BELMONT BANCORP.
Supplement dated February 23, 2000 to
Prospectus dated February 4, 2000
Revised Estimate of Results for the Fourth Quarter of 1999
We disclosed in the prospectus that we expected to incur a loss of $2.4
million to $2.6 million for the fourth quarter of 1999, or $0.45 to $0.50 per
share. We attributed the estimated loss to three factors, including our plan to
record a loan loss provision of approximately $850,000 for the fourth quarter
for reserves and credit downgrades on a variety of loans. On February 22, 2000,
the Office of the Comptroller of the Currency, following completion of its
review of our loan portfolio, advised that it would require us to increase this
loan loss provision to $2.5 million. As a result, we now estimate that we will
incur a loss for the fourth quarter of 1999 of from $3.5 million to $3.7
million, or $0.66 to $0.71 per share. We have also revised our previous estimate
of book value of between $2.02 and $2.07 per share at December 31, 1999 to
between $1.80 and $1.85 per share.
As disclosed in the prospectus, we have undertaken a thorough assessment of
all of our operations, personnel, policies and procedures, with particular
emphasis on the loan portfolio. We originated the loans that required additional
reserves well before we implemented these new policies. None of these loans
involved the Schwartz Home matters. Neither the Comptroller of the Currency nor
our outside accountants have identified any other loans which they believe
require additional loan loss reserves at this time.
Revised Estimate of Capital Requirements
The Comptroller of the Currency has also required the Bank to limit the
amount of deferred tax assets that the Bank includes in Tier 1 capital. As a
result of this limitation and the loss we expect to incur for the fourth quarter
of 1999, we now estimate our Tier 1 capital at December 31, 1999 to be $9.1
million and our Tier 1 leverage ratio to be 2.8%. At this level of
capitalization, the Bank is currently regarded as "significantly
undercapitalized" under regulatory Prompt Corrective Action requirements.
As disclosed in the prospectus, the Bank entered into a consent order with
the Comptroller of the Currency which requires, among other things, that the
Bank achieve by March 31, 2000, and thereafter maintain, Tier 1 capital at least
equal to 6% of adjusted total assets, which is referred to as a 6% Tier 1
leverage ratio. The Bank would not be treated as "well capitalized" even if it
achieved and maintained a Tier 1 leverage ratio of 6% unless and until the
consent order is terminated or modified to eliminate this capital requirement.
Tier 1 capital consists principally of shareholders' equity less goodwill and a
portion of deferred tax assets. We now expect to need $9.2 million in offering
proceeds, in addition to the $1.65 million recently invested in Belmont by our
directors, in order to achieve a Tier 1 leverage ratio of 6% by March 31, 2000.
As a result of these revised estimates, the shares offered in the offering
are being offered at a price more than our estimated book value. Assuming that
our estimated book value at December 31, 1999 is in fact $1.80 per share, a
purchaser of shares in the offering will pay a premium of $0.20 per share or 11%
over book value.
Withdrawal of Subscriptions
The subscription funds received in the offering will be held in an escrow
account with Firstar Trust Company until both the rights offering and the
ancillary offering are completed, which will be March 28, 2000, unless either
offering is extended. We will not decide whether or not to accept subscriptions
until that date. At any time during the offering and until we accept your
subscription, you may withdraw your subscription to purchase our common stock by
notifying either Shareholder Relations, Belmont Bancorp., 980 National Road,
Wheeling, West Virginia 26003, fax number 304-233-8947, or Firstar Trust
Company, escrow agent, 425 Walnut Street, ML CN-WN-06CT, Cincinnati, Ohio 45202,
Attention: Brian George. Upon receipt of your request, we will promptly return
your subscription funds.
