U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
For the Quarter Ended March 31, 1998
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ___________________ to
__________________
Commission file number 0-12724
Belmont Bancorp.
An Ohio Corporation
IRS Employer ID number - 34-1376776
325 Main Street
Bridgeport, Ohio 43912
Telephone (614) 695-3323
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
The number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common Stock, $0.50 par value,
2,630,998 shares outstanding
as of April 24, 1998
<PAGE>
FORM 10-Q
BELMONT BANCORP.
Quarter Ending March 31, 1998
INDEX
Part I. Financial information
Financial highlights
Management's report on financial statements
Consolidated Statements of Condition - March 31, 1998,
December 31, 1997, and March 31, 1997
Consolidated Statements of Income-Three Months
Ended March 31, 1998 and March 31, 1997
Consolidated Statements of Cash Flows-Three Months
Ended March 31, 1998 and March 31, 1997
Consolidated Statements of Changes in Shareholders' Equity
Three Months Ended March 31, 1998 and March 31, 1997
Notes to the Consolidated Financial Statements
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II - Other Information
Legal Proceedings
Changes in Securities
Defaults upon Senior Securities
Submission of Matters to a Vote of Security Holders
Other Information
Signature page
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
BELMONT BANCORP. AND SUBSIDIARIES
Financial Highlights
March 31 1998 1997 % Change
Earnings and dividends
($000's)
Net income $ 1,578 $ 1,421 11.0
Operating earnings (1) 1,849 1,832 0.9
Cash dividends declared on
common stock 447 361 23.8
Per common share (2):
Net income $ 0.60 $ 0.54 11.9
Cash dividends declared 0.170 0.136 25.0
Book value 12.33 10.47 17.7
Market price :
High 52.00 22.40 132.1
Low 40.00 20.00 100.0
At quarter-end ($000's)
Assets $ 393,846 $ 371,963 5.9
Loans and leases 224,130 199,085 12.6
Deposits 283,546 266,310 6.5
Stockholders' equity 32,434 27,673 17.2
Key Ratios
Return on average assets 1.60% 1.68%
Return on average common
shareholders' equity 18.97% 20.42%
Net interest margin (TE) 4.28% 4.65%
Number of shares 2,630,998 2,643,123 (0.5)
Number of full time equivalent
employees 146.0 128.0 14.1
Total assets per FTE employee $ 2,698 $ 2,906 (7.2)
(1) Operating earnings are defined as earnings before income taxes
minus securities gains or plus securities losses.
(2) Per share data has been restated to reflect payment of
a 25% common stock dividend on July 1, 1997.
MANAGEMENT'S REPORT ON FINANCIAL STATEMENTS
The following consolidated financial statements and
related notes of Belmont Bancorp. and subsidiaries were
prepared by management which has the primary responsibility
for the integrity of the financial information. The
statements are prepared in conformity with generally accepted
accounting principles appropriate in the circumstances, and
include amounts that are based on management's best estimates
and judgments. Financial information elsewhere in the
quarterly report is prepared on a basis consistent with that
in the financial statements.
In meeting its responsibility for the accuracy of the
financial statements, management relies on the Corporation's
comprehensive system of internal accounting controls. This
system provides reasonable assurance that assets are
safeguarded and transactions are recorded to permit the
preparation of appropriate financial information. The system
of internal controls is characterized by an effective control
oriented environment within the Corporation which is
augmented by written policies and procedures, internal audits
and the careful selection and training of qualified
personnel.
The functioning of the accounting system and related
internal accounting controls is under the general oversight
of the Audit Committee of the Board of Directors which is
comprised of five outside directors. The accounting system
and related controls are reviewed by a program of internal
audits and by the Corporations' independent accountants. The
Audit Committee meets regularly with the contract internal
auditor and the independent public accountants to review the
work of each and ensure that each group is properly
discharging its responsibilities. In addition, the Committee
reviews and approves the scope and timing of the internal and
external audits and any findings with respect to the system
of internal controls. Reports of examinations conducted by
federal regulatory agencies are also reviewed by the
Committee.
The annual consolidated financial statements of Belmont
Bancorp. and subsidiaries will be examined by S.R. Snodgrass
A.C., the Corporation's independent certified public
accountants. Their examination will be conducted in
accordance with generally accepted auditing standards and
will include a review of internal controls and a test of
transactions in sufficient detail to allow them to report on
the fair presentation of the consolidated operating results
and financial condition of Belmont Bancorp. and subsidiaries.
BASIS OF PRESENTATION
The consolidated financial statements include the
accounts of Belmont Bancorp. and its subsidiaries, Belmont
National Bank and Belmont Financial Network.
Consolidated Condensed Balance Sheet
Belmont Bancorp. and Subsidiaries
(Unaudited) ($000s except per share amounts)
March 31, December 31, March 31,
1998 1997 1997
ASSETS
Cash and due from banks $ 11,223 $ 10,265 $ 12,917
Federal funds sold - - -
Loans held for sale 1,713 884 -
Securities available for sale at
market value 126,758 121,156 123,755
Securities held to maturity (1) 15,237 15,955 18,207
Loans 222,417 224,016 199,085
Less allowance for possible loan
losses (4,186) (4,134) (3,263)
Net loans 218,231 219,882 195,822
Premises and equipment, net 7,481 7,401 7,191
Other real estate owned - 20 -
Accrued income receivable 3,013 2,586 2,957
Other assets 10,190 10,564 11,114
Total Assets $393,846 $388,713 $371,963
LIABILITIES
Non-interest bearing deposits
Demand $ 29,380 $ 29,987 $ 30,329
Interest-bearing deposits:
Demand 46,732 33,463 43,653
Savings 81,168 79,829 79,471
Time 126,266 120,629 112,857
Total deposits 283,546 263,908 266,310
Securities sold under
repurchase agreements 7,801 5,256 8,815
Federal funds purchased and
other short-term borrowings 5,525 14,635 47,609
Long term debt 59,410 69,635 19,514
Accrued interest on deposits
and other borrowings 814 731 736
Other liabilities 4,316 2,649 1,306
Total liabilities $361,412 $356,814 $344,290
SHAREHOLDERS' EQUITY
Preferred stock - authorized
90,000 shares with
no par value; issued and
outstanding, none - - -
Common stock - $0.50 par
value, 8,900,000 shares
authorized; 2,644,163 issued
in 1998 and 1997 $ 1,321 $ 1,321 $ 1,057
Surplus 7,854 7,781 7,781
Treasury stock (13,165 shares
at 3/31/98; 6,665 shares at
12/31/97; 1,040 shares at
3/31/97) (501) (131) (8)
Retained earnings:
Unappropriated 23,010 21,879 18,880
Appropriated for
contingencies 850 850 850
Accumulated other comprehensive income (100) 199 (887)
Total shareholders' equity $ 32,434 $ 31,899 $ 27,673
Total liabilities and
shareholders' equity $393,846 $388,713 $371,963
(1) Market value at March 31, 1998, $15,441; December 31, 1997, $16,181;
March 31, 1997, $18,061.
Consolidated Condensed Statement of Income
(Unaudited) ($000s except per share amounts)
For the Three Months Ended March 31,
1998 1997
INTEREST INCOME
Loans and lease financing
Taxable $ 5,215 $ 4,354
Tax-exempt 66 89
Investment securities:
Taxable 1,828 1,703
Tax-exempt 291 276
Dividends 81 54
Interest on trading securities 1 -
Interest on fed funds sold 39 52
Total interest income 7,521 6,528
INTEREST EXPENSE
Deposits 2,660 2,444
Borrowings 1,160 607
Total interest expense 3,820 3,051
Net interest income 3,701 3,477
Provision for possible loan losses 150 105
Net interest income after
provision for possible loan losses 3,551 3,372
NON-INTEREST INCOME
Trust fees 109 78
Service charges on deposits 171 171
Other operating income 230 197
Investment securities gains (losses) - (1)
Trading profits (losses) 14 -
Gains (losses) on securities
available for sale 320 156
Total non-interest income 844 601
NON-INTEREST EXPENSE
Salary and employee benefits 1,066 835
Net occupancy expense of premises 199 190
Equipment expenses 221 229
Other operating expenses 740 732
Total non-interest expense 2,226 1,986
Income before income taxes 2,169 1,987
INCOME TAXES 591 566
Net income $ 1,578 $ 1,421
PER COMMON SHARE DATA
Net income per share $ 0.60 $ 0.54
Cash dividend per share $ 0.170 $ 0.136
Book value per share $ 12.33 $ 10.47
Weighted average shares
outstanding 2,631,804 2,641,998
Belmont Bancorp.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31, 1998
(Unaudited)
1998 1997
Operating Activities
Net income $1,578 $ 1,421
Adjustments to reconcile net income to net
cash flows provided by operating activities:
Provision for possible loan losses 150 105
Depreciation and amortization expense 201 199
Amortization of investment security premiums 368 255
Accretion of investment security discounts
and interest recorded on zero-coupon securities (69) (51)
Investment securities (gains) losses - 1
(Gains) losses on securities available for sale (320) (156)
(Gains) losses on sale of trading assets (14)
Proceeds from sale of trading assets 483 -
Gain on sale of loans (41) (6)
(Increase) decrease in interest receivable (427) (1,036)
Increase (decrease) in interest payable 83 72
Others, net 2,195 (10,247)
Net cash provided (used) by operating activities 4,187 (9,443)
Investing Activities
Net (increase) decrease in federal funds sold - 24,450
Proceeds on sale of securities available for
sale 17,940 13,397
Proceeds from maturities and calls of
investment securities 3,107 172
Purchase of securities available for sale (32,970) (61,922)
Principal collected on mortgage-backed
securities 6,139 3,279
Net (increase) decrease in loans and
leases, net of charge offs (9,940) (13,583)
Proceeds on sale of loans 10,641 3,277
Recoveries on loans previously charged off 11 14
Purchases of premises and equipment (281) (130)
Proceeds on sale of other real estate owned 20 66
Net cash provided (used) by investing
activities (5,333) (30,980)
Financing Activities
Net increase (decrease) in deposits 19,638 4,771
Net increase (decrease) in repurchase
agreements 2,545 535
Net increase (decrease) in short-term
borrowings (9,110) 37,609
Payments on long-term debt (10,225) (162)
Purchase of treasury stock (409) -
Proceeds on issuance of treasury stock 112 -
Dividends paid on common and preferred stock (447) (361)
Net cash provided (used) by financing
activities 2,104 42,392
Increase (Decrease) in Cash and Cash
Equivalents 958 1,969
Cash and Equivalents at Beginning of Year 10,265 10,948
Cash and Equivalents at March 31 $11,223 $ 12,917
<TABLE>
Belmont Bancorp.
Statement of Changes in Shareholders' Equity
For the Three Months Ended March 31, 1998 and 1997
<CAPTION>
Accumulated
Compre- Other Compre- Retained Earnings
hensive hensive Common Unappro- Appro- Treasury
Total Income Income Stock Surplus priated priated Stock
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996 $27,332 ($168) $1,057 $7,781 $17,820 $850 ($8)
1997 Year-to-date net
income 1,421 1,421 1,421
Change in
unrealized loss-
securities
available-for-sale (719) (719) (719)
Comprehensive income $ 702
Cash dividends
declared:
Common stock
($.136 per share) (361) (361)
Balance, March 31,
1997 $27,673 ($887) $1,057 $7,781 $18,880 $850 ($8)
Balance, December 31,
1997 $31,899 $ 199 $1,321 $7,781 $21,879 $850 ($131)
1998 Year-to-date net
income 1,578 1,578 1,578
Change in
unrealized loss-
securities available-
for-sale, net of
reclassification
adjustment (1) (299) (299) (299)
Comprehensive income $1,279
Purchase of treasury
stock (409) (409)
Issuance of treasury
stock 112 73 39
Cash dividends
declared:
Common stock
($.17 per share) (447) (447)
Balance, March 31,
1998 $32,434 ($100) $1,321 $7,854 $23,010 $850 ($501)
(1) Disclosure of reclassification
adjustment:
Unrealized holding losses
arising during period (88)
Less: reclassification
adjustment for gains included
in net income, net of tax 211
Net unrealized losses on
securities (299)
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The foregoing financial statements are unaudited,
however, in the opinion of Management, all adjustments
necessary for a fair presentation of the financial statements
have been included. A summary of the Corporation's
significant accounting policies is set forth in Note 1 to the
Consolidated Financial Statements in the Corporation's Annual
Report on Form 10-K for 1997.
Related party transactions - The Corporation's and it
Subsidiaries' directors and officers and their associates
were customers of, and had other transactions with, the
subsidiary bank in the ordinary course of business during
1998. All loans and commitments included in such
transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing
at the time for comparable transactions with other persons
and did not involve more than the normal risk of
collectibility.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SUMMARY
The net income of Belmont Bancorp. for the three months
ended March 31, 1998 increased 11.0% to $1,578,000, compared
to $1,421,000 for the first three months of 1997. Earnings
per common share were $0.60 for the first three months of
1998, compared to $0.54 for the corresponding period last
year, an increase of 11.1%. Operating earnings increased to
$1,849,000 for the three months of 1998, up 0.9% from
$1,832,000 for the same period last year.
The following table presents the return on average
shareholders' equity and the return on average assets for
comparative periods of 1998 and 1997.
Quarter ended
March 31,
($000s) 1998 1997
Return on average assets 1.60% 1.68%
Return on average common equity 18.97% 20.42%
Average assets $393,756 $339,316
Average shareholders' equity $ 33,279 $ 27,831
Average assets increased $54.4 million from $339.3
million to $393.8 million from March 31, 1997 to March 31,
1998. Average shareholders' equity increased $5.4 million
primarily through the retention of earnings.
NET INTEREST INCOME
A major share of the Corporation's income results from
the spread between income on earning assets and interest
expense on the liabilities used to fund those assets. Net
interest income is affected by changes in interest rates and
the amounts and distributions of interest earning assets and
interest bearing liabilities outstanding. Net interest
margin is net interest income divided by the average earning
assets outstanding. A third frequently used measure is net
interest rate spread which is the difference between the
average rate earned on assets and the average rate paid on
liabilities without regard to the amounts outstanding in
either category.
Table 1, Consolidated Average Balance Sheets and
Analysis of Net Interest Income, compares interest revenue
and interest earning assets outstanding with interest cost
and liabilities outstanding for the three months ended March 31,
1998, 1997 and 1996. The table contains net interest
income, net interest margin and net interest rate spread for
each period. All three of these measures are reported on a
taxable equivalent basis.
The taxable equivalent yield on interest earning assets
decreased from 8.54% during the first quarter of 1997 to
8.50% in 1998, a decrease of 4 basis points. (A basis point
(bp) is equivalent to .01%.) The cost of interest bearing
liabilities rose 28 basis points from 4.41% during the first
quarter of 1997 to 4.69% in 1998. The net interest margin
decreased from 4.65% to 4.28% during the comparative
quarters. The net interest margin for the first quarter of
1996 was 4.66%.
Table 2, Analysis of Net Interest Income Changes,
separates the dollar change in the Corporation's net interest
income into three components: changes caused by (1) an
increase or decrease in the average asset and liability
balances outstanding (volume); (2) the changes in average
yields on interest earning assets and average rates for
interest bearing liabilities (yield/rate); and (3) combined
volume and yield/rate effects (mix).
TABLE 1. - CONSOLIDATED AVERAGE BALANCE SHEETS AND ANALYSIS OF NET
INTEREST INCOME (Fully Taxable Equivalent Basis) ($000's)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997 1996
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 $225,239 $5,313 9.57% $193,184 $4,484 9.41% $161,434 $3,783 9.50%
Securities
Taxable 116,728 1,908 6.63% 99,570 1,757 7.16% 117,365 2,074 7.17%
Exempt from
income tax 21,619 424 7.95% 21,211 400 7.65% 23,867 467 7.94%
Trading
account assets 76 1 5.34% 0 0 0.00% 0 0 0.00%
Federal funds
sold 2,915 39 5.43% 4,001 52 5.27% 469 6 5.19%
Total interest
earning assets 366,577 7,685 8.50% 317,966 6,693 8.54% 303,135 6,330 8.47%
Cash and due
from banks 10,839 10,024 8,664
Other assets 20,270 15,095 13,311
Valuation
allowance-
available for
sale securities 217 (577) 627
Allowance for
possible loan
loss (4,147) (3,192) (2,740)
Total assets 393,756 339,316 322,997
Liabilities
Interest
bearing
liabilities
Interest
checking 44,210 373 3.42% 46,197 392 3.44% 33,229 242 2.95%
Savings 81,638 658 3.27% 79,435 597 3.05% 78,320 588 3.04%
Other time
deposits 121,811 1,629 5.42% 111,871 1,455 5.27% 114,449 1,452 5.15%
Other
Borrowings 82,315 1,160 5.72% 43,310 607 5.68% 43,244 567 5.32%
Total interest
bearing
liabilities 329,974 3,820 4.69% 280,813 3,051 4.41% 269,242 2,849 4.29%
Demand deposits 29,239 28,540 25,820
Other
liabilities 1,264 2,132 2,077
Total
liabilities 360,477 311,485 297,139
Shareholders'
equity 33,279 27,831 25,858
Liabilities
& shareholders'
equity 393,756 339,316 322,997
Net interest
income
Margin on a
taxable
equivalent
basis 3,865 4.28% 3,642 4.65% 3,481 4.66%
Net interest
rate spread 3.81% 4.13% 4.18%
Interest
bearing
liabilities
to interest
earning assets 90.01% 88.32% 88.82%
</TABLE>
TABLE 2. - ANALYSIS OF NET INTEREST INCOME CHANGES
(Taxable Equivalent Basis) ($000's)
Three Months Ended March 31,
1998 Compared to 1997 1997 Compared to 1996
Volume Yield Mix Total Volume Yield Mix Total
Increase (Decrease)
in Interest Income
Loans and Leases $744 $73 $12 $829 $744 ($36) ($7) $701
Securities
Taxable 303 (129) (23) 151 (314) (3) 0 (317)
Exempt from
Income Taxes 8 16 0 24 (52) (17) 2 (67)
Trading Account
Assets 0 0 1 1 0 0 0 0
Federal Funds Sold (14) 2 (1) (13) 45 0 1 46
Total Interest
Income Change 1,041 (38) (11) 992 423 (56) (4) 363
Increase (Decrease)
in Interest Expense
Interest Checking (17) (2) 0 (19) 94 40 16 150
Savings 17 43 1 61 8 1 0 9
Other Time
Deposits 129 41 4 174 (33) 37 (1) 3
Short Term
Borrowings 547 3 3 553 1 39 0 40
Total Interest
Expense Change 676 85 8 769 70 117 15 202
Increase (Decrease)
in Net Interest
Income on a Taxable
Equivalent Basis $ 365 ($123) ($19) $223 $353 ($173) ($19) $ 161
(Increase) Decrease
in Taxable
Equivalent
Adjustment 1 15
Net Interest Income
Change $224 $176
OTHER OPERATING INCOME
Other operating income, excluding securities gains and
losses, increased 17.5%, or $78,000, and totaled $524,000 for
the first three months of 1998, compared to $446,000 for the
respective period last year. Changes in various categories
of other income are depicted in the table below.
Three months ended March 31,
($000s) 1998 1997 % Change
Trust fees $109 $ 78 39.7%
Service charges on deposits 171 171 0.0%
Gain on sale of loans 41 6 583.3%
Trading gains (losses) 14 0 na
Other income 189 191 -1.0%
Subtotal 524 446 17.5%
Security gains (losses) 0 (1) 100.0%
Gains (losses)
securities available
for sale 320 156 105.1%
Total $844 $601 40.4%
INVESTMENT SECURITIES
The amortized cost and estimated market values of
securities held to maturity at March 31, 1998 are as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
U.S. Treasury securities and
obligations of
U.S. Government
corporations and agencies $ 2,259 $ 0 $41 $ 2,218
Obligations of states and
political subdivisions 4,448 191 10 4,629
Mortgage-backed securities 8,530 107 43 8,594
Total $15,237 $298 $94 $15,441
Obligations of U.S. Government corporations and agencies
consist of one floating rate structured note.
The amortized cost and estimated market values of
securities available for sale at March 31, 1998 are as
follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
($000s) Cost Gains Losses Value
U.S. Treasury securities
and obligations of
U.S. Government
corporations and agencies $ 4,546 $ 1 $ 0 $ 4,547
Obligations of states and
political subdivisions 22,207 210 144 22,273
Mortgage-backed securities 66,399 345 282 66,462
Mortgage derivatives 25,553 9 280 25,282
Corporate trust preferred
securities 3,501 6 16 3,491
Marketable equity
securities 4,703 0 0 4,703
Total $126,909 $571 $722 $126,758
The mortgage derivatives are comprised solely of
collateralized mortgage obligations (CMOs) including one
principal only CMO issued by FNMA with a book value of
$105,000 and an estimated market value of $92,000. Privately
issued CMOs included in the table above have a book value of
$2,360,000 and an estimated market value of $2,315,000.
Credit risk on privately issued CMOs is evaluated based upon
independent rating agencies and on the underlying collateral
of the obligation.
Corporate trust preferred securities consist of four
separate issues, none with a par value in excess of $1
million.
No single privately issued bond exceeded 10% of
shareholders equity at March 31, 1998.
Market factors and prepayment speeds can have an impact
on the yield and average lives of mortgage-backed securities
including mortgage derivatives.
OPERATING EXPENSES
Successful expense control is an essential element in
maintaining the Corporation's profitability. Historically,
when comparing the Corporation to various peer groups, the
overhead costs of the Corporation have been significantly
lower than peer. The following table shows the dollar
amounts and growth in various components of operating
expenses.
Three months ended March 31,
($000s) 1998 1997 % Change
Salaries and wages $ 774 $ 625 23.8%
Employee benefits 292 210 39.0%
Net occupancy expense 199 190 4.7%
Equipment expense 221 229 -3.5%
Other operating expenses 740 732 1.1%
Total $2,226 $1,986 12.1%
Personnel costs increased due to the expansion of the
branch network and the Bank's credit administration and asset
management staffs.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Corporation provides as an expense an amount which
reflects expected loan losses. This provision is based on
the growth of the loan and lease portfolio and on historical
loss experience. The expense is called the provision for
possible loan losses in the Consolidated Statement of Income.
Actual losses on loans and leases are charged against the
allowance built up on the Consolidated Balance Sheet through
the allowance for possible loan losses. The amount of loans
and leases actually removed as assets from the Consolidated
Balance Sheets is referred to as charge-offs and, after
netting out recoveries previously charged-off assets, becomes
net charge-offs.
For the first three months of 1998, $150,000 was added
to the allowance and charged to expense compared to $105,000
in 1997. At March 31, 1998, the allowance for possible loan
losses to total loans and leases was 1.87% compared to 1.64%
last year. The ratio of the Allowance for Possible Loan
Losses to underperforming assets was 495.4% at March 31, 1998
compared to 1169.5% last year. The following table details
the Allowance for Possible Loan Losses and also includes
various loan charge off statistics for 1998 and 1997.
Allowance for Possible Loan Losses
Three months ended March 31,
($000s) 1998 1997
Balance, beginning of period $4,134 $ 3,153
Provision for possible loan losses 150 105
Loans charged-off 109 9
Recoveries on loans
previously charged-off 11 14
Net charge offs 98 (5)
Balance, end of period $4,186 $ 3,263
Loans and leases outstanding
at period $224,130 $199,085
Average loans and leases $225,239 $193,184
Annualized net charge offs
as a percent of:
Average loans and leases 0.17% -0.01%
Total loans at end of period 0.17% -0.01%
Reserve for possible loan losses 9.36% -0.61%
Reserve for possible loan
losses to:
Average loans and leases 1.86% 1.69%
Total loans at end of period 1.87% 1.64%
Under-performing assets 495.38% 1169.53%
UNDER-PERFORMING ASSETS
Under-performing assets consist of (1) non-accrual
loans, leases and debt securities on which the ultimate
collectibility of the full amount of interest is uncertain,
(2) loans and leases past due ninety days or more as to
principal or interest and (3) other real estate owned. A
summary of under-performing assets at March 31 follows:
Under-performing assets March 31,
($000s) 1998 1997
Non-accrual loans and leases $837 $252
Ninety days past due loans
and leases still accruing interest 8 27
Other real estate owned 0 0
Total $845 $279
Loans restructured and in compliance with modified terms
are not included in total nonperforming assets. Total under-
performing assets were $845,000 or 0.21% of total assets at
March 31, 1998 compared to $279,000 or 0.08% of total assets
at March 31, 1997.
LONG TERM DEBT
Long term debt consists of advances from the Federal
Home Loan Bank as follows:
Amount Current
Type ($000s) Rate Maturity
Fixed rate, non-amortizing advance $ 5,000 6.10% 9/17/99
Fixed rate, non-amortizing advance 5,000 6.20% 9/15/00
Fixed rate, non-amortizing advance 2,000 5.90% 6/2/98
Fixed rate, non-amortizing advance 10,000 6.56% 10/1/07
Fixed rate, non-amortizing advance 30,000 5.09% 12/10/07
Fixed rate, amortizing advance 88 5.55% 12/22/98
Fixed rate, amortizing advance 1,866 6.05% 11/18/01
Fixed rate, amortizing advance 122 5.80% 12/1/05
Fixed rate, amortizing advance 1,259 6.85% 6/6/11
Fixed rate, amortizing advance 111 6.75% 6/6/11
Fixed rate, amortizing advance 821 6.85% 6/12/11
Fixed rate, amortizing advance 252 6.95% 8/31/15
Fixed rate, amortizing advance 2,247 6.70% 8/1/12
Fixed rate, amortizing advance 644 6.25% 11/1/17
$59,410
CAPITAL RESOURCES
The Corporation maintains a relatively high level of
capital as a margin of safety for its depositors and
shareholders. At March 31, 1998, shareholders' equity was
$32,434,000 compared to $31,899,000 at December 31, 1997 and
$27,673,000 at March 31, 1997. The following table presents
various capital ratios as of March 31:
March 31, 1998 1997
Average shareholder's
equity to :
Average assets 8.5% 8.2%
Average deposits 12.0% 10.5%
Average loans and leases 14.8% 14.4%
Primary capital 9.3% 8.3%
Risk-based capital ratio:
Tier 1 11.8% 11.8%
Total 13.1% 13.1%
Leverage ratio 8.1% 7.4%
The Federal Reserve Board has adopted risk-based capital
guidelines that assign risk weightings to assets and off-
balance sheet items. The guidelines also define and set
minimum capital requirements (risk-based capital ratios).
Banks are required to have core capital (Tier 1) of at least
4.0% or risk-weighted assets and total capital of 8.0% or
risk-weighted assets. Tier 1 capital consists principally
of shareholders' equity less goodwill, while total capital
consists of core capital, certain debt instruments and a
portion of the reserve for possible loan losses. At March
31, 1998, the Corporation had a Tier 1 capital ratio of 11.8%
and a total capital ratio of 13.1%, well above regulatory
minimum requirements.
National banks are required to maintain Tier 1 capital
in an amount equal to at least 3.0% of adjusted total assets,
referred to as a total assets leverage ratio. At March 31,
1998, the Corporation's leverage ratio was 8.1%.
STOCK REPURCHASE
In accordance with a plan approved by the Board of
Directors and previously announced in March 1996, the Company
repurchased 9,000 shares of its common stock during the first
quarter of 1998. The cost of the purchases was $409,375.
The plan approved by the Board of Directors permits the
Company to repurchase up to $1,000,000 of Belmont Bancorp.
common stock on the open market or in separately negotiated
transactions. Through March 31, 1998, the Corporation has
purchased a total of $532,875 of its common stock.
NEW ACCOUNTING STANDARD
The Financial Accounting Standards Board (FASB) has
issued Statement of Financial Accounting Standards No. 130
(SFAS 130), "Reporting Comprehensive Income," which is
effective for fiscal years beginning after December 15, 1997.
SFAS establishes standards for reporting and presentation of
comprehensive income and its components within the
Corporation's consolidated financial statements. Generally,
comprehensive income includes net income along with other
transactions not typically recorded as a component of net
income, including changes in unrealized gains and losses on
securities available for sale. SFAS 130 requires the
disclosure of an amount that represents total comprehensive
income and the components of comprehensive income in a
consolidated financial statement. The Corporation has
disclosed the requirements of SFAS 130 within the Statement
of Changes in Shareholders' Equity.
PART II - OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Changes in securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of matters to a vote of security
shareholders
The annual meeting of Belmont Bancorp. was held April
20, 1998. The following items were submitted to a vote of
the shareholders:
Proposal Number 1: Election of Directors
The following individuals were elected to serve on the Board
of Directors Election of Directors for a three-year term
expiring at the annual shareholders' meeting in 2001:
J. Vincent Ciroli, Jr., President and CEO, Belmont Bancorp.
and Belmont National Bank
For: 2,149,406
Against: 0
John H. Goodman, II, Realtor, President Goodman Group, Inc.
For: 2,149,420
Against: 0
Keith A. Sommer, Attorney, Partner, Sommer, Liberati &
Hoffman
For: 2,149,420
Against: 0
James R. Miller, President, New Philadelphia Fan Company
For: 2,147,076
Against: 0
Other members of the Board of Directors are listed in the
Corporation's proxy statement dated March 20, 1998 and which
is hereby incorporated by reference.
Proposal Number 2; To ratify the proposed Amendment the
Articles of Incorporation to allow for a two-for-one split of
the common stock.
For 2,105,546
Against 32,223
Abstain 11,732
Proposal Number 3: To ratify the appointment of S. R.
Snodgrass A.C. as independent auditors for the year ending
December 31, 1998.
This proposal was approved as follows:
For 2,116,019
Against 25,994
Abstain 7,488
Proposal Number 3: To transact other such business as may
come before the meeting.
This proposal was approved as follows:
For 2,077,195
Against 61,900
Abstain 10,406
Item 5. Other information
None
Item 6. Exhibits
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
Belmont Bancorp.
(Registrant)
May 8, 1998 s/J. Vincent Ciroli, Jr.
J. Vincent Ciroli, Jr.
President & CEO
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