings 30.82% 31.25% 38.75%
Other time 38.71% 43.12% 36.23%
Certificates-$100,000 and 4.66% 5.06% 4.14%
over
Total 100.00% 100.00% 100.00%
CHANGE IN AVERAGE DEPOSIT SOURCES ($000s)
1995 to 1994 to
1996 1995
Demand $2,059 $1,022
Interest bearing checking 12,623 (811)
Savings 662 (16,976)
Other time (8,929) 19,147
Certificates-$100,000 and
over (743) 2,522
Total $5,672 $4,904
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, 1996, shareholders' equity was $27,332,000
compared to $25,164,000 at December 31, 1995, an increase of
$2,168,000 or 8.62%. The increase in capital during 1996 was due
to retention of earnings. The Corporation also retired
$1,000,000 in senior cumulative preferred stock during the
fourth quarter of 1996.
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).
Bank holding companies 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,
1996, the Corporation had a Tier 1 capital ratio of 12.43%
and a total capital ratio of 13.68%, well above the regulatory
minimum requirements.
The following table shows several capital and liquidity
ratios for the Corporation for the last three years:
December 31 1996 1995 1994
Average shareholder's equity to:
Average assets 7.81% 7.34% 6.87%
Average deposits 10.20% 9.07% 8.05%
Average loans and leases 15.06% 14.97% 14.73%
Primary capital 9.13% 8.78% 6.95%
Risk-based capital ratio:
Tier 1 12.43% 13.07% 12.26%
Total 13.68% 14.32% 13.21%
Leverage ratio 7.93% 7.39% 6.33%
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,
1996, the Corporation's Tier One leverage ratio was 7.93%.
The following table presents dividend payout ratios for the
past three years.
1996 1995 1994
Total dividends declared
as a percentage of net income 26.59% 25.77% 27.18%
Common dividends declared
as a percentage of earnings per
common share 25.64% 24.36% 25.37%
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
increased by $14.7 million, or 5.95%, from the end of 1995 to
1996. Repurchase agreements and short term borrowings declined
by $6.3 million and $14.1 million, respectively, during the same
period. Long term borrowings increased by $14.9 million over the
same period. Average deposits increased 2.25% during 1996
compared to 1995.
The Bank also has unused lines of credit with various
correspondent banks totaling $35.5 million which may be used as
an alternative funding source. In addition, the Bank has an
available repurchase agreement-based cash management advance with
the Federal Home Loan Bank for $30 million.
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, 1996 Non-rate
Total Sensitive
1-30 31-90 91-180 181-365 1 year 1-5 & over
days days days days & under years 5 years Total
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans and leases $48,916 $10,465 $8,495 $18,282 $86,158 $41,141 $61,484 $188,783
Investment securities 172 2,961 1,342 831 5,306 5,746 8,247 19,299
Securities available for sale 639 4,700 3,254 3,628 12,221 26,746 39,761 78,728
Total interest earning
assets 49,727 18,126 13,091 22,741 103,685 73,633 109,492 286,810
Interest bearing liabilities:
Interest checking 8,897 0 0 0 8,897 0 31,672 40,569
Savings 19,787 0 0 0 19,787 0 61,174 80,961
Certificates-$100,000 and over 2,023 1,224 2,125 4,667 10,039 2,074 1,020 13,133
Other time 7,504 12,794 12,106 29,815 62,219 25,461 9,964 97,644
Repurchase agreements 3,780 0 0 0 3,780 4,500 0 8,280
Short term borrowings 10,000 0 0 0 10,000 0 0 10,000
Long term debt 0 0 2,000 0 2,000 14,571 3,105 19,676
Total interest bearing
liabilities 51,991 14,018 14,231 34,482 114,722 32,035 103,830 250,587
Rate sensitivity gap -2,264 4,108 -1,140 -11,741 -11,037 41,598 5,662 36,223
Cumulative gap -$2,264 $1,844 $704 -$11,037 $30,561 $36,223
Cumulative gap as a percentage
of interest earning assets -0.79% 0.64% 0.25% -3.85% 10.66% 12.63%
</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.
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 21, 1997 (Exhibit C) is incorporated by
reference in response to this item.
EXECUTIVE OFFICERS OF THE REGISTRANT AS OF JANUARY 1, 1997:
Name Age Position
J. Vincent Ciroli, Jr. 51 President and Chief Executive Officer,
Belmont Bancorp. & Belmont National Bank
William Wallace 41 Vice President, Belmont Bancorp.;
Executive Vice President & Chief
Operating Officer, Belmont National Bank
Jane R. Marsh 35 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 21, 1997 (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 21, 1997 (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 21, 1997 (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 17, 1997.
By s/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 s/John A. Belot Director
Vincent Ciroli, Jr. s/J. Vincent Ciroli, Jr. Director, President
& CEO. Belmont Bancorp., Belmont National
Bank
Samuel Mumley s/Samuel Mumley Director
Mary L. Holloway Haning s/Mary L. Holloway Haning Director
Charles J. Kaiser, Jr. s/Charles J. Kaiser, Jr. Director
John H. Goodman, II s/John H. Goodman, II Director
Dana Lewis s/Dana Lewis Director
Jane R. Marsh s/Jane R. Marsh Secretary, Belmont
Bancorp. and
Sr. Vice President,
Controller
& Cashier, Belmont
National Bank
James Miller s/James Miller Director
W. Quay Mull, II s/W. Quay Mull, II Director
Tom Olszowy s/Tom Olszowy Director
Keith Sommer s/Keith Sommer Director
William Wallace s/William Wallace Director &
Vice President,
Belmont Bancorp.;
Executive Vice
President & COO,
Bank
Charles A. Wilson, Jr. Vice Chairman
s/Terrence A. Lee
Chairman of the Board
Terrence A. Lee
March 17, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 10948
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 24450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 78728
<INVESTMENTS-CARRYING> 19299
<INVESTMENTS-MARKET> 19302
<LOANS> 188783
<ALLOWANCE> 3153
<TOTAL-ASSETS> 333903
<DEPOSITS> 261539
<SHORT-TERM> 18280
<LIABILITIES-OTHER> 7076
<LONG-TERM> 19676
0
0
<COMMON> 1057
<OTHER-SE> 26275
<TOTAL-LIABILITIES-AND-EQUITY> 333903
<INTEREST-LOAN> 16234
<INTEREST-INVEST> 9267
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 25501
<INTEREST-DEPOSIT> 9386
<INTEREST-EXPENSE> 12127
<INTEREST-INCOME-NET> 13374
<LOAN-LOSSES> 465
<SECURITIES-GAINS> 396
<EXPENSE-OTHER> 8388
<INCOME-PRETAX> 6778
<INCOME-PRE-EXTRAORDINARY> 6778
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5002
<EPS-PRIMARY> 2.34
<EPS-DILUTED> 2.34
<YIELD-ACTUAL> 4.45
<LOANS-NON> 143
<LOANS-PAST> 74
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1249
<ALLOWANCE-OPEN> 2703
<CHARGE-OFFS> 62
<RECOVERIES> 47
<ALLOWANCE-CLOSE> 3153
<ALLOWANCE-DOMESTIC> 3153
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2341
</TABLE>
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 24, 1997, relating to the consolidated balance
sheets of Belmont Bancorp. as of December 31, 1996 and 1995,
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, 1996.
Said report appears as Exhibit 2 of Belmont Bancorp.'s
annual form 10-K.
s/ S.R. Snodgrass A.C.
Wheeling, WV
March 17, 1997
The Belmont Bancorp.
1996 Annual Report
Corporate Profile
Belmont Bancorp. (the Corporation) is a $334 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 eleven 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>
1996 1995 % change
<S> <C> <C> <C>
Net income $ 5,002 $ 4,206 18.9%
Operating Return on average assets 1.49% 1.35%
results Return on average common equity 19.55% 18.90%
Return on average total equity 19.05% 18.42%
Per Net income $ 2.34 $ 1.95 20.0%
common Dividend 0.600 0.475 26.3%
share Book value at year-end 12.93 11.43 13.1%
At Total assets $333,903 $317,279 5.2%
year- Total loans 188,783 159,957 18.0%
end Total deposits 261,539 246,850 6.0%
Total shareholders' equity 27,332 25,164 8.6%
Liquidity Average common equity
and to average total assets 7.51% 7.02%
capital Average total equity
ratios to average total assets 7.81% 7.34%
Tier one capital ratio 12.43% 13.07%
Total risk-based capital ratio 13.68% 14.32%
Leverage ratio 7.93% 7.39%
Dividend payment ratio 26.59% 25.77%
</TABLE>
From Management
We are pleased to report that we have just concluded the
most successful year in the 150 year history of Belmont
Bancorp. Performance improvement was shown in nearly every
meaningful area of measurement over our record results in
1995. Our accomplishments are particularly noteworthy in
light of an unanticipated $397,000 bill from the U.S.
Government (which we will explain in a moment) and the cost
associated with the unparalleled geographic expansion of
your Corporation.
Belmont Bancorp. continues to experience double digit
income growth. Net income for 1996 was a record $5,002,000
after recognition of a $397,000 pre-tax charge during the
third quarter for a special federal government assessment to
capitalize the Savings Association Insurance Fund (SAIF) of
the Federal Deposit Insurance Corporation (FDIC). This
"onetime" expense on about 30% of our deposits relates back
to our 1992 purchase of three offices of a savings and loan
in Tuscarawas County. Without this charge, earnings would
have been $5,264,000 or $2.46 per share for 1996 compared to
$4,206,000 for 1995, representing a 25.2% increase.
Earnings per share were $2.34 for 1996 versus $1.95 for the
prior year. Our compounded annual earning per share growth
rate over the past five years is now 22.74%, which compares
very favorably with noted growth companies such as Intel,
Banc One, Hewlett-Packard and Microsoft.
Also noteworthy was our return on average equity and
our return on average assets. Return on average equity increased
to 19.55% from 18.90% in 1995. Return on average assets increased
to 1.49% from 1.35% in 1995. Without the SAIF charge, the return
on average equity and the return on average assets would have been
20.59% and 1.57%, respectively. Total shareholders' equity for 1996
increased 8.6% to $27,332,000 from $25,164,000.
From Management
In 1996, our loan portfolio grew 18% to $188,783,000 while
maintaining outstanding asset quality. Nonperforming assets
as a percentage of total assets decreased to just 0.08% of
total assets compared to 0.24% in 1995, while nonperforming
assets as a percentage of allowance for loan losses was only
8.98% versus 27.93% in the prior year. Additionally, our
allowance for possible loan loss as a percentage of total
loans decreased slightly to 1.67% from 1.69% in the prior
year.
Our 150th year of service to families, businesses and
communities was an exciting and busy one. During the year
we moved Belmont National Bank headquarters to Wheeling,
West Virginia and celebrated the opening of our first and
second West Virginia office in the Woodsdale and Elm Grove
areas of Wheeling. Our Elm Grove Office offers express
drive-up service and 24-hour ATM banking, and both West
Virginia offices feature extended banking hours.
Construction began on our newest Ohio facility, the Plaza
West Solution Center in St. Clairsville, and we committed to
opening an office in the new Imperial Plaza located in
Bellaire, Ohio. Both locations will be fully operational
during the second quarter of 1997 with extended banking
hours, including express drive-up service and 24-hour ATM
banking. By the end of the first quarter of 1997, we will
also provide the Ohio communities of Bridgeport and Cadiz
with 24-hour ATM banking service.
Our aggressive approach to providing customers with new
and innovative financial solutions and additional electronic
banking convenience took another form as well in 1996. If
you are a computer user with internet access, we now have an
interactive web site designed to help our customers plan for
retirement, plan and finance the education of children,
purchase a new home and much more from the comfort of their
home or office. Please stop by and visit us on the World
Wide Web at www.belmontbank.com.
This annual report is dedicated to each and every Belmont
National Bank customer, some of whom are depicted on its
cover as well as profiled within the annual report. We are
grateful for the opportunity to be your financial partner...
to work with you through your constantly changing needs
in your lifelong pursuit of financial well-being and
security. Our objective is to bring order and expertise to
the process of understanding and evaluating the rapidly
expanding and complex financial services options you face
throughout your life.
We extend our sincerest appreciation to all the officers
and staff of the Corporation, and the Board of Directors
whose dedication and hard work make Belmont Bancorp. and
Belmont National Bank one of the top banking organizations
in the country.
And, as always, we thank our shareholders across the
country who have shown confidence and trust in the
leadership of your Corporation. We pledge to you our
continuing best effort and look forward to providing you
with another prosperous year.
J. Vincent Ciroli, Jr. Terrence A. Lee
President & CEO Chairman
A Customer Profile
Planning For Their Children's Education
During one of our visits with John and Vickie Miller, it
become clear to us, their financial partner, that the
education of their two young daughters was an important
objective. It wasn't until recently that John managed to
pay off his old student loans. If possible, they want the
kids to avoid a similar burden of enormous college debt.
Our first step was to provide John and Vickie with an
estimate of future tuition, room and board at a state
university based on each child's current age. Fortunately,
at birth the Millers had set up college savings accounts for
each daughter and were periodically depositing money. Based
on this information, we calculated the amount that would be
available for each child, factoring in the balance,
deposits, the interest rate and years until college.
Our work with the Millers validated a concern which John had
expressed early in our discussions-the goal was not
realistic based on their present efforts. Together, over
time, we have explored a number of specific actions designed
to help reach the objective: 1) Establish a set amount to be
automatically transferred from the family checking account to
each college fund savings account on payday. 2) For the funds
already saved, pursue long-term investments which provide a
greater rate of return. 3) Ask relatives, who normally give
each child a Christmas present, to help fund the college fund
by making the gift a monetary one.
Through our brokerage services, John and Vickie Miller are
now investing in quality "blue chip" stocks for their
daughters' education and have weekly deposits into the
college fund savings. As their financial partner, we will
meet with the Millers periodically to make sure we are doing
everything possible to help them reach this important goal.
A Customer Profile
Preparing For Retirement
With the pressures of raising children, retirement thoughts
had never been a discussion for Doug and Alice Gibson...
until now. The kids are grown and on their own; Alice is
back to work, using her pay to invest in certificates of
deposit. The last time Alice was in, she mentioned
retirement savings and concerns about future financial
security. As their financial partner, we offered to work
with the Gibsons to help them understand what is needed to
live in retirement and what their financial resources will
be based on their current savings habits.
Since our brief conversation about a month ago, we have met
with Doug and Alice twice. Fortunately, they have some
time, about a dozen years, and two incomes to help support
the cost of meeting retirement goals. During our first
meeting, we discussed the collaborative effort required by
both partners-the Gibsons and Belmont National Bank.
The Gibsons helped us establish a snapshot of their
financial situation, to know what assets were already
available: Doug's 401(k) plan, other savings, investments
and life insurance, their home and other personal property,
as well as, amounts owed-mortgage, car loans, etc. We also
put the Gibsons in touch with the Social Security
Administration to obtain their Personal Earnings and Benefit
Estimate Statement.
Since then, we completed a net worth and cash flow analysis
and estimated what the Gibsons will need to maintain their
lifestyle, factoring in live expectancy and inflation. The
Gibsons were delighted when we then presented a no-cost way
to increase their retirement funding and lower federal and
state income tax using Doug's 401(k) plan plus IRA's for
Doug and Alice. Now, with greater confidence in reaching
financial security, the Gibsons are looking forward to their
next visit with their financial partner to discuss specific
IRA investment options.
A Customer Profile
Growing Your Own Business
The pressures of owning a business in today's competitive
environment can be an imposing task for even the most
skilled owner. Rodney Strong, owner of River City Tool and
a successful, machine tool manufacturer, was in the middle
of a crisis that impacts most growth businesses. His
company was increasing annual sales at 20% and his customer
base was expanding in size and geography. Unfortunately,
his cash flow was not keeping pace with his sales. Mr.
Strong was facing a dilemma which, if not dealt with, could
permanently cripple his business.
River City Tool has been our customer since its birth by Mr.
Strong in 1989. At that time, he used an equipment loan and
a second mortgage on his home to finance the start-up. He
was familiar with our high level of expertise in dealing
with his business and has come to rely on the bank. Now, he
was coming to us with what he thought was an embarrassing,
unique problem-running out of money as his business grew.
Our meeting with Mr. Strong was frank and open as he
explained the problem and suggested he had no solutions
within his company. As his financial partner, our solution
was both quick and effective. We provided for his immediate
short-term cash flow needs and also designed and implemented
a cash management system that allowed him to quickly collect
and monitor his customer accounts.
The solution provided an operating line of credit tied to
account receivables and an electronic cash collection
mechanism to accelerate cash flow despite the growing
geographic diversity of his customers. The most important
result of the bank designed system is Rodney Strong now
devotes more time in serving his customers, and less time
worrying about his company's cash flow.
Mr. Strong knew Belmont National Bank provided quality
service and business loans. Now he knows what many of our
customers have come to realize-we provide financial solution
for their complex problems.
<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>
1996
Interest income $6,150 $6,331 $6,576 $6,444
Interest expense 2,849 3,058 3,201 3,019
Net interest income 3,301 3,273 3,375 3,425
Provision for credit losses 150 105 105 105
Security gains (losses) 229 4 34 129
Net overhead 1,423 1,557 1,897 1,650
Income before income taxes 1,957 1,615 1,407 1,799
Income taxes 548 450 324 454
Net income $1,409 $1,165 $1,083 $1,345
Net income per common share $ 0.66 $ 0.54 $ 0.50 $ 0.64
1995
Interest income $5,898 $5,763 $5,955 $5,838
Interest expense 2,746 2,648 2,791 2,742
Net interest income 3,152 3,115 3,164 3,096
Provision for credit losses 400 300 200 250
Security gains (losses) 127 37 18 (80)
Net overhead 1,510 1,391 1,377 1,662
Income before income taxes 1,369 1,461 1,605 1,104
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
Net income $ 641 $ 792 $1,135 $ 666
Net earnings per common
share $ 0.29 $ 0.37 $ 0.53 $ 0.30
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Five Year Summary of Operations
For the Years Ending December 31, 1996, 1995, 1994, 1993,
1992 (Unaudited) ($000's except per share data)
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Interest income $ 25,501 $ 23,454 $ 19,715 $ 16,789 $ 14,717
Interest expense 12,127 10,927 8,807 8,616 8,082
Net interest income 13,374 12,527 10,908 8,173 6,635
Provision for credit
losses 465 1,150 805 577 405
Net interest income
after provision
for credit losses 12,909 11,377 10,103 7,596 6,230
Securities and trading
gains (losses) 396 102 (63) 943 323
Other operating income 1,861 1,683 1,290 1,193 966
Operating expenses 8,388 7,623 7,069 6,757 5,107
Income before income
taxes 6,778 5,539 4,261 2,975 2,412
Income taxes 1,776 1,333 1,027 406 574
Net income $ 5,002 $ 4,206 $ 3,234 $ 2,569 $ 1,838
Earnings per common
share (1) $ 2.34 $1.95 $ 1.49 $ 1.18 $ 0.85
Cash dividend declared
per share (1) $ 0.600 $ 0.475 $ 0.378 $ 0.331 $ 0.324
Book value per common
share (1) $ 12.93 $ 11.43 $ 9.09 $ 8.68 $ 7.84
Total loans $ 188,783 $159,957 $147,096 $125,232 $113,977
Total assets 333,903 317,279 312,963 267,505 267,332
Total deposits 261,539 246,850 255,923 243,232 245,743
Total shareholders'
equity 27,332 25,164 20,214 19,355 17,565
(1) Restated for stock dividends paid during 1994 and 1995.
</TABLE>
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Balance Sheets
For the Years Ended December 31, 1996 and 1995 ($000's)
<CAPTION>
Assets 1996 1995
<S> <C> <C>
Cash and due from banks $ 10,948 $ 10,175
Federal funds sold 24,450 -
Securities available for sale (at market value) 78,728 112,109
Securities held to maturity (market value of
$19,302 - 1996; and $23,758 - 1995) 19,299 23,726
Loans 188,783 159,957
Less allowance for possible loan losses (3,153) (2,703)
Net loans 185,630 157,254
Premises and equipment, net 7,260 5,090
Other real estate owned 66 579
Accrued income receivable 1,921 2,150
Other assets 5,601 6,196
Total assets $ 333,903 $ 317,279
Liabilities and Shareholders' Equity
Liabilities
Non-interest bearing deposits:
Demand $ 29,232 $ 26,494
Interest bearing deposits:
Demand 40,569 27,193
Savings 80,961 78,883
Time 110,777 114,280
Total deposits 261,539 246,850
Securities sold under repurchase agreements 8,280 14,539
Short-term borrowings 10,000 24,126
Long-term debt 19,676 4,802
Accrued interest on deposits and other borrowings 664 661
Other liabilities 6,412 1,137
Total liabilities 306,571 292,115
Shareholders' Equity
Preferred stock - authorized 90,000 shares with - -
no par value; issued and outstanding, none
Senior cumulative preferred stock - authorized, - 1,000
issued and outstanding no shares and 10,000
shares with a $100 par value at December 31, 1996
and 1995, respectively
Common stock - $0.50 par value, 8,900,000 shares
authorized, 2,115,476 issued 1,057 1,057
Surplus 7,781 7,781
Treasury stock (832 shares) (8) (8)
Retained earnings:
Unappropriated 17,820 14,148
Appropriated for contingencies 850 850
Net unrealized gain (loss) on securities
available for sale (168) 336
Total shareholders' equity 27,332 25,164
Total liabilities and shareholders' equity $ 333,903 $ 317,279
</TABLE>
The accompanying notes are an integral part of the financial
statements.
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Income
For the Years Ended December 31, 1996, 1995 and 1994
($000's)
<CAPTION>
Interest Income 1996 1995 1994
<S> <C> <C> <C>
Loans and lease financing:
Taxable $ 15,905 $ 13,924 $ 11,499
Tax-exempt 329 288 190
Investment securities:
Taxable 7,660 7,638 6,714
Tax-exempt 1,251 1,424 1,209
Dividends 175 133 98
Interest on trading securities - - 1
Interest on federal funds sold 181 47 4
Total Interest income 25,501 23,454 19,715
Interest Expense
Deposits 9,386 9,022 7,865
Short-term borrowings 2,741 1,905 942
Total interest expense 12,127 10,927 8,807
Net interest income 13,374 12,527 10,908
Provision for Possible Loan Losses 465 1,150 805
Net interest income
after provision
for possible loan
losses 12,909 11,377 10,103
Non-lnterest Income
Trust fees 502 413 341
Service charges on deposits 660 555 527
Other operating income 699 715 422
Investment securities gains (losses) 396 102 (64)
Trading gains (losses) - - 1
Total non-interest income 2,257 1,785 1,227
Non-lnterest Expense
Salary and employee benefits 3,436 3,357 2,946
Net occupancy expense of premises 686 552 533
Equipment expenses 817 764 618
Other operating expenses 3,449 2,950 2,972
Total non-interest expense 8,388 7,623 7,069
Income before income taxes 6,778 5,539 4,261
Income Taxes 1,776 1,333 1,027
Net income $ 5,002 4,206 $ 3,234
Weighted - Average Number of Shares
Outstanding 2,114,644 2,114,644 2,114,524
Earnings Per Common Share $ 2.34 $ 1.95 $ 1.49
</TABLE>
The accompanying notes are an integral part of the financial
statements.
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1996, 1995 and 1994
($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, 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
1996 net income - - - 5,002 - - -
Cash dividend declared:
Preferred stock - - - (61) - - -
Common stock (per share $.60) - - - (1,269) - - -
Redemption of preferred stock (1,000) - - - - - -
Change in unrealized gain
(loss)- securities
available to sale - - - - - - (504)
Balance, December 31, 1996 $ - $ 1,057 $ 7,781 $ 17,820 $ 850 $ (8) $ (168)
</TABLE>
The accompanying notes are an integral part of the financial
statements.
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
($000's)
<CAPTION>
Operating Activities 1996 1995 1994
<S> <C> <C> <C>
Net income $ 5,002 $ 4,206 $ 3,234
Adjustments to reconcile net income to net cash flows
provided (used) by operating activities:
Provision for loan losses 465 1,150 805
Depreciation and amortization expense 674 601 519
Amortization of investment security premiums 1,469 1,123 1,877
Accretion of investment security discounts and
interest recorded on zero-coupon securities (358) (305) (403)
Investment securities (gains) losses 1 11 10
Trading (gains) losses - - (1)
(Gains) losses on securities available for sale (397) (113) 55
Proceeds from sale of securities held in trading acct - - 1,517
Purchase of securities for trading account - - (1,516)
Loss (gain) on sale of fixed assets 6 23 2
Gain on sale of loans (72) (136) (23)
Loss (gain) on sale of other real estate owned 65 - (1)
(Increase) decrease in interest receivable 229 (17) (420)
Increase in interest payable 3 71 137
Others, net 6,130 (65) 1,859
Net cash provided (used) by operating activities 13,217 6,549 7,651
Investing Activities
Net increase in federal funds sold (24,450) - -
Proceeds from maturities and calls of investment
securities 1,859 12,154 3,207
Purchase of securities available for sale (99,267) (106,839) (26,052)
Purchase of investment securities - (2,321) (47,621)
Proceeds on sale of securities available for sale 110,808 85,414 16,198
Principal collected on mortgage-backed securities 22,930 19,405 29,434
Net increase in loans and leases, net of charge-offs (38,756) (23,491) (25,486)
Proceeds on sale of loans 9,874 10,816 2,104
Loans purchased - (94) -
Recoveries on loans previously charged-off 47 67 55
Proceeds from sale of other real estate owned 514 - 84
Purchase of premises and equipment (2,859) (1,071) (711)
Proceeds from sale of fixed assets 8 4 1
Net cash provided by (used in) investing activities (19,292) (5,956) (48,787)
Financing Activities
Net increase (decrease) in deposits 14,689 (9,073) 12,691
Net increase (decrease) in repurchase agreements (6,259) 5,803 5,027
Net increase (decrease) in short-term borrowings (14,126) (2,636) 26,762
Proceeds from the issuance of long-term debt 15,125 4,805 -
Payments on long-term debt (251) (3) -
Dividends paid on common and preferred stock (1,330) (1,084) (889)
Redemption of preferred stock (1,000) - -
Sale of treasury stock - - 6
Net cash provided by (used in) financing activities 6,848 (2,188) 43,597
Increase (Decrease) in Cash and Cash Equivalents 773 (1,595) 2,461
Cash and Cash Equivalents at Beginning of Year 10,175 11,770 9,309
Cash and Cash Equivalents at End of Year $ 10,948 10,175 $ 11,770
</TABLE>
The accompanying notes are an integral part of the financial
statements.
Belmont Bancorp. and Subsidiaries
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 1996, 1995 and 1994
($000's)
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 eleven full-service
banking facilities located in Belmont, Harrison, and
Tuscarawas Counties in Ohio, and Wheeling, West Virginia.
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
affect 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.
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
nonaccrual, 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.
Allowances 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.
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, 1996 and 1995, were
$1,092,000 and $1,508,000, respectively. Amortization
charged to expense was $415,000 in each of the three years
in the period ended December 31, 1996.
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 1994 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.
3. Investment Securities
<TABLE>
The estimated market value of investment securities are as
follows at December 31:
<CAPTION>
1996 1995
-------------------------------------------- -----------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Market Amortized 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 $2,264 $ - $ (94) $ 2,170 $ 2,269 $ - $ (65) $ 2,204
Obligations of states and
political subdivisions 4,812 131 (58) 4,885 5,034 127 (78) 5,083
Mortgage-backed securities 12,223 121 (97) 12,247 16,423 147 (99) 16,471
Total held to maturity $19,299 $252 $ (249) $19,302 $ 23,726 $ 274 $ (242) $ 23,758
Securities available for sale:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $4,098 $ - $ (40) $ 4,058 $ 12,697 $ 66 $ - $ 12,763
Obligations of states and
political subdivisions 9,618 19 (93) 9,544 18,162 296 (86) 18,372
Mortgage derivative securities 22,776 104 (477) 22,403 9,180 256 (58) 9,378
Mortgage-backed securities 39,223 412 (179) 39,456 69,315 466 (431) 69,350
Total debt securities 75,715 535 (789) 75,461 109,354 1,084 (575) 109,863
Equity securities 3,267 - - 3,267 2,246 - - 2,246
Total available for sale $78,982 $535 $ (789) $78,728 $111,600 $1,084 $ (575) $112,109
</TABLE>
The amortized cost and estimated market value of investment
securities at December 31, 1996, 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 $ 31 $ 33 $ 500 $ 502
Due after one year
through five years 3,637 3,558 4,273 4,233
Due after five years
through ten years - - - -
Due after ten years 3,408 3,464 8,943 8,867
Mortgage-backed securities 12,223 12,247 39,223 39,456
Mortgage derivative securities - - 22,776 22,403
Equity securities - - 3,267 3,267
Total $19,299 $19,302 $78,982 $78,728
</TABLE>
At December 31, 1996 and 1995, the mortgage derivative
securities consist solely of collateralized mortgage
obligations (CMO), including one principal-only CMO with a
book value of $169,000 and an estimated fair market value of
$126,000 at December 31, 1996, and a book value of $267,000
and an estimated fair market value of $209,000 at December
31, 1995. At December 31, 1996, securities held to maturity
include a U.S. Government Agency structured note with a
carrying value of $2,264,000 and an estimated market value
of 2,170,000. 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 an estimated market value of
$1,997,000.
<TABLE>
Sales and write-downs of investment securities resulted in
the following:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Proceeds from sales $110,808 $85,414 $16,198
Gross gains 745 464 31
Gross losses (346) (352) (86)
Losses on securities called (3) (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 $26,724,000 and $39,149,000 at December
31, 1996 and 1995, 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>
1996 1995
<S> <C> <C>
Real estate-construction $ 1,327 $ 1,530
Real estate-mortgage 71,715 69,999
Real estate-secured by nonfarm,
nonresidential property 25,954 28,744
Commercial, financial and agricultural 76,035 46,055
Obligations of political subdivisions in the U.S. 4,519 4,477
Installment and credit card loans to individuals 9,233 9,149
Direct financing leases - 3
Loans receivable $188,783 $159,957
</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 $143,000 and $162,000 at December 31, 1996
and 1995, respectively. The after-tax effect of the interest
that would have been accrued on these loans was $7,000 in 1996
and $5,000 in 1995.
<TABLE>
The following is an analysis of loan activity to directors,
executive officers, and their associates (see Note 13):
<CAPTION>
1996 1995
<S> <C> <C>
Balance previously reported $6,800 $4,904
New loans during the year 2,760 4,097
Total 9,560 9,001
Less repayments during the year 1,748 2,201
Balance, December 31 $7,812 $6,800
</TABLE>
<TABLE>
Activity in the allowance for loan losses is summarized as
follows:
<CAPTION>
December 31
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $2,703 $1,537 $1,617
Additions charged to operating expense 465 1,150 805
Recoveries on loans previously
charged-off 47 67 55
Total 3,215 2,754 2,477
Loans charged-off 62 51 940
Balance at end of year $3,153 $2,703 $1,537
</TABLE>
The entire allowance represents a valuation reserve which is
available for future charge-offs.
5. Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation and amortization, as follows:
<TABLE>
<CAPTION>
Original
December 31 Useful Life
1996 1995 Years
<S> <C> <C> <C>
Land and land improvements $ 1,161 $ 1,009
Buildings 5,546 3,534 30 - 50
Furniture, fixtures and equipment 4,890 4,272 5 - 12
Leasehold improvements 377 373 5 - 20
Total 11,974 9,188
Less accumulated depreciation
and amortization 4,714 4,098
Premises and equipment, net $ 7,260 $ 5,090
</TABLE>
Charges to operations for depreciation and amortization
approximate $674,000, $601,000, and $519,000 for 1996, 1995,
and 1994, respectively.
6. Deposits
<TABLE>
The distribution of the bank's deposits at December 31, 1996
and 1995, are as follows:
<CAPTION>
1996 1995
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 Corporations $13,020 $40,569 $80,961 $105,878 $12,422 $27,193 $78,883 $110,258
U.S. Government 285 - - - 272 - - -
States and political
subdivisions 14,705 - - 4,899 12,124 - - 4,022
Other depository
institutions in the U.S. - - - - - - - -
Certified, officers' checks,
travelers cheques, etc. 1,222 - - - 1,676 - - -
Total $29,232 $40,569 $80,961 $110,777 $26,494 $27,193 $78,883 $114,280
</TABLE>
6. Deposits (continued)
Time deposits include certificates of deposit issued in
denominations of $100,000 or more which amounted to
$13,133,000 at December 31, 1996, and $11,877,000 at
December 31, 1995. A maturity distribution of time
certificates of deposit of $100,000 or more follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Due in three months or less $ 3,247 $ 3,626
Due after three months through six months 2,125 3,303
Due after six months through twelve months 4,667 3,312
Due after one year through five years 2,074 1,327
Due after five years 1,020 309
Total $13,133 $11,877
</TABLE>
7. Federal Funds Purchased and Securities Sold Under
Repurchase Agreements
Federal funds purchased and securities sold under agreements
to repurchase represent primarily overnight borrowings.
However, as of December 31, 1996, BNB had two repurchase
agreements outstanding with maturities from twelve to twenty-
four months. For all repurchase agreements, the securities
underlying the agreements were under BNB's control. Information
related to these borrowings is summarized below:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Securities sold under
repurchase agreements:
Balance at year end $ 8,280 $14,539 $8,736
Average during the year $11,529 $17,669 $8,210
Maximum month-end balance $21,362 $24,012 $9,653
Weighted average rate during the year 4.86% 4.82% 3.56%
Rate at December 31 3.07- 3.05% 4.93%
4.69%
Federal funds purchased:
Balance at year end $ - $ - $4,500
Average during the year $ 1,132 $700 $ 397
Maximum month-end balance $ 5,338 $ - $4,500
Weighted average rate during the year 5.61% 6.87% 4.43%
Rate at December 31 - - 6.25%
</TABLE>
At December 31, 1996, BNB also had available additional
credit totaling $30 million under a repurchase agreement-
based cash management advance agreement, all of which was
unused. This agreement will expire on August 22, 1997.
8. Short-Term Borrowings
Short-term borrowings consist of advances from the Federal
Home Loan Bank of Cincinnati. Advances are made under
agreements which allow for maximum borrowings of
$30,000,000. Advances can be made at fixed or variable
rates of interest. 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, 1996 and 1995, is
summarized below:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Balance at year end $10,000 $24,126
Average balance during the year $11,222 $11,790
Maximum month-end balance $27,352 $29,796
Weighted average rate during the year 5.59% 5.54%
Interest rate at December 31 5.45% 6.15%
Collateral:
Residential mortgage loans $15,000 $36,190
Federal Home Loan Bank stock $2,959 $ 1,844
</TABLE>
9. Long-Term Debt
Long-term debt consists of advances from the Federal Home
Loan Bank of Cincinnati. Fixed-rate, single payment loans
totaling $14,000,000 and $4,000,000 at December 31, 1996 and
1995, respectively, mature in 1997 and 1998 with interest
rates ranging from 5.4% to 7.0%. Fixed-rate, amortizing
loans totaling $5,676,000 and $802,000 at December 31, 1996
and 1995, respectively, 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 $29,514,000 and $7,203,000 at
December 31, 1996 and 1995, respectively, and Federal Home
Loan Bank Stock.
Scheduled principal payments on long-term debt in each of
the five years subsequent to December 31, 1996, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 2,662
1998 $12,703
1999 $ 634
2000 $ 674
2001 $ 670
</TABLE>
10. Income Tax
The components of applicable income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Currently payable $1,910 $1,726 $ 880
Deferred (134) (393) 147
Income tax $1,776 $1,333 $1,027
</TABLE>
The following temporary differences gave rise to the
deferred tax asset at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Allowance for loan losses $ 923 $ 770
Interest on non-accrual loans 4 9
Unrealized (gains) losses on investments 105 (145)
Deferred loan origination fees 11 19
Deferred compensation and liability
for future employees benefits 85 81
Intangible assets 283 216
Premises and equipment due to
differences in depreciation (132) (121)
Direct finance leases (86) (86)
Federal Home Loan Bank
stock dividends (141) (84)
Total deferred tax assets $1,052 $ 659
</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:
<TABLE>
<CAPTION>
1996 1995 1994
Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Tax at statutory rate $2,305 34.0 $1,883 34.0 $1,449 34.0
Reductions in taxes
resulting from:
Tax exempt interest
on investments
and loans (537) (7.9) (582) (10.5) (476) (11.2)
Excess of tax loss over
book gains on
investment securities (37) (0.6) (22) (0.4) - -
Earnings on life
insurance policies (39) (0.6) (33) (0.6) (18) (0.4)
Non-deductible
interest expense 78 1.2 75 1.4 64 1.5
Others - net 6 0.1 12 0.2 8 0.2
Actual tax expense $1,776 26.2 $1,333 24.1 $1,027 24.1
</TABLE>
The bank has available $623,000 in capital loss
carryforwards which will expire in 1998.
11. 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 1996, 1995, and 1994 was $234,000,
$242,000, and $180,000, respectively.
In addition to providing the profit-sharing plan, Belmont
Bancorp. sponsors two defined benefit postretirement 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 postretirement 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 Postretirement Benefits Other than Pensions."
The statement requires the accrual of the expected cost of
providing postretirement benefits to employees and certain
dependents during the years that an employee renders service.
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:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees $ 44 $ 42
Fully eligible active plan participants 30 50
Other active plan participants 54 53
128 145
Plan assets at fair value - -
Accumulated post-retirement benefit
obligation in excess of plan assets 128 145
Unrecognized net gain (loss) from past
experience different from that assumed
and from changes in assumptions 6 (26)
Prior service cost not yet recognized
in expense 14 38
Unrecognized transition obligation - (12)
Accrued post-retirement benefit cost
in the balance sheet $148 $ 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 $128,000 and $-
0-, respectively at December 31, 1996, and $145,000 and $-0-
respectively at December 31, 1995.
<TABLE>
Post-retirement expense includes the following components:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Service cost $ 6 $ 4 $ 6
Interest cost on accumulated
post-retirement benefit obligation 10 10 10
Net amortization and deferral (10) (11) (5)
Post-retirement expense $ 6 $ 3 $ 11
</TABLE>
The annual assumed rate of increase in the per capita cost
of covered benefits for 1997 is 11.0% for medical benefits
and 8.5% for dental benefits (compared to 11.5% and 8.5% for
1996 for the respective benefits). The rates are assumed to
decrease gradually to 5.5% (for medical in 2005 and for
dental in 2003), 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 postretirement benefit
obligation as of December 31, 1996, by $4,000, and the
aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1996 by $1,000.
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7%. The
long-term inflation rate assumed was 4%.
12. 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, 1996, 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,
1997 $112
1998 59
1999 42
2000 42
2001 44
Thereafter 212
Total minimum lease payments $511
</TABLE>
Rental expense under operating leases approximated $129,000
in 1996, $86,000 in 1995, and $83,000 in 1994.
13. 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 1996 and 1995. The outstanding balance of all loans to
the related parties was $7,812,000 and $6,800,000 at
December 31, 1996 and 1995, 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.
14. 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.
<TABLE>
The following represents financial instruments whose
contract amounts represent credit risk at December 31:
<CAPTION>
Contract Amount
1996 1995
<S> <C> <C>
Commitments to extend credit $20,827 $16,021
Standby letters of credit 859 866
Commitments to purchase
when-issued securities 5,500 -
</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, $294,000 expire in 1997,
while the remaining $565,000 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.
15. Concentrations 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.
16. Limitations 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 1997 without
approval of the Comptroller of the Currency of approximately
$7,700,000 plus an additional amount equal to the bank's net
profit for 1997 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.
17. Other Operating Expenses
<TABLE>
Other operating expenses include the following:
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Taxes other than payroll
and real estate $ 395 $ 287 $ 228
Supplies and printing 301 295 262
Insurance, including
Federal Deposit Insurance 567 430 616
Data processing 71 64 281
Advertising 101 159 102
Amortization of intangibles 415 415 415
Other (individually less than
1% of total interest income) 1,599 1,300 1,068
Total $3,449 $2,950 $2,972
</TABLE>
18.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, 1996 and 1995, were $3,095,000 and $1,724,000, respectively.
19. Cash Flow Information
The corporation's policy is to include cash on hand and
amounts due from banks in the definition of cash and cash
equivalents.
Cash payments for interest in 1996, 1995, and 1994 were
$12,124,000, $10,856,000, and $8,670,000, respectively.
Cash payments for income taxes for 1996, 1995, and 1994 were
$1,733,000, $1,740,000, and $1,030,000, respectively.
20. Preferred Stock
On October 2, 1992, the corporation issued 10,000 shares of
$100 par value, non-voting, senior cumulative preferred
stock with dividends payable quarterly in an amount equal to
$8 per annum. All of the shares were redeemed in the year
ended December 31, 1996.
21. Regulatory Matters
The subsidiary bank is subject to various regulatory capital
requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate
certain mandatory, and possibly additional discretionary,
actions by regulators that, if undertaken, could have a
direct material effect on the bank's financial statements.
Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the bank must meet
specific capital guidelines that involve quantitative
measures of the bank's assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory
accounting practices. The bank's capital amounts and
classifications are also subject to qualitative judgments by
the regulators about components, risk, weighting, and other
factors.
Quantitative measures established by regulation to ensure
capital adequacy require the bank to maintain minimum
amounts and ratios (set forth in the table below) of total
and Tier I capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier I capital (as
defined) to average assets (as defined). Management
believes, as of December 31, 1996, that the bank meets all
capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notifications from
the Office of the Comptroller of the Currency categorized
the bank as well capitalized under the regulatory framework
for prompt corrective action. To be categorized as well
capitalized, the bank must maintain minimum total risk-
based, Tier I risk-based, and Tier I leverage ratios as set
forth in the table. There are no conditions or events since
those notifications that management believes have changed
the institution's category.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital $28,368 13.4% $16,917 8.0% $ 21,146 10.0%
(to Risk Weighted Assets)
Tier I Capital $25,718 12.2% $8,458 4.0% $ 12,687 6.0%
(to Risk Weighted Assets)
Tier I Capital $25,718 7.7% $13,357 4.0% $ 16,696 5.0%
(to Average Assets)
</TABLE>
22. 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 is
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 Held 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.
<TABLE>
The estimated fair values as of December 31 for the
corporation's financial instruments are as follows:
<CAPTION>
1996 1995
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and federal funds sold $ 35,398 $ 35,398 $ 10,175 $ 10,175
Securities available for sale 78,728 78,728 112,109 112,109
Securities held to maturity 19,299 19,302 23,726 23,758
Loans, net 185,630 188,755 157,254 160,186
Financial liabilities:
Deposits 261,539 261,602 246,850 247,255
Repurchase agreements 8,280 8,280 14,539 14,539
Short-term borrowings 10,000 10,000 24,126 24,126
Long-term debt 19,676 17,808 4,802 4,864
</TABLE>
23. Condensed Parent Company Financial Statements
Presented below are the condensed balance sheets, statements
of income, and statements of cash flows for Belmont Bancorp.
<TABLE>
<CAPTION>
Balance Sheets
1996 1995
<S> <C> <C>
Assets
Cash $ 101 $ 23
Investment in subsidiaries
(at equity in net assets) 26,535 24,485
Equity securities 120 120
Advances to subsidiaries, net 429 398
Prepaid taxes 4 158
Other assets 422 -
Total Assets $27,611 $25,184
Liabilities
Accrued dividends $ - $ 20
Accrued taxes 23 -
Deferred compensation 256 -
Total liabilities 279 20
Shareholders' Equity
Preferred stock - -
Senior cumulative preferred stock - 1,000
Common stock 1,057 1,057
Capital surplus 7,781 7,781
Treasury stock-832 shares (8) (8)
Retained earnings-appropriated 850 850
Retained earnings-unappropriated 17,820 14,148
Net unrealized gain (loss) on
securities available for sale (168) 336
Total shareholders' equity 27,332 25,164
Total Liabilities and Shareholders' Equity $27,611 $25,184
</TABLE>
<TABLE>
<CAPTION>
Statements of Income
1996 1995 1994
<S> <C> <C> <C>
Operating Income
Dividends from subsidiaries $2,479 $1,084 $ 879
Other income 19 10 10
Total income 2,498 1,094 889
Operating Expenses (67) (59) (33)
Income before income tax
and equity in undistributed
income of subsidiaries 2,431 1,035 856
Income Tax Credit 18 18 8
Equity in Undistributed Income
of Subsidiaries 2,553 3,153 2,370
Net Income $5,002 $4,206 $3,234
</TABLE>
<TABLE>
<CAPTION>
Statements of Cash Flows
1996 1995 1994
<S> <C> <C> <C>
Operating Activities
Net income $ 5,002 $ 4,206 $ 3,234
Adjustments to reconcile net income to
net cash provided by operating activities:
Undistributed earnings of affiliates (2,553) (3,153) (2,370)
Changes in operating assets and liabilities:
Prepaid taxes 153 (10) (148)
Accrued expenses and dividends 259 - (166)
Other assets (422) - -
Net cash provided by
operating activities 2,439 1,043 550
Investing Activities
Payments (to) from subsidiaries (31) (253) 539
Investment purchases - (60) -
Net cash provided (used) by
investing activities (31) (313) 539
Financing Activities
Cash paid for fractional shares - - (10)
Sale of treasury stock - - 5
Redemption of preferred stock (1,000) - -
Dividends (1,330) (1,084) (879)
Net cash used by financing activities (2,330) (1,084) (884)
Increase (Decrease) in Cash & Cash Equivalents 78 (354) 205
Cash and Cash Equivalents at Beginning of Year 23 377 172
Cash and Cash Equivalents at End of Year $ 101 $ 23 $ 377
</TABLE>
Supplemental disclosures:
The Corporation made income tax payments of $1,733,000,
$1,740,000, and $1,030,000 in 1996, 1995, and 1994,
respectively. These payments represented income tax
payments for the Corporation and its consolidated
subsidiaries.
The Corporation incurred no interest expense in 1996, 1995
or 1994.
Belmont Bancorp. and Subsidiaries
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, 1996
and 1995, 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, 1996.
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, 1996 and 1995, 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, 1996, 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.
S. R. Snodgrass A. C.
Wheeling, West Virginia
January 24, 1997
Belmont Bancorp. and Subsidiaries
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
Vice President, Belmont Bancorp.
Executive Vice President and
Chief Operating Officer
Belmont National Bank
Jane R. Marsh
Secretary, Belmont Bancorp.
Senior Vice President
Controller and Cashier
Belmont National Bank
Belmont Bancorp. and Subsidiaries
<TABLE>
Consolidated Average Balance Sheets
For the Years Ended December 31, 1996, 1995 and 1994 (Fully
Taxable Equivalent Basis) (000's)
<CAPTION>
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 $174,445 $16,389 9.39% $152,502 $14,347 9.41% $134,952 $11,779 8.73%
Securities
Taxable 115,070 7,828 6.80% 113,409 7,768 6.85% 114,468 6,810 5.95%
Exempt from income taxes 23,403 1,802 7.70% 25,689 2,062 8.03% 21,866 1,746 7.98%
Trading account assets - - - - - -% 138 1 .72%
Federal funds sold 3,409 181 5.31% 805 47 5.84% 130 4 3.08%
Total interest earning assets 316,327 26,200 8.28% 292,405 24,224 8.28% 271,554 20,340 7.49%
Cash and due from banks 9,328 8,448 8,275
Other assets 14,229 12,927 12,014
Market value appreciation
(depreciation) of securities
available for sale (767) (731) (860)
Allowance for possible loan loss (2,928) (2,139) (1,427)
Total Assets $336,189 $310,910 $289,556
Liabilities
Interest bearing liabilities
Interest checking $ 38,576 $ 1,225 3.18% $25,953 $ 614 2.37% $ 26,764 $ 581 2.17%
Savings 79,341 2,423 3.05% 78,679 2,359 3.00% 95,655 2,850 2.98%
Other time deposits 111,657 5,738 5.14% 121,329 6,049 4.99% 99,660 4,434 4.45%
Other borrowings 50,274 2,741 5.45% 34,665 1,905 5.50% 21,217 942 4.44%
Total interest bearing liabilit 279,848 12,127 4.33% 260,626 10,927 4.19% 243,296 8,807 3.62%
Demand deposits 27,878 25,819 24,797
Other liabilities 2,199 1,632 1,583
Total liabilities 309,925 288,077 269,676
Shareholders' Equity 26,264 22,833 19,880
Total Liabilities and
Shareholders' Equity $336,189 $310,910 $289,556
Net interest income margin
on a taxable equivalent basis 14,073 4.45% 13,297 4.55% 11,533 4.25%
Net interest rate spread 3.95% 4.09% 3.87%
Interest bearing liabilities to
interest earning assets 88.47% 89.13% 89.59%
</TABLE>
Fully taxable equivalent basis computed at effective federal
tax rate of 34%.
Average loan balances include nonperforming loans.
Belmont Bancorp. and Subsidiaries
<TABLE>
Analysis of Net Interest Income Changes
For the Years Ended December 31, 1996, 1995 and 1994 (Fully
Taxable Equivalent Basis) (000's)
<CAPTION>
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 $2,064 $ (20) $ (2) $2,042 $1,532 $ 917 $ 119 $ 2,568
Securities
Taxable 114 (53) (1) 60 (63) 1,031 (10) 958
Exempt from income taxes (183) (84) 7 (260) 305 9 2 316
Trading account assets - - - - (1) (1) 1 (1)
Federal funds sold 152 (4) (14) 134 21 4 18 43
Total interest income
change 2,147 (161) (10) 1,976 1,794 1,960 130 3,884
Increase (decrease) in
interest expense
Interest checking 299 210 102 611 (18) 52 (1) 33
Savings 20 44 - 64 (506) 18 (3) (491)
Other time deposits (482) 186 (15) (311) 964 535 116 1,615
Short-term borrowings 858 (15) (7) 836 597 224 142 963
Total interest expense
change 695 425 80 1,200 1,037 829 254 2,120
Increase (decrease) in
net interst income on a
taxable equivalent basis $1,452 $(586) $(90) $ 776 $ 757 $1,131 $(124) $ 1,764
(Increase) decrease in
taxable equivalent
adjustment 71 (145)
Net interest income change $ 847 $ 1,619
</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
John H. Goodman, II
Realtor, President, Goodman Group, Inc.
Mary L. Holloway Haning
Teacher,
Mount DeChantal Visitation Academy
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 & Associates
Dana J. Lewis
President, Zanco Enterprises, Inc.
James R. Miller
President,
New Philadelphia Fan Company
W. Quay Mull, II
Chairman, Mull Industries, Inc.
Samuel A. Mumley
Executive Secretary,
Ohio Valley Athletic Conference
Tom Olszowy
Independent Insurance Agent,
Tom Olszowy Insurance Agency
Keith A. Sommer
Attorney, Partner,
Sommer, Liberati & Hoffman
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
Gerald J. Elliott
Vice President and Compliance Officer
Larry G. Gibbs
Vice President & Trust Officer
Logan B. Sturgeon
Vice President & Senior Trust Officer
Belmont Financial Network, Inc.
J. Vincent Ciroli, Jr. Jane R. Marsh
Chairman and President Secretary and Treasurer
William Wallace
Vice President
Belmont Investment and Financial Services,Inc.
J. Vincent Ciroli, Jr. William Wallace
President and Chief Executive Officer 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
Elm Grove Office
2066 National Road
Wheeling, WV 26003
(304) 243-6570
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
(330) 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
Corporate Information
Stock Listing Belmont Bancorp.'s common stock is
listed on The Small-Cap Market of
NASDAQ under the symbol BLMT. The
Transfer Agent is Registrar and
Transfer Company, 10 Commerce Drive,
Cranford, New Jersey 07016, telephone
1-800-368-5948.
Annual Shareholders' All shareholders are invited to attend
Meeting Belmont Bancorp.'s annual meeting to be
held at Belmont National Bank, 100 Plaza
Drive, St. Clairsville, Ohio, on Monday,
April 21, 1997, at 11 a.m.
Dividend Payment Subject to approval of the board of
directors, dividends are paid on Belmont
Bancorp.'s common stock on or about the
28th day of March, June, September and December.
Automatic Dividend Through the corporation's Automatic
Reinvestment Plan Dividend Reinvestment Plan, shareholders
may elect to reinvest dividends, and invest
optional cash payments of up to $1,500
per quarter, in additional shares of
Belmont Bancorp.'s common stock at the
market value. To join the plan, please
write to Registrar and Transfer Company,
10 Commerce Drive, Cranford, New Jersey
07016, or call 1-800-368-5948.
Form 10-K Upon written request of any shareholder
on record on December 31, 1996, the
Corporation will provide, without charge,
a copy of its 1996 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.
Inquiries Inquiries, comments and suggestions concerning Belmont
Bancorp. are welcome. Individual shareholders, analysts
and institutional investors should contact Ms. Jane
Marsh, Secretary, at 1-614-695-3323 or 1-800-542-0174.
Equal Employment Belmont Bancorp. is committed to providing equal
employment opportunities to every employee and every
applicant for employment, regardless of, but not
limited to such factors as race, color, religion, sex,
national origin, age, familial or marital status,
ancestry, citizenship, sexual orientation, veteran
status or being a qualified individual with a
disability.
Belmont Bancorp.
325 Main Street
Bridgeport, OH 43912
(614) 695-3323
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
( X ) Definitive Proxy Statement by Rule 14a-6(e)(2))
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
BELMONT BANCORP.
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
( X )$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
( )$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( )Fee computed on table below per Exchange Act Rules14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transactions computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( )Fee paid previously with preliminary materials.
( )Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
BELMONT BANCORP.
April 21, 1997
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, 100 Plaza Drive, St. Clairsville,
Ohio, on Monday, April 21, 1997, at 11:00 a.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 2000.
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, 1997.
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 28, 1997, 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 21, 1997
PROXY STATEMENT
OF
BELMONT BANCORP.
325 Main Street
Bridgeport, Ohio 43912
ANNUAL MEETING OF SHAREHOLDERS
April 21, 1997
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 21, 1997, in the conference
room of Belmont National Bank, 100 Plaza Drive, St.
Clairsville, Ohio, 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 21, 1997.
The Board of Directors has fixed the close of business on
February 28, 1997, 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 the shareholders' shares
of Common Stock multiplied by the number of Directors to be
elected, and the shareholder may cast all of such votes for
a single Director, or such votes may be distributed among
the nominees, as each shareholder 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 20, 1997, 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 2000.
All nominees are currently Directors of the Corporation and
its principal subsidiary, Belmont National Bank. Each of
the nominees to be elected has continuously served in the
principal occupation shown for the past five years.
<TABLE>
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 2000:
<CAPTION>
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
<S> <C> <C> <C> <C>
John A. Belot 54 1979 18,706 (1) * President,
Walden Industries, Inc.
Terrence A. Lee, CPA 47 1987 1,733 (2) *
Chairman, Belmont Bancorp.
and Belmont National Bank;
Partner, Lee & Associates
Dana J. Lewis 53 1994 13,370 *
President, Zanco Enterprises,
Inc., New Philadelphia, Ohio;
Owner/Operator of McDonalds
restaurants
W. Quay Mull, II 54 1984 12,594 (3) *
Chairman of the Board
Mull Industries, Inc.
William Wallace 41 1991 9,867 (4) *
Executive Vice President &
Chief Operating Officer,
Belmont National Bank;
Vice President, Belmont Bancorp.
</TABLE>
Footnotes
1. 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; 3,575
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.
2. 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 21,194 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.
3. 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.
4. This amount includes 2,632 shares held jointly with
Christine Wallace, Mr. Wallace's wife, in which he shares
voting and investment power; 2,061 shares held in the name
of Christine Wallace, IRA, to which Mr. Wallace disclaims
any beneficial interest; 453 shares held in the name of
William Wallace as Custodian for Joseph J. Wallace, UWVTMA;
453 shares held in the name of William Wallace as Custodian
for Lauren C. Wallace, UWVTMA; 421 shares held in the name
of William Wallace as Custodian for Adrienne C. Wallace,
UWVTMA; and 388 shares held in the name of William Wallace
as Custodian for William J. Wallace, UWVTMA; Mr. Wallace's
minor children.
* 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:
<TABLE>
Directors Whose Term of Office Will Expire at the Annual
Shareholders' Meeting in 1998
<CAPTION>
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
<S> <C> <C> <C> <C>
J. Vincent Ciroli, Jr. 51 1984 10,043 *
President & Chief Executive
Officer, Belmont Bancorp.
and Belmont National Bank
John H. Goodman, II 52 1974 44,886 (5) 2.12
Realtor, President
Goodman Group, Inc.
Keith A. Sommer 56 1995 2,734 *
Attorney, Partner, Sommer,
Liberati & Hoffman
James R. Miller 54 1995 400 *
President, New Philadelphia
Fan Company (Jan. 1997 to
Present) Vice President &
General Manager,
Joy Technologies Inc.
(April 1992-Dec. 1996)
</TABLE>
Footnotes
5. This amount includes 2,854 shares held in the name of
Marylouise Goodman IRA, and 133 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 21,194 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 1,612 shares
held by John H. Goodman, II and J. Harvey Goodman, Trustees
under a trust dated February 13, 1995 and 4,283 shares held
by J. Harvey Goodman and John H. Goodman, II, Trustees under
a trust dated April 26, 1995.
<TABLE>
Directors Whose Term of Office Will Expire at the Annual
Shareholders' Meeting in 1999
<CAPTION>
Common Stock
Name And Year First % of
Principal Occupation Age Elected Amount Total
<S> <C> <C> <C> <C>
Mary L. Holloway Haning 41 1993 1,565 (6) *
Teacher, Mount De Chantal
School (Sept. 1996 -
Present) Special Projects
Coordinator, Plastic Surgery,
Inc. (Sept. 1995-Sept. 1996)
Director of Admissions,
Wheeling Country Day School
(1987-1995)
Charles J. Kaiser, Jr. 47 1979 10,548 (7) *
Attorney, Partner, Phillips,
Gardill, Kaiser & Altmeyer
Samuel A. Mumley 65 1996 100 *
Executive Secretary,
Ohio Valley Athletic
Conference
Thomas Olszowy 50 1993 15,066 (8) *
Independent Insurance Agent,
Tom Olszowy Insurance Agency
Charles A. Wilson, Jr. 54 1973 21,816 (9) 1.03 President,
Wilson Funeral & Furniture
Co.
</TABLE>
Footnotes
6. This amount includes 1,024 shares held for the benefit
of Mary L. Holloway Haning in trust in which Wesbanco Bank
Wheeling is trustee.
7. 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.
8. 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.
9. 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.
As of February 28, 1997, the Directors and Officers of the
Corporation as a group beneficially owned 162,428 shares or
7.68 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
1996. From time to time the law firms of Phillips, Gardill,
Kaiser & Altmeyer, of which Charles J. Kaiser, Jr. is a
partner, and Sommer, Liberati & Hoffman, of which Keith A.
Sommer is a partner, have rendered legal services to the
Corporation and the Bank. Messrs. Kaiser and Sommer are
directors of both the Corporation and the Bank. It is
contemplated that these firms 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 six (6)
times during the year 1996. 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 thirteen (13 ) times
during 1996. 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 eight (8) times during 1996.
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 Bank's compliance officer, and
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 four (4) times
during 1996.
The Bank also has a Trust Committee that met three (3)
times in 1996 whose members are Ms. Haning and Messrs.
Belot, Lewis, Mumley, 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 1996, a total
of $81,266.67 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 $2,423.04 and
Mr. Terhune received $5,567.04 during 1996 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 but
with the addition of James R. Miller and Keith A. Sommer
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 equity.
-- Compensation should play a critical role in attracting
and retaining executives whom the Corporation deems most 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, 1996, 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:
<TABLE>
<CAPTION>
Name and All Other
Principal Position Year Salary Bonus Compensation
<S> <C> <C> <C> <C>
J. Vincent Ciroli, Jr. 1996 $152,000.00 $68,400.00 $16,767.99
President & 1995 $145,000.00 $116,000.00 $14,159.04
Chief Executive 1994 $129,900.06 $88,181.00 $9,439.38
Officer
Belmont Bancorp. and
Belmont National Bank
William Wallace 1996 $110,000.17 $49,500.00 $15,722.09
Vice President, 1995 $105,000.00 $84,000.00 $11,162.44
Belmont Bancorp. and 1994 $94,734.91 $64,303.00 $6,685.09
Executive Vice President
& Chief Operating Officer
Belmont National Bank
Jane R. Marsh 1996 $70,000.01 $31,500.00 $9,915.19
Secretary, Belmont 1995 $58,000.02 $46,400.00 $6,097.44
Bancorp. and Senior 1994 $51,877.20 $35,212.00 $3,665.09
Vice President,
Controller, and Cashier,
Belmont National Bank
</TABLE>
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, and comparisons
with other Ohio and regional banking organizations of
similar size. 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 analysis 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 has been 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 has
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. Beginning in 1996, a sliding
cap was placed on the calculation of the bonus pool so that
no bonus would exceed eighty percent (80%) of an executive
officer's base salary. 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 was not 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 was received.
The selected rates of return on beginning shareholders'
equity was thirteen percent (13.00%) for 1994. In part
based upon the delay in obtaining peer numbers and in part
based upon the variance between the Bank's performance and
peer performance, for the year 1996 the selected rate of
return on beginning shareholder's equity was established at
eighteen percent (18%). 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 1996, the Bank paid
$36,166.74 in matching funds and made a voluntary
contribution of $184,462.57, or nine percent (9%) of annual
salary. In 1996, the profit sharing contribution attributed
to Mr. Ciroli was $13,500.00; the matching funds
contribution was $2,583.99. The profit sharing contribution
paid for Mr. Wallace was $13,500.00; the matching funds
contribution was $1,991.09. The profit sharing contribution
paid for Mrs. Marsh was $8,389.08 and the matching funds
contribution was $1,400.11. 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 1996, the
amount of income attributable for a split-dollar insurance
plan was $684.00, $231.00 and $126.00 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 during
1995 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 W. Quay Mull, II
Charles J. Kaiser, Jr. Thomas Olszowy
Terrence A. Lee Keith A. Sommer
James R. Miller 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, 1991 and
assumes reinvestment of dividends.
Belmont Bancorp. Stock Price Performance
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, 1997. 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 1996 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, 1996, 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 20,
1998, 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 21, 1997. At
the time of the submission of the proposal, a proponent may
also submit a statement in support of the proposal. The
proposal and its supporting statement in the aggregate
shall not exceed 500 words. 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 OF DIRECTORS
March 21, 1997 J. VINCENT CIROLI, JR.,
PRESIDENT & CEO
APPENDIX A
PROXY
BELMONT BANCORP., BRIDGEPORT, OHIO
ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1997
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, 100
Plaza Drive, St. Clairsville, Ohio, on April 21, 1997, at 11:00 A.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
2000:
John A. Belot W. Quay Mull, II
Terrence A. Lee William Wallace
Dana J. Lewis
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, 1997.
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.
