<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K
Annual Report Persuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the calendar year ended December 31, 1996 Commission File No.2-95114
-----------------------
LOGAN COUNTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
West Virginia 55-0660015
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 597 Logan, WV 25601
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (304) 752-2080
Securities Registered Pursuant To Section 12(b) of The Act:
NONE
Name of each exchange
Title of Each Class on which registered
Securities Registered Pursuant to Section 12(g) of The Act:
NONE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. (X)Yes ( )No.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date:
Class Outstanding at March 23, 1996
Common Stock ($2.50 Par Value) 467,612 Shares
State the aggregate market value of the voting stock held by non-affiliates
of the registrant.
AGGREGATE MARKET VALUE OF VOTING STOCK BASED ON LAST TRADE PRICE
$11,222,688 $24.00
DOCUMENTS INCORPORATED BY REFERENCE
(NONE)
1
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LOGAN COUNTY BANCSHARES, INC.
FORM 10--K
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ITEM 1 -- Business 3--5
ITEM 2 -- Properties 6
ITEM 3 -- Legal Proceedings 6
ITEM 4 -- Submission of Matters to a Vote of Security
Holders Holders 6
ITEM 5 -- Market for the Registrant's common Stock
Registrant's Common Stock and Related Security
Holder Matters 7
ITEM 6 -- Selected Financial Data 8
ITEM 7 -- Management's Discussion and Analysis 9--27
ITEM 8 -- Financial Statements and Supplemental Data 28--51
ITEM 9 -- Disagreements on Accounting and Financial
Disclosures 52
ITEM 10 -- Directors and Executive Officers of the
Registrant 52
ITEM 11 -- Executive Compensation 53
ITEM 12 -- Security Ownership of Certain Beneficial Owners
and Management 53
ITEM 13 -- Certain Relationships and Related Transactions 53
ITEM 14 -- Exhibits, Financial Statement Schedules and
Reports on Form 8K 53
PROXY MATERIALS 54--60
SIGNATURES 61
</TABLE>
2
<PAGE>
ITEM 1--BUSINESS
LOGAN COUNTY BANCSHARES, INC.
Logan County BancShares, Inc. is a bank holding company which was organized
under the laws of the State of West Virginia in 1985. On May 17, 1985, the
Corporation acquired all the outstanding capital stock of Logan Bank & Trust
Company (LB&T) and also all of the outstanding stock of Bank of Chapmanville
(BC). Both of these subsidiaries are banking corporations organized under the
laws of the State of West Virginia. On May 28, 1996, the subsidiary banks; Logan
Bank & Trust Company and Bank of Chapmanville entered into a merger agreement
whereby they would be merged into Logan Bank & Trust Company. The merger was
completed after proper regulatory approval and was accounted for under the
pooling of interest method of accounting.
Logan Bank & Trust Company was organized in 1963, and still operates at its
original location at the corner of Washington and Main Streets in Logan, West
Virginia. The Company also has a separate drive-up facility and mini-bank also
located on Washington Street in Logan, and in early February 1996 opened a new
full-service branch in the Man area. In November 1996, the bank acquired a
branch facility from another financial institution located at Harts, West
Virginia. The facility at Route 10 North, Harts, is operated as a full service
branch of the bank. Logan Bank & Trust Company is a member of the Federal
Reserve System and deposits are insured persuant to the Federal Deposit
Insurance Act.
Logan Bank & Trust Company provides a complete range of retail banking
services to individuals and small and medium size businesses. Their services
include checking, savings, NOW, Super NOW, and money market deposit accounts,
business loans, individual loans, mortgage loans, home equity loans, loans for
education, health and similar situations, other consumer-oriented financial
services including safety deposit box accounts, IRA accounts and night
depository. The Company also operates several automatic teller machines at two
strategic locations in Logan County which provide 24-hour working services to
customers of Logan Bank & Trust Company. The Company is a member of the Cirrus
ATM network which has over 100 locations in West Virginia and more than 10,000
locations in 47 states.
Logan Bank & Trust Company provides depository lending and related
financial services to commercial, retail, industrial, financial and
governmental customers. The lending function includes short and medium term
loans of revolving credit arrangements, letters of credit, inventory and
accounts receivable financing and real estate construction lending. The
Company also offers a discount investment brokerage service through a
sub-contract arrangement with a larger financial institution.
The Chapmanville Bank of LB&T bank has one location situated on Railroad
Avenue in Chapmanville, West Virginia.
This facility also provides a complete range of retail banking services to
individuals and small and medium sized businesses. These services include
checking, savings, NOW, Super NOW, and Money Market Account deposits. Business
loans, individual loans, mortgage loans, home equity loans, loans for education,
health and similar situations are provided as well. In addition, the Bank offers
consumer oriented financial services such as IRA accounts, night depository,
safety deposit boxes and other banking related services.
3
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LOGAN BANK & TRUST COMPANY, CONTINUED...
The branch also provides depository, lending and related financial services
to commercial, retail, industrial, financial and governmental customers. The
lending function includes short and medium-term loans, revolving credit
arrangements, letters of credit, inventory and accounts receivable financing,
and real estate construction lending as do all the branches of Logan Bank &
Trust Company.
COMPETITION
Vigorous competition exists in the market area of Logan County
BancShares, Inc. In addition to the three other banks located within the
market area, the location is in a relatively close proximity to two
population centers of the State. There is also competition for deposits and
related financial services from non-bank institutions such as savings and
loans, insurance companies and brokerage firms, all of which are active in
the area. Loans are provided by those instutitions as well in addition to the
finance companies. Since the Bank Holding company Act, passed by the West
Virginia Legislature in 1982, local banks have been joining bank holding
companies around the State. Of the five banks located in Logan County, only
one is a unit bank. The other four are members of various multi-bank holding
companies. Logan County BancShares, Inc. has been able to compete effectively
within the county by having one institution located in the county seat (Logan
Bank & Trust Company), and the other institution is located in the
high-growth area of the county (Bank of Chapmanville). Also, to stimulate
growth, Logan County BancShares, Inc. is the only bank holding company owned
and controlled from within the county.
SUPERVISION AND REGULATION
The Corporation is a bank holding company within the meaning of the Bank
Holding Company Act of 1956 (the Act) and is registered as such with the Board
of Governors of the Federal Reserve System (the Reserve Board). As a bank
holding company, the Corporation is required to file with the Federal Reserve
Board an annual report and such other information as may be required. The
Federal Reserve Board may also make examinations of the corporation. In
addition, the Federal Reserve Board has the authority (which it has not
exercised) to regulate provisions of certain bank holding company debt.
The Act requires every bank holding company to obtain the prior approval of
the Federal Reserve Board before acquiring substantially all the assets of or
direct or indirect ownership or control of more than 5% of the voting shares of
any bank which is not already majority-owned. The Act also prohibits a bank
holding company, with certain exceptions, from itself engaging in or acquiring
direct or indirect control of more than 5% of the voting shares of any company
engaged in non-banking activities. One of the principal exceptions to these
prohibitions is for engaging or acquiring shares of a company engaged in
activities found by the Federal Reserve Board by order or regulation to be so
closely related to banking or managing banks as to be a proper incident thereto.
The Act prohibits the acquisition by a bank holding company of more than 5% of
the outstanding voting shares of a bank located outside the State in which the
operations of its banking subsidiaries are principally conducted, unless such an
acquisition is specifically authorized by statute of the State in which the bank
acquired is located. The Act and regulations of the Federal Reserve Board also
4
<PAGE>
prohibit a bank holding company and its subsidiaries from engaging in certain
tie-in arrangements in connection with any extension of credit or provision of
any property or services.
Logan Bank & Trust Company and Bank of Chapmanville are insured banks
organized under the Banking Law of the State of West Virginia and are members of
the Federal Reserve System. Accordingly, their operations are subject to Federal
and State laws applicable to commercial banks with trust powers and to
regulation by the Commissioner of Banking and the West Virginia State Banking
Commissioner, the Federal Reserve Board and the Federal Deposit Insurance
Corporation. Among other restrictions, the West Virginia Banking laws state that
banks organized thereunder may pay dividends only out of undivided profits.
Under the Federal Reserve Act, the approval of the Federal Reserve Board is
required for dividends declared by a state member bank which in any year exceeds
the net profits of such bank for that year, as defined, combined with retained
net profits for the two preceeding years.
GOVERNMENT MONETARY POLICIES AND ECONOMIC CONTROLS
The earnings and growth of the banking industry and of Logan Bank & Trust
company and Bank of Chapmanville are affected by the credit policies of
monetary authorities including the Federal Reserve System. An important
function of the Federal Reserve System is to regulate the national supply of
bank credit in order to control recessionary and inflationary pressures.
Among the instruments of monetary policy used by the Federal Reserve to
implement these objectives are open market operations in the U. S. Government
securities, changes in the discount rate on member bank borrowings, and
changes in reserve requirements against member bank deposits. These means are
used in varying combinations to influence overall growth of bank loans,
investments and deposits and may also affect interest rates charged on loans
or paid for deposits. The monetary policies of the Federal Reserve
authorities have had a significant effect on the operating results of
commercial banks in the past and are expected to continue to have such an
effect in the future.
In view of changing conditions in the national economy and in the money
markets, as well as the effect of actions by monetary and fiscal authorities,
including the Federal Reserve system, no prediction can be made as to
possible future changes in interest rates, deposit levels, loan demand or
their effect on the business and earnings of the Corporation, Logan Bank &
Trust Company and the Bank of Chapmanville.
FOREIGN OPERATIONS
The corporation and subsidiaries have no foreign operations.
EXECUTIVE OFFICERS
For information concerning the Executive Officers of the Corpora-tion,
please see Item 10.
5
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ITEM 2--PROPERTIES
The principal offices of the corporation are shared with those of Logan Bank
& Trust Company and are situated in Logan, West Virginia. This building, a
two-story bank and office building, is owned by Logan Bank & Trust company, as
is a mini-bank and drive-up facility which is located near-by. In addition, a
one-story office and bank building is located on Railroad Avenue in
Chapmanville, West Virginia. During 1996 the Bank opened two other branch
facilities in West Virginia. Both are one-story office and bank buildings
located at Rt. 10, South Man, West Virginia and Rt.10 North at Harts, West
Virginia.
ITEM 3--LEGAL PROCEEDINGS
There are no legal actions or proceedings pending to which the Corporation,
or its subsidiaries, are a party
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
6
<PAGE>
ITEM 5 -- MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
The shares of Logan County BancShares, Inc. are infrequently traded in the
over-the-counter and are not listed on the National Association of Security
Dealers Automated Quotation System (NASDAQ) or on any exchange. Management is
not aware of any security dealer which makes a market in the stock; therefore,
no active trading market should be deemed to exist.
The sales price for Logan County BancShares, Inc. stock are determined by
negotiations between individual buyers and sellers. Although Logan keeps no
records of sales prices paid for Logan stock and has no direct knowledge of such
prices, for purposes of presentation, Corporation's management estimates the
approximate market value ranges for 1996 and 1995 to be as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
SALES PRICE: QUARTER QUARTER QUARTER QUARTER
- ------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1996 Common Stock $ 24-$25 $ 24-$25 $ 25-$30 $ 25-$30
1995 Common Stock $ 24-$25 $ 24-$25 $ 24-$25 $ 24-$25
PER SHARE DIVIDENDS DECLARED:
- -----------------------------
1996 Common Stock $0.00 $0.45 $0.00 $0.70
1995 Common Stock $0.00 $0.40 $0.00 $0.55
</TABLE>
7
<PAGE>
ITEM 6--SELECTED FINANCIAL DATA
LOGAN COUNTY BANCSHARES, INC.
(In Thousands of Dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31: 1996 1995 1994 1993 1992
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total Interest Revenue..................................... $ 7,359 $ 6,664 $ 6,040 $ 5,639 $ 6,194
Total Interest Expense..................................... 2,988 2,687 2,243 2,225 2,729
--------- --------- --------- --------- ---------
Net Interest Revenue....................................... 4,371 3,977 3,797 3,414 3,465
Provision for Possible Loan Losses......................... 40 59 271 383 292
--------- --------- --------- --------- ---------
Net Interest Revenue After Provision for Possible Loan
Losses................................................... 4,331 3,918 3,526 3,031 3,173
Other Operating Revenue.................................... 1,000 731 529 969 451
Other Operating Expense.................................... (3,026) (2,794) (2,690) (2,724) (2,726)
--------- --------- --------- --------- ---------
Income Before Income Taxes................................. 2,305 1,855 1,365 1,276 898
Income Taxes............................................... 767 643 300 462 (288)
--------- --------- --------- --------- ---------
Net Income................................................. $ 1,538 $ 1,212 $ 1,065 $ 814 $ 610
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Per Common Share:
Net Income................................................. $ 3.29 $ 2.59 $ 2.28 $ 1.74 $ 1.30
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Cash Dividends Declared.................................... $ 1.15 $ 0.95 $ 0.70 $ 0.655 $ 0.60
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
At December 31:
Total Loans................................................ $ 70,872 $ 63,685 $ 59,437 $ 52,485 $ 48,519
Total Assets............................................... 107,380 94,719 89,872 82,052 81,345
Total Deposits............................................. 95,233 83,717 79,709 77,388 72,173
Long-Term Debt............................................. 0 0 0 0 100
Total Shareholders' Equity................................. 11,415 10,391 9,555 8,986 8,478
Selected Ratios:
Rate of Return on on Average:
Total Assets............................................... 1.52% 1.32% 1.20% 0.98% 0.75%
Shareholders' Equity....................................... 14.00% 11.98% 11.38% 9.20% 7.34%
Tier 1 Capital to Total Assets at Year End................. 10.89% 10.90% 11.47% 11.58% 10.95%
Average Total Share-holders' Equity to Average total
Assets................................................... 10.88% 10.99% 10.58% 10.69% 10.26%
Common Dividend Payout Ratio............................... 34.95% 36.66% 30.76% 36.68% 46.15%
Nonaccrual and Re-structured business Loans as a Percentage
of Total Loans........................................... 0.96% 2.64% 2.70% 4.34% 2.18%
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Logan County BancShares, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Management's Discussion and Analysis reviews and discusses the financial
condition of Logan County BancShares, Inc. and Subsidiaries. Included are (a)
the results of operations for 1996 and (b) discussion of liquidity including an
asset and liability sensitivity analysis, and (c) an analysis of earnings,
dividends, and capital. The discussion and analysis discloses any material
changes and any infrequent events and known trends as they relate to liquidity,
capital resources and results of operations. The information presented reflects
the activities of the holding company and the subsidiary bank, Logan Bank &
Trust Company.
To assist in understanding and evaluating major changes in Logan County
BancShares, Inc.'s financial position and results of operations, this discussion
emphasizes a comparison of the years 1996 to 1995, 1995 to 1994, and 1994 to
1993, and also presents five year information in instances where appropriate.
This discussion should be read concurrently with the audited financial
statements including notes to those statements.
The following definitions apply to terms used in this report:
AVERAGE BALANCES: All balances have been computed on the basis of monthly
averages.
NET INTEREST INCOME: Interest and related fee income on earning assets,
reduced by total interest paid on interest bearing deposits and borrowed funds.
This net amount, when divided by average earning asset balances becomes net
interest margin.
NET NON-INTEREST EXPENSE: Non-interest expenses reduced by the amount of
non-interest income.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is provided through short-term investments, payments on
outstanding loans, and the ability to attract new deposits or borrow funds. At
December 31, 1996, and 1995, the funds available within one year from
investments and loans were $29,962,000. and $20,776,000.
Logan County BancShares, Inc.'s deposit mix has increased by $11,515,000. in
1996, and $4,008,000. in 1995 and by $7,390,000. in 1994. The increase in 1996
was across the deposit mix which points to a slight upturn in the overall
economy in the area. Time deposits represented the major growth in the deposit
mix. They increased by $8,619,000., $7,911,000. and $3,120,000. respectively in
1996, 1995 and 1994. The shift in 1996 and 1995 was from Savings accounts into
Time deposits due to the Banks' promotional activities; offering competitive
interest rates for short-term and long-term CD's. Demand deposits contributed to
the growth in the deposit mix by increasing $785,000. in 1996, $1,111,000. in
1995 and $4,317,000. in 1994. Savings increased $2,111,000. in 1996 after
decreasing $5,014,000. in 1995 and $45,000. in 1994. These changes are
predominantly due to the fluctuating interest rates by the Federal Reserve and
movement of savings to time deposits by the consumer in order to obtain a better
interest rate. At December 31, 1996 and 1995, 29.43% and 32.54% of the total
deposits were in demand deposits, while 32.03% and 33.98% were in savings and
38.48% and 25.23% were in time deposits, respectively. The stable growth in
deposits gives the Bank a firm deposit base to meet the lending demand and
market fluctuations.
9
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
During 1996, 1995 and 1994, banks have been faced with a highly competitive
atmosphere in the sense of maintaining a continuity of growth. Logan County
BancShares, Inc. has performed reasonably well considering the economic outlook
of the market area. The merger of Bank of Chapmanville into Logan Bank & Trust
Company enabled the Company to capture a sizeable portion of the market for
deposits in the fastest growing area of Logan County, West Virginia. Also, with
the addition of the Man Branch of Logan Bank & Trust and Harts Bank of Logan
Bank & Trust in 1996, the company has expanded its current market. See Table I.
for a five-year summary of financial data.
Capital planning is essentially the management process that allocates
capital resources in a manner that generates the highest income, while
maintaining sufficient liquidity, at the lowest degree of risk attainable.
Moreover, it is the philosophy of Logan County BancShares, Inc. to nurture that
growth by planning for steady, long-range profits rather than the high-risk,
high-exposure techniques. As noted in Table I. the ratio of net income to
average assets was 1.52%, 1.32%, and 1.20%, for the years ended December 31,
1996, 1995 and 1994, respectively. Through the periods presented, management has
allocated new funds into the higher-yielding loans and holding the investment
securities nearly constant. Although the improvement in the local economy had
been at a slow pace through 1994 in 1995 and 1996 overall loan demand and
deposit growth show a marked increase.
Table I. represents a summary of financial data for the previous five years.
10
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Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
TABLE I.--SUMMARY OF FINANCIAL DATA FOR FIVE YEARS
(In thousands of dollars)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Year End Balances:
Total Assets............................................ $ 107,380 $ 94,719 $ 89,871 $ 82,052 $ 81,345
Total Earning Assets.................................... 99,542 91,968 84,025 77,388 74,717
Total Deposits.......................................... 95,233 83,717 79,709 72,319 72,174
Stockholders' Equity.................................... 11,415 10,391 9,555 8,986 8,478
Income for the Year:
Total Interest Income................................... 7,359 6,664 6,040 5,639 6,194
Total Interest Expense.................................. 2,988 2,686 2,243 2,225 2,729
Net Interest Income..................................... 4,371 3,978 3,797 3,414 3,465
Provision for Loan Losses............................... 40 59 271 383 292
Non-Interest Income..................................... 1,000 731 529 969 451
Non-interest expense.................................... 3,793 3,438 2,990 3,186 3,014
Net Income.............................................. 1,538 1,212 1,065 814 610
Per Share Data Net Income................................. 3.29 2.59 2.28 1.74 1.30
Stockholders' Equity.................................... 24.41 22.22 20.43 19.22 18.13
Cash Dividends.......................................... 1.15 0.950 0.700 0.655 0.600
Key Ratios
Net Income To:
Average Assets.......................................... 1.52% 1.32% 1.20% 0.98% 0.75%
Average Stockholders' Equity............................ 14.00% 11.98% 11.38% 9.20% 7.34%
Average Stockholders' Equity to Average
Assets.................................................. 10.88% 10.99% 10.58% 10.69% 10.26%
</TABLE>
11
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
TABLE II.-- RATE ANALYSIS OF INTEREST EARNING ASSETS AND INTEREST BEARING
LIABILITIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1996 1995
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE INCOME AVERAGE AVERAGE INCOME AVERAGE
BALANCE (EXPENSE) YIELD BALANCE (EXPENSE) YIELD
----------- ----------- ----------- ----------- ----------- -----------
EARNING ASSETS:
Loans
(Net of Reserves &
Discounts):
Commercial....... $ 28,476 $ 2,493 8.75% $ 25,389 $ 2,182 8.59%
Real Estate...... 31,897 2,681 8.41% 30,108 2,466 8.19%
Consumer......... 5,521 525 9.51% 5,650 517 9.15%
----------- ----------- ----- ----------- ----------- -----
Total Net
Loans........ 65,894 5,699 8.65% 61,147 5,165 8.45%
----------- ----------- ----- ----------- ----------- -----
Investment
Securities:
Taxable.......... 8,337 567 6.80% 12,244 667 5.45%
Non-Taxable...... 95 12 12.63% 175 20 11.43%
Available for
Sale........... 10,206 559 5.48% 6,360 430 6.76%
----------- ----------- ----- ----------- ----------- -----
Total
Investment
Securities... 18,638 1,138 6.11% 18,779 1,117 5.95%
----------- ----------- ----- ----------- ----------- -----
Federal Funds Sold
& Securities
Securities
Purchased Under
Option to
Resell........... 9,827 525 5.34% 6,693 389 5.81%
----------- ----------- ----- ----------- ----------- -----
Total Earning
Assets....... $ 94,359 $ 7,362 7.80% $ 86,619 $ 6,671 7.70%
----------- ----------- ----- ----------- ----------- -----
----------- ----------- ----- ----------- ----------- -----
Interest Bearing
Liabilities
Savings &
Interest
Bearing
Demand......... $ 46,952 $ 1,286 2.74% $ 46,936 $ 1,366 2.91%
Time Deposits.... 31,006 1,694 5.46% 25,352 1,320 5.21%
----------- ----------- ----- ----------- ----------- -----
Total Interest
Bearing
Liabilities... $ 77,958 $ 2,980 3.82% $ 72,288 $ 2,686 3.72%
----------- ----------- ----- ----------- ----------- -----
----------- ----------- ----- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------
<S> <C> <C> <C>
AVERAGE INCOME AVERAGE
BALANCE (EXPENSE) YIELD
----------- ----------- ---------
EARNING ASSETS:
Loans
(Net of Reserves &
Discounts): $ 24,275 $ 1,909 7.86%
Commercial....... 27,351 2,236 8.18%
Real Estate...... 5,579 510 9.14%
Consumer......... ----------- ----------- -----
Total Net 57,205 4,655 8.14%
Loans........ ----------- ----------- -----
Investment
Securities:
Taxable.......... 14,658 847 5.78%
Non-Taxable...... 180 13 7.22%
Available for
Sale........... 5,011 271 5.41%
----------- ----------- -----
Total
Investment
Securities... 19,849 1,131 5.70%
----------- ----------- -----
Federal Funds Sold
& Securities
Securities
Purchased Under
Option to
Resell........... 5,942 253 4.26%
----------- ----------- -----
Total Earning
Assets....... $ 82,996 $ 6,039 7.28%
----------- ----------- ----
----------- ----------- ----
Interest Bearing
Liabilities
Savings &
Interest
Bearing
Demand......... 50,987 1,546 3.03%
Time Deposits.... 17,556 697 3.97%
----------- ----------- -----
Total Interest
Bearing
Liabilities... $ 68,543 $ 2,243 3.27%
----------- ----------- -----
----------- ----------- -----
</TABLE>
12
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
TABLE III.-- VOLUME ANALYSIS OF CHANGE IN INTEREST INCOME AND INTEREST EXPENSE
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1996 VS. 1995
---------------------------------
INTEREST INCOME EXPENSE INCREASE (DECREASE) DUE TO
CHANGE IN
------------------------------- ---------------------------------
1996 1995 1994 VOLUME RATE TOTAL
--------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON
EARNING ASSETS:
LOANS:
Commercial....................................... $ 2,493 $ 2,182 $ 1,909 $ 265 $ 46 $ 311
Real Estate...................................... 2,681 2,466 2,236 145 70 215
Consumer......................................... 525 517 510 (12) 20 8
--------- --------- --------- ----- --------- ---------
Total Loans.................................... 5,699 5,165 4,655 398 136 534
--------- --------- --------- ----- --------- ---------
SECURITIES:
Taxable.......................................... 567 667 847 (213) 113 (100)
Tax Exempt....................................... 9 13 13 (4) 0 (4)
Available for Sale............................... 559 430 271 259 (130) 129
--------- --------- --------- ----- --------- ---------
Total Securities............................... 1,135 1,110 1,131 42 (17) 25
--------- --------- --------- ----- --------- ---------
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED:
Under Agreement to Resell........................ 525 388 253 183 (46) 137
--------- --------- --------- ----- --------- ---------
TOTAL INTEREST INCOME ON EARNING ASSETS.............. 7,359 6,663 6,039 623 73 696
--------- --------- --------- ----- --------- ---------
INTEREST EXPENSE ON INTEREST BEARING LIABILITIES:
Savings and Interest Bearing Demand Deposits..... 1,286 1,366 1,546 0 (80) (80)
Time Deposits.................................... 1,694 1,320 697 296 78 374
--------- --------- --------- ----- --------- ---------
TOTAL INTEREST EXPENSE INTEREST BEARING
LIABILITIES.................................. 2,980 2,686 2,243 296 (2) 294
--------- --------- --------- ----- --------- ---------
NET INTEREST INCOME.............................. $ 4,379 $ 3,977 $ 3,796 $ 327 $ 75 $ 402
--------- --------- --------- ----- --------- ---------
--------- --------- --------- ----- --------- ---------
<CAPTION>
1995 VS. 1994
---------------------------------
INCREASE (DECREASE) DUE TO
CHANGE IN
---------------------------------
VOLUME RATE TOTAL
----------- --------- ---------
<S> <C> <C> <C>
INTEREST INCOME ON
EARNING ASSETS:
LOANS:
Commercial....................................... $ 88 $ 185 $ 273
Real Estate...................................... 226 4 230
Consumer......................................... 6 1 7
--- --------- ---------
Total Loans.................................... 320 190 510
--- --------- ---------
SECURITIES:
Taxable.......................................... (140) (40) (180)
Tax Exempt....................................... 0 0 0
Available for Sale............................... 73 86 159
--- --------- ---------
Total Securities............................... (67) 46 (21)
--- --------- ---------
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED:
Under Agreement to Resell........................ 104 31 135
--- --------- ---------
TOTAL INTEREST INCOME ON EARNING ASSETS.............. 357 267 624
--- --------- ---------
INTEREST EXPENSE ON INTEREST BEARING LIABILITIES:
Savings and Interest Bearing Demand Deposits..... (123) (57) (180)
Time Deposits.................................... 310 313 623
--- --------- ---------
TOTAL INTEREST EXPENSE INTEREST BEARING
LIABILITIES.................................. 187 256 443
--- --------- ---------
NET INTEREST INCOME.............................. $ 170 $ 11 $ 181
--- --------- ---------
--- --------- ---------
</TABLE>
13
<PAGE>
LOGAN COUNTY BANCSHARS, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
LOAN PORTFOLIO
The loan portfolio of Logan County BancShares, Inc. continues to represent
the largest component of earning assets. Loan activity has continued to increase
due to the Bank's emphasis on lending; as shown on Table IV, the Bank has
contributed substantially to liquidity by structuring the loan portfolio in such
a manner as to have approximately 27.34% of the total loans due within one year.
Further, the company has 15.18% of the loan portfolio in floating rates loans.
TABLE IV--REMAINING MATURITIES OF LOANS AT DECEMBER 31, 199]6
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COMMERCIAL,
FINANCIAL AND REAL ESTATE
AGRICULTURAL MORTGAGES INSTALLMENTS TOTAL
---------------- -------------- ----------------- ---------
<S> <C> <C> <C> <C>
MATURITIES
Due Within One Year.............................. $ 13,445 $ 4,658 $ 1,510 19,613
Due One to Five Years............................ 10,663 11,611 3,111 25,385
Due After Five Years............................. 6,866 17,831 2,028 26,725
------- ------- ------ ---------
Total Loans.................................. $ 30,974 $ 34,100 $ 6,649 $ 71,723
------- ------- ------ ---------
------- ------- ------ ---------
Due After One Year at Fixed Rate................. $ 14,900 $ 25,026 $ 4,368 $ 44,294
Due After One Year at Floating Rate.............. 8,376 1,002 0 9,378
------- ------- ------ ---------
Total Loans Due After One Year............... $ 23,276 $ 26,028 $ 4,368 $ 53,672
------- ------- ------ ---------
------- ------- ------ ---------
</TABLE>
14
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LOAN LOSSES AND CREDIT RISKS
The allowance for loan losses is established by charging expenses at an
amount which will maintain the allowance for loan losses at a level sufficient
to provide for potential loan losses. Loan losses are charged directly to the
allowance when they occur and recoveries are credited to the allowance. The
amount of the provision is based on past loan loss experience, management's
evaluation of the loan portfolio under current economic conditions, and such
other factors as in management's best judgement deserve current recognition in
estimating loan losses. Tables V. and VI. represent a summary of loan loss
experience for the years 1996, 1995, 1994, 1993 and 1992.
TABLE V.--ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
--------- --------- --------- --------- ----------
Amount of Loans Outstanding at End of Period..................... $ 70,872 $ 63,685 $ 59,437 $ 52,485 $ 48,519
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Monthly Average Amount of Loans.................................. $ 65,894 $ 61,147 $ 57,205 $ 48,541 $ 47,522
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Balance of Allowance for Possible Loan Losses at Beginning of
Period......................................................... $ 662 $ 606 $ 516 $ 430 $ 430
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Loans Charged Off:
Commercial..................................................... $ 3 $ 0 $ 72 $ 293 $ 173
Real Estate.................................................... 17 0 0 24 115
Consumer....................................................... 5 8 111 24 13
--------- --------- --------- --------- ----------
Total Loans Charged Off.......................................... 25 8 183 341 301
--------- --------- --------- --------- ----------
Recoveries of Loans Previously Charged Off:
Commercial..................................................... 0 0 0 43 7
Real Estate.................................................... 1 0 0 0 0
Consumer....................................................... 3 5 2 2 2
--------- --------- --------- --------- ----------
Total Recoveries................................................. 4 5 2 45 9
--------- --------- --------- --------- ----------
Net Loans Charged Off:........................................... 21 3 181 296 292
--------- --------- --------- --------- ----------
Additions to Allowance:
Charged to Expense............................................. 40 59 271 382 292
--------- --------- --------- --------- ----------
Balance at End of Period{ul $ 681 $ 662 $ 606 $ 516 $ 430
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Ratio of Net Charge-Offs During Period to Average Loans.......... 0.003% 0.005% 0.316% 0.610% 0.614%
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
15
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
TABLE VI.--ALLOCATION OF ALLOWANCE FOR LOAN TABLE VI.--
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
---------------------------- ---------------------------- ---------------------------- ----------------------------
% OF % OF % OF % OF
OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
LOAN LOAN LOAN LOAN
ALLOWANCE BALANCE ALLOWANCE BALANCE ALLOWANCE BALANCE ALLOWANCE BALANCE
----------- --------------- ----------- --------------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial.. $ 435 1.41% $ 423 1.51% $ 358 1.47% $ 324 1.33%
Real
Estate.. 141 0.41% 137 0.44% 140 0.46% 140 0.60%
Consumer.. 105 1.58% 102 1.85% 108 1.93% 52 0.97%
----- --- ----- --- ----- --- ----- ---
Total.... $ 681 0.95% $ 662 1.03% $ 606 1.01% $ 516 0.97%
----- --- ----- --- ----- --- ----- ---
----- --- ----- --- ----- --- ----- ---
<CAPTION>
DECEMBER 31, 1992
----------------------------
% OF
OUTSTANDING
LOAN
ALLOWANCE BALANCE
----------- ---------------
<S> <C> <C>
Commercial $ 246 1.05%
Real
Estate.. 137 0.70%
Consumer. 47 0.83%
----- ---
Total.... $ 430 0.88%
----- ---
----- ---
</TABLE>
16
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
CONSOLIDATED SUMMARY OF LOANS AND NON-PERFORMING ASSETS
Non-performing assets consist of (a) loans not accruing interest any
longer due to doubts about future collectability, (b) loans more than ninety
days past due for the last principal or interest payment, and (c) other real
estate owned by the Bank taken originally as loan collateral. Table VII.
provides a five-year summary of the components involved in non-performing
assets as of year end.
Loans are determined to be nonaccruing when it has been determined that
the ability of the Bank to collect the unpaid balance of such loans is highly
unlikely due to the financial position of the borrower and general economic
conditions. The determination of such classification is made by bank
management on a case-by-case basis for problem loans. Generally, a review of
each loan ninety days or more past due is made monthly and such loans deemed
uncollectable become classified as nonaccrual.
Loans are determined to be ninety days delinquent when such a period of
time has elapsed since the last payment of principal or interest was made. At
such a time, consideration as to whether to classify the loan as nonaccruing
is made. However, until such classification is made, interest will continue
to be accrued.
Other real estate consists of real property that the Bank originally took
as collateral for loans but has since acquired title to when the borrowers
defaulted and the Bank bid on the property in question at public auction.
TABLE VII.--CONSOLIDATED SUMMARY OF LOANS AND NON-PERFORMING ASSETS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Commercial Loans........................................... $ 30,974 $ 27,977 $ 24,312 $ 24,288 $ 23,742
Real Estate Loans.......................................... 34,100 30,848 30,122 23,343 19,561
Consumer Loans............................................. 6,649 5,522 5,609 5,369 5,646
--------- --------- --------- --------- ---------
Subtotal................................................... 71,723 64,347 60,043 53,000 48,949
Less: Unearned Income...................................... 170 0 0 0 0
--------- --------- --------- --------- ---------
Subtotal................................................... 71,553 64,347 60,043 53,000 48,949
Less: Reserve for Loan Losses.............................. Loan
Losses..................................................... 681 662 606 516 430
--------- --------- --------- --------- ---------
Net Loans.................................................. $ 70,872 $ 63,685 $ 59,437 $ 52,484 $ 48,519
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Non-Performing Assets
Non-Accruing Loans........................................ $ 687 $ 1,700 $ 1,620 $ 2,279 $ 1,057
Loans Past Due 90 Days.................................... 739 1,614 491 331 715
Other Real Estate Owned................................... 260 181 186 227 280
--------- --------- --------- --------- ---------
Total Non-Performing Assets................................ $ 1,686 $ 3,495 $ 2,297 $ 2,837 $ 2,052
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
17
<PAGE>
Logan County BancShares, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
SECURITIES
The securities portfolio of Logan County BancShares, Inc. is the second
largest area of resource allocation. Investments provide liquidity and serve
as a hedge offsetting the increased sensitivity of deposits caused by
deregulation. Until 1981, the Bank had been developing a large portfolio of
tax-exempt securities with extended maturities. This portfolio was used to
offset the tax effects of a large spread between asset yield and funds cost.
However, due to the combined effects of inflation, deregulation, and the
rising costs of funds, that portfolio is no longer necessary. Since 1982,
Logan County BancShares, Inc. has been shifting the concentration of the
portfolio from tax exempt securities into more profitable, higher-yielding
assets
Securities include those classified as held to maturity and available for
sale. Tax exempt investments decreased by $65,000. in 1996, $55,000. in 1995
and $81,000. in 1993. As noted above the decreases were primarily due to
maturities in these types of securities. In 1996, all categories of
investment securities increased by $4,943,000. representing a 30.04% increase
from 1995. The components of this increase were U.S. agencies increasing by
$7,189,000. and U.S. governments decreasing by $2,431,000. During 1995,
investment securities decreased by $4,210,000. or 20.38%, consisting of
decreases of U.S. Government Securities at $2,529,000., U.S. Agencies at
$1,626,000. and State and Municipal of $55,000. During 1994, investment
securities decreased by $570,000. or 2.69%, consisting of a decrease of
$5,042,000. in U.S. Government and an increase of $4,472,000. in U.S.
Agencies.
Logan County BancShares, Inc. adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" on January 1, 1994. Accordingly, all debt securities, that Logan
County BancShares does not have the ability or management does not have the
positive intent to hold to maturity, are classified as "securities available
for sale" and are carried at market value.
TABLE VIII.--MATURITY DISTRIBUTION OF SECURITIES AT DECEMBER 31, 1996
(In Thousands of Dollars)
<TABLE>
<CAPTION>
OVER
OVER FIVE
ONE ONE YEAR YEARS
YEA THROUGH THROUGH OVER
DECEMBER 31, 1996 OR FIVE TEN TEN MARKET
DOLLARS IN THOUSANDS LESS YEARS YEARS YEARS TOTAL VALUE
--------- ----------- ----------- ----- --------- -------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government:
Available for sale............................................... 0 0 0 0 0 0
Held for maturity................................................ 2,509 1,502 0 0 4,011 3,988
U.S. Federal Agency Security
Available for sale............................................... 500 13,674 250 0 14,424 14,076
Held to maturity................................................. 0 2,993 0 0 2,993 3,024
State and municipal obligations:
Available for sale............................................... 0 0 0 0 0 0
Held to maturity................................................. 65 0 0 0 65 66
Total securities:
Available for sale............................................... 500 13,674 250 0 14,424 14,076
Held to maturity................................................. 2,574 4,495 0 0 7,069 6,078
--------- ----------- --- --- --------- ------
Total............................................................. 3,074 18,169 250 0 21,493 20,154
Percent of total.................................................. 14.30% 84.53% 1.16% 0.00% 100.00% 93.77%
Weighted average yield**.......................................... 4.78% 6.15% 6.00% 0.00% 5.98% 5.93%
</TABLE>
** The weighted average yields are based on carrying value and effective
yields are weighted for the scheduled maturity of each security.
18
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
OTHER INCOME
Service fee income increased in 1996 to $948,000., up by $250,000. over
1995 and up $212,000. in 1994 to $698,000., this growth was 38.82% and 43.62%
respectively. This growth reflects the market change in deposit accounts from
non-transactional accounts to transactional types and an increased emphasis
by the bank on fee income. The other fees increased by $20,000. and decreased
by $7,000. due to restricting of other services provided to the Bank's
customers. The above changes are primarily due to overall increase activity
in the banks deposit and lending activity. Securities gains are directly
related to the volume of security sales.
TABLE IX--OTHER INCOME
(In Thousands of Dollars)
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-------------------------------------
1996 OVER 1995 1995 OVER 1994
-------------------- ---------------
1996 1995 1994 AMOUNT PERCENT AMOUNT PERCENT
--------- --------- --------- --------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Service Fee................................................ $ 948 $ 698 $ 486 $ 250 38.82% $ 212 43.62%
Other Fees................................................. 52 32 43 20 62.50% (11) -25.58%
Securities:
Gain (Loss)................................................ 0 1 0 (1) -100.00% 1 100.00%
--------- --------- --------- --------- --------- ----- ------
Total Other Income......................................... $ 1,000 $ 731 $ 529 $ 269 36.80% $ 202 38.19%
--------- --------- --------- --------- --------- ----- ------
--------- --------- --------- --------- --------- ----- ------
</TABLE>
19
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
TABLE X. - OTHER EXPENSES
(In Thousands of Dollars)
<TABLE>
<CAPTION>
----------------------------------
1996 Over 1995 1995 Over 1994
----------------------------------
1996 1995 1994 AMOUNT PERCENT AMOUNT PERCENT
---- ---- ---- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries and
Benefits $1,549 $1,381 $1,274 $168 12.16% $107 8.40%
Taxes 132 123 101 9 7.32% 22 21.78%
Depreciation 144 117 121 27 23.08% (4) -3.31%
Repairs and
Maintenance 121 98 97 23 23.47% 1 1.03%
Fees Paid to
Directors 98 102 99 (4) -3.92% 3 3.03%
Equipment Rental 26 22 21 4 18.18% 1 4.76%
FDIC & Fidelity
Insurance 72 158 227 (86) 54.43% (69) -30.40%
Data Processing 266 241 232 25 10.37% 9 3.88%
Bank Stationary 110 81 67 29 35.80% 14 20.90%
Bank Operating
Expenses 509 471 451 38 8.07% 20 4.43%
------ ------ ------ ------ ------- ----- -------
Total $3,027 $2,794 $2,690 $233 8.34% $104 3.87%
------ ------ ------ ------ ------ ----- -------
------ ------ ------ ------ ------ ----- -------
</TABLE>
20
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
OTHER EXPENSES
Other expenses increased by $233,000. to $3,027,000. in 1996. This
increase was generally due to activity in all areas of the subsidiary bank.
Salaries and benefits increased $168,000. or 12.17% due to normal salary
adjustments while other operating expenses increased slightly by $19,386. or
4.29% due to overall efforts to control operating costs.
In 1996 and 1995 taxes remained stable showing small changes of $9,000.
in 1996 and $22,000. in 1995. Depreciation expense increased from 1995 to
1994. This increase is attributable to the opening of two branch facilities
at Man and Harts, West Virginia.
Repairs and maintenance, directors' fees, equipment rental, data
processing and Bank stationery expenses vary from year to year based on the
Company's demand. These types of expenses are not directly related to the
income function and, therefore, increase or decrease sporadically.
FDIC and Fidelity insurance decreased $86,000. in 1996 and $68,564. in
1995 due to reevaluation of liability by the FDIC and lower rates
attributable to such reevaluation.
21
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
EARNINGS AND DIVIDENDS
As demonstrated in Table XI., Logan County BancShares, Inc. strives to
achieve a favorable dividend payout rate to the shareholders. In 1996, the
company continued the trend of growth in all areas presented. Net income grew
27.03% along with dividends of 21.10%, assets increased 13.37% while equity
increased 9.85%. In 1994 the company showed growth in all areas with an
30.82% growth in Net Income, 9.53% in total assets and a 6.33% increase in
Equity. In 1995 income increased $147,000. or 13.80%, therefore, increasing
equity 8.75% to $10,391,000. Assets grew 5.39%, primarily due to the growth
in net loans of $4,304,000. Dividends increased $.25 per share or 35.71%.
Over the four years compared there appears to be a positive growth trend.
TABLE XI.--THREE-YEAR SUMMARY OF EARNINGS AND DIVIDENDS
<TABLE>
<CAPTION>
PER SHARE PERCENT CHANGE OVER PRIOR YEAR
------------------------ -------------------------------------
DIVIDEND NET NET TOTAL
PAYOUT INCOME DIVIDENDSS INCOME DIVIDENDS ASSETS EQUITY
----------- ----------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1993..... 36.68% $ 1.74 $ 0.655 33.85% 9.17% 0.87% 5.99%
1994..... 30.76% $ 2.28 $ 0.700 36.03% 6.87% 9.53% 6.33%
1995..... 36.66% $ 2.59 $ 0.950 13.60% 35.71% 5.39% 8.75%
1996..... 34.95% $ 3.29 $ 1.150 27.03% 21.10% 13.37% 9.85%
</TABLE>
EARNING ASSETS
Table XII. represents analysis of earning assets and interest bearing
liabilities for the years ended December 31, 1995, 1994 and 1993.
In 1996, the earning assets grew by $7,740,000. or 8.94% to $94,359,000.,
the loan portfolio comprized 69.83% of earning assets and increased by
$4,748,000. or 7.76% in the year. During 1995, the total earning assets grew
by $3,623,000. or 4.37% to $86,619,000., this growth was funded by growth in
deposits, along with a move of funds from investments. In 1995, $3,942,000.
or 6.89%, and in all years, the primary item of growth was the loan
portfolio, which increased by $8,664,000. in 1994. Other earning assets
increase at a relatively stable pace during the periods, however, yields
remained relatively stable comparing 1995 to 1994.
INTEREST BEARING LIABILITIES
Interest bearing liabilities include interest bearing demand deposits,
savings accounts, time deposits and borrowed funds. These are the prime
sources of funds for Logan County BancShares, Inc. to support earning assets.
Total average interest bearing liabilities increased $5,670,000. or 7.84% in
1996 and 5.46% or 3,745,000. in 1995 , 8.47% or $5,353,000. in 1994. In 1996,
the net interest margin increased by .04 basis points to 4.64%, increased by
.06 basis points to 4.60% in 1995 and increased 0.16 basis points to 4.57% in
1994. The company has been able to match earning yields with costs of funds
over the past three years to maintain a stable net interest margin.
22
`
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
TABLE XII.--ANALYSIS OF EARNING ASSETS AND AND INTEREST BEARING LIABILITIES
(In Thousands of Dollars)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
-------------------------------- ------------------------------- ---------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- --------- --------- --------- --------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
LOANS:
Commercial......................... $ 28,476 $ 2,493 8.75% $ 25,389 $ 2,182 8.59% $ 24,275 $ 1,909 7.86%
Real Estate........................ 31,897 2,681 8.41% 30,108 2,466 8.19% 27,351 2,236 8.18%
Consumer........................... 5,521 525 9.51% 5,650 517 9.15% 5,579 510 9.14%
---------- --------- --------- --------- --------- --------- --------- ------- ------
Total Loans....................... 65,894 5,699 8.65% 61,147 5,165 8.45% 57,205 4,655 8.14%
---------- --------- --------- --------- --------- --------- --------- ------- ------
INVESTMENT SECURITIES:
Taxable............................ 8,337 567 6.80% 12,244 667 5.45% 14,658 847 5.78%
Tax Exempt *....................... 95 12 12.63% 175 20 11.43% 180 13 7.22%
Available for Sale................. 10,206 559 5.48% 6,360 430 6.76% 5,011 271 5.41%
---------- --------- --------- --------- --------- --------- --------- ------- -----
Total Securities.................. 18,638 1,138 6.11% 18,779 1,117 5.95% 19,849 1,131 5.70%
---------- --------- --------- --------- --------- --------- --------- ------- -----
FEDERAL FUNDS SOLD................... 9,827 525 5.34% 6,693 389 5.81% 5,942 253 4.26%
---------- --------- --------- --------- --------- --------- --------- ------- -----
TOTAL EARNING ASSETS................. $ 94,359 $ 7,362 7.80% $ 86,619 $ 6,671 7.70% $ 82,996 $ 6,039 7.28%
---------- --------- --------- --------- --------- --------- --------- ------- -----
---------- --------- --------- --------- --------- --------- --------- ------- -----
NON-EARNING ASSETS:
Cash and Due from Banks............ 3,546 2,989 3,166
Bank Premises...................... 1,942 1,364 1,412
Other Assets....................... 1,128 1,108 920
---------- -------- ---------
TOTAL NON-EARNING ASSETS............. $ 6,616 $ 5,461 $ 5,498
---------- -------- ---------
TOTAL ASSETS......................... $ 100,975 $ 92,080 $ 88,494
---------- -------- ---------
---------- -------- ---------
</TABLE>
* Shown at tax equivalent amount given statutory tax rate @ 34%
23
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
TABLE XII.--ANALYSIS OF EARNING ASSETS AND INTEREST BEARING LIABILITIES
(CONTINUED)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED DECEMBER 31, 1996 YEAR ENDED DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------------- --------------------------------- ------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- --------- --------- --------- --------- ----- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST BEARING LIABILITIES:
Savings Deposits and Interest
Bearing:
DDA.............................. $ 46,952 $ 1,286 2.74% $ 46,936 $ 1,366 2.91% $ 50,987 $ 1,546 3.03%
Time Deposits.................... 31,006 1,694 5.46% 25,352 1,320 5.21% 17,556 697 3.97%
---------- --------- --------- --------- --------- --- --------- ------- -----
Total Interest Bearing
Liabilities.................... 77,958 $ 2,980 3.82% 72,288 $ 2,686 3.72% 68,543 $ 2,243 3.27%
---------- --------- --------- --------- --------- --- --------- ------- -----
---------- --------- --------- --------- --------- --- --------- ------- -----
NON-INTEREST BEARING LIABILITIES AND
CAPITAL:
Demand Deposits.................... 11,037 9,036 9,816
Accrued Expenses................... 995 636 775
Capital............................ 10,985 10,120 9,360
---------- --------- ---------
Total Non-Interest Bearing
Liabilities and Capital........ 23,017 19,792 19,951
---------- --------- ---------
Total Liabilities and
Stockholders' Equity........... $ 100,975 $ 92,080 $ 88,494
---------- --------- ---------
---------- --------- ---------
NET INTEREST MARGIN................. $ 94,359 $ 4,382 4.64% $ 86,619 $ 3,985 4.60% $ 82,996 $ 3,796 4.57%
---------- --------- --------- --------- --------- --- --------- ------- -----
---------- --------- --------- --------- --------- --- --------- ------- -----
</TABLE>
24
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
TABLE XIII.--ASSET AND LIABILITY MATURITY RATE SENSITIVITY
(In Thousands of Dollars)
<TABLE>
<CAPTION>
TOTAL OVER
0--90 91-180 181-365 ONE YEAR ONE YEAR TOTAL
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets
Loans............................................... $ 14,901 $ 1,583 $ 3,129 $ 19,613 $ 51,259 $ 70,872
Investments......................................... 3,098 0 2,574 5,672 15,723 21,395
Fed. Funds Sold..................................... 7,275 0 0 7,275 0 7,275
---------- ---------- ---------- ---------- --------- ---------
Total Earning Assets................................. 25,274 1,583 5,703 32,560 66,982 99,542
---------- ---------- ---------- ---------- --------- ---------
Interest Bearing Liabilities:
Demand Deposits..................................... 17,463 0 0 17,463 0 17,463
Savings............................................. 12,102 9,598 8,860 30,560 0 30,560
CD's-$100,000 and Over.............................. 2,840 1,926 3,146 7,912 1,983 9,895
Other Time.......................................... 9,261 6,717 8,167 24,145 2,603 26,748
---------- ---------- ---------- ---------- --------- ---------
Total Interest Bearing Liability..................... 41,666 18,241 20,173 80,080 4,586 84,666
---------- ---------- ---------- ---------- --------- ---------
Interest Sensitivity Gap............................. ($ 16,392) ($ 16,658) ($ 14,470) ($ 47,520) $ 62,396 $ 14,876
---------- ---------- ---------- ---------- --------- ---------
---------- ---------- ---------- ---------- --------- ---------
Cumulative Gap....................................... ($ 16,392) $ 33,050 ($ 47,520) ($ 47,520) $ 14,876 $ 14,876
---------- ---------- ---------- ---------- --------- ---------
---------- ---------- ---------- ---------- --------- ---------
Rate Sensitive Assets/Rate Sensitive Liabilities
(Cumulative Percentage)............................ 61.11% 44.83% 40.66% 40.66% 117.57% 117.57%
---------- ---------- ---------- ---------- --------- ---------
---------- ---------- ---------- ---------- --------- ---------
</TABLE>
25
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis of Financial
Condition and Results of Operations
ASSET AND LIABILITY MATURITY RATE SENSITIVITY
Asset and liability management is responsible for the planning,
implementation, and control process for determining asset mix and maturity
features relative to liability maturities in such a way that net interest
margin will be maximized. A major tool for such a process is gap management
of the Bank's interest sensitive assets to interest sensitive liabilities.
The negative gap position as presented in the following table for
maturities of one year or less is offset by the substantial positive gap
position for maturities greater than one year. The earnings of Logan County
BancShares, Inc. are sufficient to withstand the short term negative gap
position. Should a large fluctuation occur, increasing the cost of funds,
management would consider increasing service charges and non-interest fees
which management determines the market would bear in order to negate
increased rate costs. An additional response, at the option of management,
would be liquidation of certain long-term investments, and conversion of
those funds into short-term securities.
Bank management recognized the concentration of large certificates of
deposit. The Bank's policy of asset-liability management matches both rates
and maturities so the Bank will not have a liquidity problem or allow income
to be affected by a change in rates.
All demand and savings deposits are considered highly volatile, although
experience has shown these accounts to be stable regardless of economic
cycles. Interest on savings and other transactional accounts have generally
remained constant over periods of interest rate changes. Therefore, deposits
and savings are classified as "over one year" to represent a more realistic
rate sensitive gap.
26
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Management's Discussion and Analysis
of Financial Position and Results of Operations
TABLE XIV.--AVERAGE BALANCE SHEET
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and Due from Banks............ $3,546 $ 2,989 $ 3,166 $ 2,608 $ 2,919
Investment Securities:
Available for Sale................. 10,206 6,360 5,011 0 0
Held to Maturity................... 8,432 12,419 14,838 20,803 20,271
-------- --------- --------- --------- ---------
Total Investments.................. 18,638 18,779 19,849 20,803 20,271
-------- --------- --------- --------- ---------
Federal Funds Sold................. 9,827 6,693 5,942 8,072 7,461
Loans
Real Estates....................... 31,897 30,108 27,351 19,899 19,429
Installment........................ 5,606 5,650 5,579 5,379 6,006
Commercial & Other................. 29,144 26,020 24,837 23,775 22,599
-------- --------- --------- --------- ---------
66,647 61,778 57,767 49,053 48,034
Less: Unearned Discount............ 85 0 0 0 0
-------- --------- --------- --------- ---------
66,562 61,778 57,767 49,053 48,034
Allowance For Loan Losses.......... (668) (631) (562) (512) (512)
-------- --------- --------- --------- ---------
Net Loans.......................... 65,894 61,147 57,205 48,541 47,522
-------- --------- --------- --------- ---------
Banking Premises................... 1,942 1,364 1,412 1,494 1,590
Accrued Interest and Other
Assets........................... 1,128 1,108 920 1,229 1,292
-------- --------- --------- --------- ---------
TOTAL ASSETS....................... $100,975 $ 92,080 $ 88,494 $ 82,747 $ 81,055
-------- --------- --------- --------- ---------
-------- --------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits:
Demand Deposits.................... $27,940 $ 26,287 $ 25,402 $ 23,812 $ 24,427
Savings Deposits................... 30,049 29,685 35,401 31,888 29,482
Time Deposits...................... 31,006 25,352 17,556 17,241 17,906
-------- --------- --------- --------- ---------
Total Deposits..................... 88,995 81,324 78,359 72,941 71,815
Purchased Funds.................... 0 0 0 0 0
Other Liabilities.................. 995 636 775 960 924
-------- --------- --------- --------- ---------
TOTAL LIABILITIES.................. 89,990 81,960 79,134 73,901 72,739
STOCKHOLDERS' EQUITY............... 10,985 10,120 9,360 8,846 8,316
-------- --------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
STOCKHOLDERS' EQUITY............. $100,975 $ 92,080 $ 88,494 $ 82,747 $ 81,055
-------- --------- --------- --------- ---------
-------- --------- --------- --------- ---------
</TABLE>
27
<PAGE>
ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Management's Report on Financial Statements................ 29
Report of Independent Certified Public Accountants......... 30
Financial Statements:
Logan County BancShares, Inc. and Subsidiaries:
Consolidated Statement of Condition as of
December 31, 1996 and 1995.................. 31-32
Consolidated Statement of Income as of
December 31, 1996, 1995 and 1994............ 33-34
Consolidated Statement of Changes
in Stock-holders' Equity for the Years
Ended December 31, 1996, 1995 and 1994...... 35
Consolidated Statement of Cash Flows for
the Years Ended December 31, 1996, 1995,
and 1994.................................... 36-37
Notes to Consolidated Financial Statements... 38-51
</TABLE>
28
<PAGE>
LOGAN COUNTY BANCSHARES, INC.
POST OFFICE BOX 597 LOGAN, WEST VIRGINIA 25601 (304) 752-0280
(304) 752-4649
To our Stockholders, Customers and Friends:
We are very proud to present the 1996 Annual Report for Logan County
BancShares, Inc. and its subsidiary, Logan Bank & Trust Company. The year
1996 did indeed set records. Not only were we able to reach and surpass the
100 million milestone; we were also able to expand to outlying areas of the
county in order to better serve our loyal customers, neighbors and friends.
The Company grew by $12,660,593, or 13.37%, to $107,379,545 in total assets
and net income raised to a record $1,538,069, up 26.92%.
As in the past, we reinvested this growth in our service area by
increasing loans $7,375,572 and opening two new branches with over $1,000,000
invested in those facilities. These factors enabled the Board to return to
our shareholders dividends of $537,753 for 1996 and maintain a solid capital
position of $11,414,936, or 11.30%, of average assets. The Company's return
of average assets was 1.52%, return on equity was 14% and earnings per share
increased from $2.59 to $3.29, or 27.03%.
With the philosophy of meeting local needs, the Company's subsidiary,
Logan Bank & Trust, went through a reorganization, to enable us to provide
efficient and convenient financial services to all our customers. Continuing
with this philosophy, we opened the Man Bank of LB&T and the Harts Bank of
LB&T. This substantial investment in these communities enables our customers
to do their banking at any of our four locations. All four locations are full
service banks and can offer efficient products and services to all our
friends, neighbors and customers throughout the region. As always, the
Company reinvests in the region because we believe our success is a
reflection of the success of our customers, communities and region. The
management, officers and staff of the banks stand ready to face the
challenges of 1997 and have the resources to turn those challenges into
opportunities for us all.
Our success in 1996, and for the future, is dependent on our staff and
the support of our customers and their community, which we gratefully
acknowledge. As always, Logan County BancShares, Inc. and its affiliate bank,
Logan Bank & Trust Company, is prepared to meet the financial needs of
Southern West Virginia.
Respectfully,
/s/ Frank H. Oakley /s/ Eddie Canterbury
Frank H. Oakley Eddie Canterbury
President Executive Vice President/CEO
Logan Bank & Trust Chapmanville Bank of Man Bank Of Harts Bank Of
LB&T LB&T LB&T LB&T
29
<PAGE>
M & co.
Certified Public Accountants
W McNEAL, WILLIAMSON & CO.
Certified Public Accountants
Donald M. McNeal, CPA Daniel L. Williamson, CPA
Post Office Box 1839 525 Tiller St., Cherry Tree Addn.
Logan, West Virginia 25601 Logan, West virginia 25601
Phone (304) 752-0461 Fax (304) 752-2660
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Logan County BancShares, Inc. and Subsidiary
We have audited the accompanying consolidated statements of condition of
Logan County BancShares, Inc., and Subsidiary as of December 31, 1996, and 1995,
and the related consolidated statements of income, changes in stockholders'
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 Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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 audit provides 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 Logan County
BancShares, Inc. and Subsidiary as of December 31, 1996, 1995 and 1994, and the
consolidated results of its operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ McNeal, Williamson & Co.
Logan, West Virginia
February 28, 1997
30
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Condition
December 31, 1996 and 1995
ASSETS
------
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
CASH AND DUE FROM BANKS....................................... $ 4,434,697 $ 4,361,286
-------------- -------------
INVESTMENT SECURITIES:
Available for sale........................................ 14,326,484 5,796,878
Held to maturity.......................................... 7,068,905 10,655,010
-------------- -------------
Total Investment Securities............................... 21,395,389 16,451,888
-------------- -------------
FEDERAL FUNDS SOLD............................................ 7,275,000 7,470,000
LOANS:
Mortgage Loans............................................ 34,100,157 30,848,508
Installment Loans......................................... 6,648,703 5,521,851
Commercial and Other Loans................................ 30,973,817 27,976,745
-------------- -------------
Total Loans........................................... 71,722,677 64,347,104
Less: Unearned Interest................................... 169,566 0
Reserve for Loan Losses............................. 681,375 661,647
-------------- -------------
Net Loans............................................. 70,871,736 63,685,457
-------------- -------------
BANK PREMISES AND EQUIPMENT................................... 2,120,424 1,716,402
ACCRUED INTEREST RECEIVABLE AND
OTHER ASSETS............................................. 1,282,299 1,033,919
-------------- -------------
$ 107,379,545 $ 94,718,952
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
31
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Condition
December 31, 1996 and 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1996 1995
-------------- -------------
<S> <C> <C>
DEPOSITS:
Demand Deposits........................................... $ 28,029,591 $ 27,245,192
Savings Deposits.......................................... 30,560,306 28,448,741
Time Certificates......................................... 36,642,682 28,022,686
-------------- -------------
Total Deposits............................................ 95,232,579 83,716,619
ACCRUED AND OTHER LIABILITIES................................. 688,753 594,290
FEDERAL INCOME TAXES PAYABLE:
Current................................................... 39,209 14,287
Deferred.................................................. 4,068 2,536
-------------- -------------
TOTAL LIABILITIES............................................. 95,964,609 84,327,732
-------------- -------------
STOCKHOLDERS' EQUITY:
Common Stock--$2.50 par value;
Authorized--520,000
Issued--509,612
Outstanding-467,612 in 1995
and 1994............................................. 1,274,030 1,274,030
Surplus................................................... 2,070,816 2,070,816
Retained Earnings (including
contingency portion of
reserve for loan losses)................................ 8,986,050 7,985,734
Net unrealized amortization
on securities available for
sale.................................................... (55,762) (79,162)
Treasury Stock............................................ (860,198) (860,198)
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY.................................... 11,414,936 10,391,220
-------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY...................................... $ 107,379,545 $ 94,718,952
-------------- -------------
-------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
32
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statements of Income
For the Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME:
Interest on Loans................................................... $ 5,699,356 $ 5,165,171 $ 4,655,473
Interest on Investment
Securities:
Available for Sale.............................................. 558,591 429,597 270,931
Held to Maturity................................................ 576,290 680,361 860,464
Other Securities................................................ 0 0 0
Interest on Federal Funds
Sold.............................................................. 524,878 388,552 252,848
------------ ------------ ------------
7,359,115 6,663,681 6,039,716
------------ ------------ ------------
INTEREST EXPENSE:
Interest on Deposits:
Savings and Time.................................................. 2,979,998 2,686,408 2,242,389
Other............................................................. 7,764 0 720
------------ ------------ ------------
2,987,762 2,686,408 2,243,109
------------ ------------ ------------
NET INTEREST INCOME..................................................... 4,371,353 3,977,273 3,796,607
PROVISION FOR LOAN LOSSES............................................... 40,000 59,363 271,083
------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES............................................. 4,331,353 3,917,910 3,525,524
------------ ------------ ------------
OTHER INCOME:
Service Fees........................................................ 948,377 697,964 485,574
Other............................................................... 52,247 31,506 43,103
Securities Gains (Losses).......................................... (176) 1,618 300
------------ ------------ ------------
1,000,448 731,088 528,977
------------ ------------ ------------
</TABLE>
The accompany notes are an integral part of these consolidated
financial statements.
33
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Income
For The Years Ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
OTHER EXPENSES:
Salaries and Benefits............................................... $ 1,548,685 $ 1,381,498 $ 1,273,727
Taxes............................................................... 132,459 122,576 100,551
Depreciation........................................................ 144,671 117,273 121,440
Repairs and Maintenance............................................. 120,439 97,714 97,178
Fees Paid to Directors.............................................. 97,425 101,675 98,725
Equipment Rental.................................................... 25,664 21,795 20,763
FDIC & Fidelity Insurance........................................... 72,207 158,065 226,629
Data Processing..................................................... 265,726 241,237 231,987
Bank Stationery and Printing........................................ 110,207 81,359 66,911
Other Operating Expenses............................................ 509,192 470,950 451,564
------------ ------------ ------------
3,026,675 2,794,142 2,689,475
------------ ------------ ------------
INCOME BEFORE INCOME TAXES.............................................. 2,305,126 1,854,856 1,365,026
FEDERAL INCOME TAXES:
Current............................................................. 787,034 614,287 466,642
Deferred............................................................ (19,977) 28,718 (166,891)
------------ ------------ ------------
NET INCOME.............................................................. $ 1,538,069 $ 1,211,851 $ 1,065,275
------------ ------------ ------------
------------ ------------ ------------
PER SHARE OF COMMON STOCK:
NET INCOME......................................................... $ 3.29 $ 2.59 $ 2.28
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompany notes are an integral part of these consolidated
financial statements.
34
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Stockholders' Equity
For The Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
NET
UNREALIZED
APPRECIATION
COMMON RETAINED TREASURY ON AVAILABLE
STOCK SURPLUS EARNINGS STOCK FOR SALE TOTAL
------ ------- -------- -------- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1993..... $1,274,030 $2,070,816 $6,480,486 ($839,598) $0 $ 8,985,734
Treasury Stock Sold;
21 shares..................... 0 0 0 2,100 0 2,100
Treasury Stock Purchased
908 @ $25 per share........... 0 0 0 (22,700) 0 (22,700)
Dividends on 468,520 shares
Common Stock @ $.35
per share..................... 0 0 (163,982) 0 0 (163,982)
Dividends on 467,612 shares
Common Stock @ $.35
per share..................... 0 0 (163,664) 0 0 (163,664)
Net Income - 1994............... 0 0 1,065,275 0 0 1,065,275
Net Change in Unrealized
Amortization on Securities
Available for Sale............ 0 0 0 0 (147,768) (147,768)
---------- ---------- ---------- --------- --------- ----------
Balance-December 31, 1994....... $1,274,030 $2,070,816 $7,218,115 ($860,198) ($147,768) $ 9,554,995
Dividends on 467,612 shares
Common Stock @ $0.95.......... 0 0 (444,232) 0 0 (444,232)
Net Income - 1995............... 0 0 1,211,851 0 0 1,211,851
Net Change in Unrealized
Amortization Securities
Available for Sale............ 0 0 0 0 68,606 68,606
---------- ---------- ---------- --------- --------- -----------
Balance-December 31, 1995....... $1,274,030 $2,070,816 $7,985,734 ($860,198) ($ 79,162) $10,391,220
Dividends on 467,612 shares
Common Stock @ $1.15.......... (537,753) (537,753)
Net Income - 1996............... 1,538,069 1,538,069
Net Change in Unrealized
Amortization Securities
Available for Sale............ 23,400 23,400
---------- ---------- ---------- --------- --------- -----------
Balance - December 31, 1996..... $1,274,030 $2,070,816 $8,986,050 ($860,198) ($ 55,762) $11,414,936
---------- ---------- ---------- --------- --------- -----------
---------- ---------- ---------- --------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
35
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Change in Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.......................................................... $ 1,538,069 $ 1,211,851 $ 1,065,275
Adjustments to reconcile
net income net income to net cash
provided by operating
activities:
Depreciation and Amortization.................................... 144,671 117,273 112,730
Provision For Loan Losses........................................ 40,000 59,363 271,083
Provision For Deferred Taxes..................................... (19,977) 28,718 (166,891)
(Gain) Loss on Sale of Securities................................ 176 (1,618) (300)
Premium Amortization and
Accretion on Investment
Securities...................................................... 12,485 28,499 40,834
Increases (Decreases) in
Income Taxes Payable............................................ 24,750 (132,589) (97,316)
(Increases) Decreases in
Interest Receivable and
Other Assets.................................................... (248,380) 60,698 90,011
Increases (Decreases) in
Interest Payable & Other Liab................................... 94,463 136,042 (53,908)
Market Value Adjustment
Amortization.................................................... 4,028 4,028 4,028
------------ ----------- -----------
Net Cash Provided by Operating Activities........................ 1,590,285 1,512,265 1,265,546
------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Investment Sec:
Available for Sale................................................. 1,500,000 1,500,000 0
Held to Maturity................................................... 500,000 0 0
Proceeds from Maturities of Inv. Sec:
AFS................................................................ 1,000,000 3,305,000 0
HTM................................................................ 3,810,000 (503,125) 5,750,000
Purchase of Investment Securities:
AFS................................................................ (10,233,781) 0 (5,480,000)
HTM................................................................ (1,491,328) 0 0
Net (Increases) Decreases in
Federal Funds Sold................................................. 195,000 (4,150,000) (165,000)
Net (Increases) Decreases in
Commercial Loans................................................... (3,017,344) (3,668,364) (204,652)
Net (Increases) Decreases in
Real Estate Loans.................................................. (3,251,649) (726,547) (6,778,955)
Net (Increases) Decreases in
Installment Loans.................................................. (957,386) 87,087 (239,880)
Purchase of Bank Premises
and Equipment...................................................... (548,693) (470,764) (40,780)
------------ ----------- -----------
Net Cash Used by
Investing Activities............................................... (12,495,181) (4,626,713) (7,159,267)
</TABLE>
The accompanying notes are an integral part of these
financial statements.
36
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Consolidated Statement of Changes in Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
INCREASES (DECREASES) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increases (Decreases) in
Demand Deposits................... $784,399 $1,111,134 $4,316,957
Net Increases (Decreases) in
Savings Deposits.................. 2,111,565 (5,014,305) (45,426)
Net Increases (Decreases) in
Time Deposits..................... 8,619,996 7,910,782 3,118,976
Proceeds from Long-Term
Borrowings........................ 0 0 0
Payment on Long-Term Borrowings..... 0 0 0
Dividends Paid...................... (537,753) (444,232) (327,646)
Payment to Acquire Treasury
Stock............................. 0 0 (22,700)
Proceeds from sale of Treasury
Stock............................. 0 0 2,400
----------- ---------- ----------
Net Cash Provided by Financing
Activities......................... $10,978,207 $3,563,379 $7,042,561
----------- ---------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents............... 73,411 448,931 1,148,840
Cash and Cash Equivalents at
Beginning of Year.................. 4,361,286 3,912,355 2,763,515
----------- ---------- ----------
Cash and Cash Equivalents at
End of Year........................ $4,434,697 $4,361,286 $3,912,355
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Supplemental Disclosures of Cash
Flow Information Cash Paid for:
Interest......................... $2,951,541 $2,648,334 $2,249,949
Income Taxes..................... $817,985 $691,982 $563,958
</TABLE>
The accompanying notes are an integral part of these
financial statements.
37
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
1. Summary of Significant Accounting Policies:
A. Basis of Consolidation:
The Consolidated Financial Statements of Logan County BancShares,
Inc. and its subsidiaries include the accounts of Logan County
BancShares, Inc. a bank holding company and its wholly owned
subsidiaries, Logan Bank & Trust Company and Bank of Chapmanville. As
further discussed in Note 13, the Company's subsidiaries were merged
into Logan Bank & Trust Company on May 28, 1996. The merger was
accounted for under the policy of Interest Method of accounting and
no restatement was necessary. All material intercompany balances and
transactions have been eliminated in consolidation. Certain prior year
amounts have been reclassified to conform with 1995 presentations.
B. Nature of Operations:
The Banks operate under State bank charters, and provide full
banking services, including trust services. As state banks, the Banks
are subject to regulation by the West Virginia State Banking
Commission and the Federal Deposit Insurance Corporation. The Company
is also subject to regulation by the Federal Reserve Bank.
C. Estimates in the Financial Statements:
The presentation of the 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 disclosure 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.
D. Cash and Cash Equivalents:
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and amounts due from banks.
E. Investment Securities:
Effective with the issuance of SFASB 115, (Accounting For Certain
Investments in Debt and Equity Securities), the Banks' Investment
securities are classified in two categories and accounted for as
follows:
Securities to be Held to Maturity: Bonds, notes and debentures for
which the banks have the positive intent and ability to hold to
maturity are reported at cost, adjusted for amortization of premiums
and accretion of discounts which are recognized in interest income,
using the Interest Method, over the period to maturity.
Securities Available for Sale: Securities available for sale
consist of bonds, notes, debentures, and certain equity securities not
classified as securities held to maturity. These securities are
carried at their fair value. Unrealized gains and losses, net of tax,
are reported as a net amount in a separate component of Shareholders'
Equity until realized. Gains and losses on sale of securities
available for sale are determined using the Specific-Indentification
Method.
38
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
1. Summary of Significant Accounting Policies (Continued):
F. Loans:
Loans are stated at face value, less reserve for loan losses.
Generally, interest is taken into income on the simple interest method
over the terms of the respective loans.
On January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment
of a Loan". The Statement requires allowances for loan losses on
impaired loans to be determined using the present value of estimated
future cash flows of the loan, discounted at the loan's effective
interest rate or the fair value of the underlying collateral. A loan
is considered to be impaired when it is probable that all principal
and interest amounts will not be collected according to the loan
contract. The adoption of the statement did not have a material effect
on the Company's consolidated financial statements.
G. Bank Premises and Equipment:
Bank premises and equipment are stated at cost, less accumulated
depreciation. Depreciation is provided over the estimated useful lives
of the assets as follows:
METHODS RANGE OF LIVES
--------------- ----------------
Banking House S/L, ACRS 10--40 years
Furniture, fixtures and Equipment S/L, DDB, ACRS 3--20 years
H. Reserve for Loan Losses:
The provision for loan losses is based on past loan loss
experience, management's evaluation of the loan portfolio under
current economic conditions and such other factors that, in
management's best judgement, deserve current recognition in estimating
loan losses.
It is the Bank's policy to place loans on a non-accrual status in
the event of bankruptcy, reorganization or statutory default arising
from non-compliance with the essential covenants of the Loan
Agreement. In addition, non-accrual status arises when the creditor
has had assets seized or repossessed or from other conditions as may
be deemed appropriate from the creditor's performance. Non-performing
loan status is determined and identified by individual loan officers,
normal management information data, the loan committee, the internal
audit department, independent auditors, or bank examiners, and the
status of such loans is monitored constantly. In many cases, non-
performing loans involve elements of collectibility such as marketable
collateral or substantial outside guarantees which insure ultimate
recovery of all principal and interest. Non-performing loans which
present elements of risk regarding recovery of principal and interest
require a non-interest accrual status. Any unpaid amounts of interest
previously accrued on these loans are reversed from income and,
thereafter, interest is only recognized to the extent payments are
received or the loan has been rehabilitated.
39
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
1. Summary of Significant Accounting Policies (Continued):
I. Real Estate Acquired Through Foreclosure:
Real estate acquired through foreclosure is carried at the lower
of the recorded investment in the property or its fair value. The
value of the underlying loan is written down to the fair value of the
real estate to be acquired by a charge to the allowance for loan
losses, if necessary. Any subsequent write-downs are charged to
operating expenses.
J. Income Taxes:
The Company and its subsidiaries file a consolidated federal
income tax return. The Subsidiaries are charged or credited an amount
equal to the income tax that would have been applicable on a separate
return basis.
The Company uses the liability method for computing deferred
income taxes. Under the liability method, deferred income taxes are
based on the change during the year in the deferred tax liability or
asset established for the expected future tax consequences of
differences in the financial reporting and tax bases of assets and
liabilities. The differences relate principally to premises and
equipment, unrealized gains and losses on investment securities
available for sale, and the allowance for loan losses.
K. Per Share Information:
Primary earnings per share is computed by dividing net income by
the weighted average number of shares of common stock outstanding and
the number of shares of common stock which would be assumed
outstanding under the treasury-stock method.
L. Impact of New Accounting Standards:
In December 1991, the Financial Accounting Standards Board issued
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
which is applicable to financial statements of entities with total
assets in excess of $150 million for fiscal years ending after
December 15, 1992 and to financial statements of entities with total
assets less than $150 million for fiscal years ending after
December 15, 1995. SFAS No. 107 requires the disclosure of (i) fair
value of financial instruments for which it is practicable to estimate
that value, and (ii) the methods and significant assumptions used to
estimate fair value. Because the Statement requires only disclosure of
fair value, without recognition of any changes in the Company's
financial statements, there is no impact on the Company's financial
condition or its results of operations.
In October 1994, the Financial Accounting Standards Board issued
SFAS No. 119, "Disclosure about Derivative Financial Instruments and
Fair Value of Financial Instruments", which is applicable for
financial statements issued for fiscal years ending after December 15,
1994, except for entities with less than $150 million in total assets,
for which it is effective for fiscal years ending after December 15,
1995. SFAS No. 119 requires disclosures about amounts, nature and
terms of derivative financial instruments that are not subject to SFAS
No. 105. It also amends SFAS No. 105 and SFAS No. 107 to require that
distinction in certain disclosures required by those statements. The
effect of adopting the new guidance was not material to the Company's
consolidated financial statements.
40
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
1. Summary of Significant Accounting Policies (Continued):
L. Impact of New Accounting Standards (Continued):
In March, 1995, the Financial Accounting Standards Board issued
SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of", which requires the recognition
of a loss on impaired assets when the carrying value of an asset
exceeds its fair value and the carrying amount of the asset may not be
recoverable. The Statement is effective for fiscal years beginning
after December 15, 1995. The Company adopted SFAS No. 121, as
required, on January 1, 1996. The effect of adopting the new guidance
was not material to the Company's consolidated financial statements.
In May, 1995, the Financial Accounting Standards Board issued SFAS
No. 122, "Accounting for Mortgage-Servicing Rights". This Statement is
effective for fiscal years beginning after December 31, 1995 and
requires the capitalization of the cost of mortgage-servicing rights
originated or acquired based on the fair value of the rights. The
Company adopted the Statement, as required, on January 1, 1996. The
effect of adopting the new guidance was not material to the Company's
consolidated financial statements.
In October, 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation". The Statement
defines the methods of accounting available for employee stock
compensation plans and is effective for years beginning after
December 15, 1995. The Company adopted the Statement, as required, on
January 1, 1996. The effect of adopting the new guidance was not
material to the Company's consolidated financial statements.
41
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
2. INVESTMENT SECURITIES:
The carrying amounts of investment in securities as shown in the
consolidated balance sheets of the bank and their approximate full values
at December 31 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSS VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
VALUES FOR THE YEAR ENDED DECEMBER 31, 1996:
Securities Available for Sale
Federal Agency Securities.................................. $ 14,174,312 $ 50,659 $ 148,487 $ 14,076,484
Equity Securities.......................................... 250,000 0 0 250,000
------------- ----------- ----------- -------------
$ 14,424,312 $ 50,659 $ 148,487 $ 14,326,484
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Securities to be Held to Maturity
Federal Agency Securities.................................. 2,992,590 34,990 3,125 3,024,455
U.S. Treasury Securities................................... 4,011,315 0 22,875 3,988,440
State and Municipal Securities............................. 65,000 1,133 0 66,133
------------- ----------- ----------- -------------
$ 7,068,905 $ 36,123 $ 26,000 $ 7,079,028
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
ENDED DECEMBER 31, 1995:
Securities Available for Sale
Federal Agency Securities.................................. $ 5,935,759 $ 66,645 $ 205,526 $ 5,796,878
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Securities to be Held to Maturity
Federal Agency Securities.................................. 4,000,000 114,610 0 4,114,610
U.S. Treasury Securities................................... 6,530,010 0 31,115 6,498,895
State and Municipal Securities............................. 125,000 3,700 0 128,700
------------- ----------- ----------- -------------
$ 10,655,010 $ 118,310 $ 31,115 $ 10,742,205
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>
The par value of securities pledged to secure public deposits and for other
purposes amounted to $5,996,628 in 1996 and $4,500,000 in 1995.
The amortized cost and estimated market value of investment in debt
securities at December 31, 1996, by contractural maturity, are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call as
prepayment penalties.
<TABLE>
<CAPTION>
SECURITIES TO BE HELD SECURITIES AVAILABLE
TO MATURITY FOR SALE
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
------------ ------------ ------------- -------------
Due in one year or less................................ $ 4,076,315 $ 4,054,573 $ 500,000 $ 500,230
Due from one year to five years........................ 2,992,590 3,024,455 13,674,312 13,576,254
Due from five years to ten years....................... 0 0 250,000 250,000
Due after ten years.................................... 0 0 0 0
------------ ------------ ------------- -------------
$ 7,068,905 $ 7,079,028 $ 14,424,312 $ 14,326,484
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
42
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
3. LOANS:
Major classifications of loans at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------------------
<S> <C> <C>
Mortgage Loans............................. $34,100,157 $ 30,848,508
Installment Loans.......................... 6,479,137 5,521,851
Commercial and Other Loans................. 30,973,817 27,976,745
-------------------------------------------
71,553,111 64,347,104
Less: Reserve for Loan Loss................ 681,375 661,641
-------------------------------------------
$70,871,736 $ 63,685,457
-------------------------------------------
-------------------------------------------
</TABLE>
Loans on which accrual of interest has been discontinued or reduced
amounted to $686,517. and $1,700,012. at December 31, 1996 and 1995
respectively. Had the above loans not been placed on a non-accrual status,
income for the Company would have increased approximately $56,537., and
$183,916. for the two years.
On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan" (SFAS
114). This statement requires that impaired loans be measured at the present
value of expected future cash flows, discounted at the loans' effective
interest rate, at the loans' observable market price, or at the fair value of
the collateral if the loan is collateral dependent. The Company accrues
interest income daily on impaired loans classified as accruing. Cash receipts
on impaired loans are applied to the recorded investment in the loan,
including accrued interest. The adoption of SFAS 114 did not have a material
effect on the Company's consolidated financial statements.
The Company's recorded investment in impaired loans was approximately
$838,000. at December 31, 1996 and $1,784,000. at December 31, 1995. Of that
amount in 1996, $548,000. represents loans for which an allowance for loan
losses, amounting to $425,000., has been established under SFAS 114. The
average recorded investment in impaired loans was approximately $887,000. for
1996 and $1,790,000. for the year ended, December 31, 1995. Interest income
recognized on impaired loans was approximately $18,000. for the year ended
December 31, 1996.
Reserve for Loan Losses:
Transactions in the reserve for loan losses for the years were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Balance at Beginning of Year................................................. $ 661,647 $ 605,829 $ 515,940
Provision Charged to Operating Expenses...................................... 40,000 59,363 271,083
Recoveries credited to Reserve............................................... 4,662 4,884 2,366
Losses Charged to Reserve.................................................... (24,934) (8,429) (183,560)
---------- ---------- ----------
Balance at End of Year....................................................... $ 681,375 $ 661,647 $ 605,829
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The balance of the reserve for loan losses for income tax purposes was
$281,723. at December 31, 1996 and 1995.
43
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
4. BANK PREMISES AND EQUIPMENT:
Bank premises and equipment are summarized as follow
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ------------ ------------
<S> <C> <C> <C>
Land.................................................... $ 404,847 $ 370,972 $ 370,972
Banking House........................................... 2,420,262 2,068,335 1,782,353
Furniture, Fixtures and Equipment....................... 1,454,091 1,288,494 1,108,309
--------------- ------------ ------------
4,279,200 3,727,801 3,261,634
Less: Accumulated Depreciation......................... 2,158,776 2,011,399 1,898,723
--------------- ------------ ------------
Bank Premises and Equipment............................. $ 2,120,424 $ 1,716,402 $ 1,362,911
--------------- ------------ ------------
</TABLE>
Depreciation expense amounted to $144,671., $117,273., and $121,440. in
1996, 1995 and 1994 respectively. Expenditures for maintenance and repairs
are charged against operations as incurred.
44
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
5. FEDERAL INCOME TAXES:
The provisions for Federal income taxes for the years ended December 31,
1996, 1995, and 1994 were less than the respective amounts that would
result from applying the statutory Federal income tax rate of 34%, due
primarily to the two Banks' tax exempt interest income.
A reconciliation of the difference between the U. S. statutory income
tax rate and the effective tax rates with resulting dollar amounts are
shown in the following table:
<TABLE>
<CAPTION>
1996 1995 1994
----------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- ----------- ---------- ----------- ---------- ---------
Tax Expense at Statutory Rate.................. $ 783,743 34.00% $ 630,651 34.00% $ 464,108 34.00%
Currently Payable:
Tax exempt
Interest....................................... (3,003) -0.13% (4,706) -0.25% (5,009) -0.37%
Security Transactions.......................... (2,598) -0.11% (763) -0.04% 3,660 0.27%
Loan Loss Provision............................ 6,708 0.29% 18,700 1.01% 0 0.00%
Pension Accruals............................... 3,680 0.16% (20,454) -1.10% 0
Other.......................................... (1,496) -0.06% (9,141) -0.49% 3,883 0.29%
Deferred Income Tax.............. ............. (19,977) -0.87% 28,718 1.54% (166,891) -12.23%
---------- ----------- ---------- ----------- ---------- --------
$ 767,057 33.28% $ 643,005 34.67% $ 299,751 21.96%
---------- ----------- ---------- ----------- ---------- --------
---------- ----------- ---------- ----------- ---------- --------
</TABLE>
Logan County Bancshares adopted SFAS No. 109, "Accounting for Income
Taxes," which requires a liability approach to financial accounting and
reporting for income taxes. The differences between the financial statement
and tax bases of assets and liabilities is determined annually and deferred
income tax assets and liabilities are computed for those differences that
have future tax consequences.
The effect of adopting SFAS No. 109 on 1996 and 1995 income from
continuing operations and net income was immaterial. The tax effect of
significant temporary differences which comprise non-current deferred tax
assets and liabilities as of December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Assets:
Market Value Allowance................................................ $ 42,066 $ 59,719
Reserve for Loan Loss................................................. 135,958 127,659
Pension Cost.......................................................... 15,318 20,455
Deferred Compensation................................................. 0 8,944
---------- ----------
Gross Deferred Tax Asset.............................................. 193,342 216,777
---------- ----------
Liabilities:
Allowance for Investments............................................. 3,896 5,503
Property and Equipment................................................ 38,235 61,156
---------- ----------
Net Deferred Tax Asset................................................ $ 151,211 $ 150,118
---------- ----------
---------- ----------
</TABLE>
Tax legislation by the State of West Virginia, enacted on July 1, 1987,
has made the Holding Company subject to both an Income tax and Business
Franchise tax. Because of modifications available in the income tax
provisions, the Holding Company had $61,520., $53,834. and $41,054. in
expense for State Income taxes for the years ending December 31, 1995, 1994
and 1993, respectively. Further, the Holding Company utilized bank shares tax
credits to offset all Business Franchise taxes accrued as of year ends.
45
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
6. Employee Pension and Retirement Plan:
The Bank Holding Company has a qualified defined benefit pension plan
which is available to employees meeting certain age and service requirements.
The total pension expense for the years 1996, 1995 and 1994 was $71,101.,
$35,482, $34,017. respectively. The Bank's policy is to fund pension costs at
the maximum amount that can be deducted for Federal Income tax purposes.
The following is a summary of the plan's funded status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1996,
1995 and 1994.
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- -----------
<S> <C> <C> <C>
Actuarial present value of accumulated benefit obligation................... $ 276,949 $ 215,686 $ 198,579
---------- ---------- -----------
---------- ---------- -----------
Projected benefit obligation................................................ $ 703,635 $ 571,545 $ 537,885
Plan assets at fair value................................................... 625,279 515,619 411,141
---------- ---------- -----------
---------- ---------- -----------
Projected Benefit Obligation Less Than Plan Assets.......................... ($ 78,356) ($ 55,926) ($ 126,744)
Unrecognized net asset at transition, net of amortization................... (72,419) (79,002) (85,585)
Unrecognized net loss from past experience different from that assumed...... 104,110 117,236 116,237
---------- ---------- -----------
---------- ---------- -----------
Accrued Pension Cost Included In Other Liabilities.......................... ($ 46,665) ($ 17,692) ($ 96,092)
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
Following is a summary of the components of net periodic pension costs:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- -----------
<S> <C> <C> <C>
Service cost - benefits earned during the period $41,461 $36,252 $35,337
Interest cost on projected benefit obligation 49,072 39,663 37,256
Actual return on plan assets (49,495) (40,316) (10,576)
Net amortization and deferral (3,108) (6,471) (28,000)
----------- ---------- -----------
Net Periodic Pension Cost $37,930 $29,128 $34,017
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
At year end 1996, 1995 and 1994, an 8% weighted average discount rate and
a 5% rate of increase in future compensation levels was used to determine the
actual present value of the projected benefit obligation. The projected
long-term rate of return on plan assets was 8% in 1996, 1995 and 1994.
46
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
7. Related Party Transactions:
The Banks have entered into related party transactions with various
directors, officers and employees. Such transactions originated in the normal
course of bank operations as a depository and lending institution. Activity
in the loans to this group for the year are as follows:
BALANCE NEW LOANS LOAN PAYMENTS BALANCE
1995 1996 1996 1996
- ----------- ------------ -------------- ----------
$1,649,359 $5,291,616 $3,353,916 $3,587,059
8. Financial Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentration of Credit Risk:
The Bank is 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 loan commitments, unused credit loan
limits, and standby letters of credit. The instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the financial statements.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for loan commitments and standby
letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.
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. At December 31, 1996, the
Bank has $5,207,000. of loan commitments outstanding with $1,051,000.
expiring in excess of one year. The exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for these
commitments is represented by the contractual amount. The credit risk
involved in issuing letters of credit is essentially the same as that
involved in extending loan commitments to customers.
47
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
8. Financial Instruments with Off-Balance-Sheet Risk and Financial
Instruments with Concentration of Credit Risk (Continued):
The total amounts of off-balance-sheet financial instruments with
credit risk are as follows:
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
Loan commitments................. $ 5,031,000 $ 5,385,057
Standby letters of credit........ $ 176,000 $ 218,900
The Bank subsidiaries grant retail, commercial and commercial real
estate loans to customers located throughout West Virginia and Eastern
Kentucky.
The Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Bank
upon extension of credit, is based on management's credit evaluation of the
customer. Collateral held varies but may include accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties. Although the Bank has a diversified loan portfolio, a
substantial portion of the debtors' ability to honor their contracts is
dependent upon the economic conditions in each loan's respective location.
9. Restriction on Cash and Due from Banks and Contingent Liabilities:
The Bank is required to maintain average balances with the Federal
Reserve Bank. The average required reserve balances were $375,000. and
$380,000. for 1996 and 1995 respectively. The Bank has various claims and
suits pending at December 31, 1996 arising in the ordinary course of its
business. It is the opinion of management and legal counsel that such
litigation will not materially affect the Bank's financial position or
earnings.
10. Regulatory Matters
The various regulatory agencies having supervisory authority over
financial institutions have adopted risk-based capital guidelines which
define the adequacy of the capital levels of regulated institutions. These
risk based capital guidelines require minimun levels of capital based upon
the risk rating of assets and certain off-balance-sheet items. Assets and
off-balance-sheet items are assigned regulatory risk-weights ranging from
0% to 100% depending on their level of credit risk. The guidelines classify
capital in two tiers, Tier I and Tier II, the sum of which is total
capital. Tier I capital is essentially common equity, less intangible
assets. Tier II capital is essentially qualifying long-term debt and a
portion of the allowance for loan losses.
REGULATORY
COMPANY MINIMUM
----------- -----------------
Tier I risk based capital ratio.............. 17.03% 4%
Total risk based capital ratio............... 18.04% 8%
Tier I leverage ratio................... 10.89% 4%
The Company's principal source of funds for dividend payments is
dividends received from the subsidiary Banks. Banking regulations limit the
amount of dividends that may be paid without prior approval of regulatory
agencies. Under these regulations, the amount of dividends that may be paid
in any calendar year is limited to the current year's net profits, as
defined, combined with the retained net profits of the preceding two years,
subject to the capital requirements as defined above.
48
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
11. Disclosures about fair value of financial instruments
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:
Cash and Cash Equivalents--For those short-term instruments, the
carrying amount is a reasonable estimate of fair value.
Investment Securities--For investment securities, fair values are
based on quoted market prices or dealer quotes.
Loans--Fair value 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 by discounting future cash flows
using the rates currently offered for deposits of similar remaining
maturities.
Securities Sold Under Agreements to Repurchase--For these short-term
instruments, the carrying amount is a reasonable estimate of fair
value.
Federal Home Loan Bank Advances--Rates currently available to the
Company for advances with similar terms and remaining maturities are
used to estimate fair value of existing debt.
Note Payable--The carrying value of variable rate borrowed funds is a
reasonable estimate of fair value.
Commitments to Extend Credit and Standby Letters of Credit-
Committments to extent credit and standby letters of credit represent
agreements to lend to a customer at the market rate when the loan is
extended, thus the commitments and letters of credit are not
considered to have a fair value.
The fair values of the Company's financial instruments at December 31,
1996 are as follows:
CARRYING FAIR
AMOUNT VALUE
-------------------------------
Financial assets:
Cash and cash equivalents................. $ 4,434,697 $ 4,434,697
Federal funds sold.............. ......... 7,470,000 7,470,000
Investment securities..................... 21,395,389 21,155,512
Loans..................................... 71,553,111 70,711,285
Less: allowance for loan losses........... (681,375) (681,375)
-------------------------------
$104,171,822 $ 103,090,119
Financial liabilities:
Deposits.................................. $ 95,232,579 $ 95,065,249
-------------------------------
-------------------------------
49
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
12. Treasury Stock:
In 1994, 908 shares of treasury stock were purchased of which 21 shares
were sold. In 1992, 238 shares of treasury stock were purchased. The total
number of shares outstanding were 467,612 for both 1996 and 1995. Earnings
per share has been computed using a weighted average number of shares
outstanding.
13. Merger and Acquisition:
On May 28, 1996 the Company and its subsidiaries, Logan Bank & Trust
Company and Bank of Chapmanville entered into a merger agreement whereby
the bank subsidiaries would merge into Logan Bank & Trust Company. The
merger was completed after proper approval by the directors, shareholders
and regulatory agencies. Since surviving bank was still a wholly owned
subsidiary of the company, the transaction was accounted for under the
pooling of interest method and no restatement of prior periods was
necessary.
In February, Logan Bank & Trust Company opened a branch located in Man,
West Virginia. This full service branch services the southern part of Logan
County and its neighboring counties. In November Logan Bank & Trust Company
acquired a branch facility located in Harts, West Virginia from another
financial institution. Under the purchase agreement, the bank acquired all
the real and personal property and assumed the deposits related to the
branch. The income and expenses of operating these branch facilities are
included in the consolidated statement of income from their opening dates.
14. Parent Only Condensed Financial Information:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
<S> <C> <C>
CONDENSED BALANCE SHEET: 1996 1995
- --------------------------------------------------------------- ------------- -------------
Assets:
Cash........................................................... $ 354,485 $ 265,395
Other Assets................................................... 264,396 22,922
Investment in Subsidiaries..................................... 11,379,008 10,395,102
------------- -------------
$ 11,997,889 $ 10,683,419
------------- -------------
------------- -------------
Liabilities and Equity:
Accrued Liabilities............................................ $ 582,953 $ 292,199
Common Stock................................................... 1,274,030 1,274,030
Surplus........................................................ 2,070,816 2,070,816
Retained Earnings.............................................. 8,930,288 7,906,572
Treasury Stock................................................. (860,198) (860,198)
------------- -------------
$ 11,997,889 $ 10,683,419
------------- -------------
------------- -------------
Condensed Statement of Income:
Equity in Net Earnings of subsidiaries......................... $ 1,635,759 $ 1,254,870
Other Income................................................... 37,414 25,527
Operating Expenses............................................. 135,104 68,546
------------- -------------
Net Income..................................................... $ 1,538,069 $ 1,211,851
------------- -------------
------------- -------------
</TABLE>
50
<PAGE>
Logan County BancShares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
December 31, 1996, 1995 AND 1994
14. Parent Only Condensed Financial Information (Continued):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------ ------------ ------------
Condensed Statement of Changes in Cash Flow:
Cash Flows From Increases (Decreases) in Cash and Cash Equivalents
Operating Activities:
Net Income.............................................................. $ 1,538,069 $ 1,211,851 $ 1,065,274
Net Change in Other Assets.............................................. (241,475) 29,912 28,103
Net Change in Notes Payable............................................. 0 0 0
Net Change in Accrued Liabilities....................................... 290,754 (33,914) (297,198)
------------ ------------ ------------
Net Cash Provided by Operating Activities............................... 1,587,348 1,207,849 796,179
------------ ------------ ------------
Cash Flows From Investing Activities: Net Change in Investment in
Subsidiaries.......................................................... (960,505) (680,637) (637,985)
------------ ------------ ------------
Net Cash Provided (Used) in Investing Activities........................ 960,505 (680,637) (637,985)
------------ ------------ ------------
Cash Flows From Financing Activities:
Dividends............................................................... (537,753) (444,232) (327,646)
Purchase of Treasury Stock.............................................. 0 0 (22,700)
Sale of Treasury Stock.................................................. 0 0 2,100
------------ ------------ ------------
Net Cash Used in Financing Activities................................... (537,753) (444,232) (348,246)
------------ ------------ ------------
Net Change in Cash and Cash Equivalents During the Year................. 89,090 82,980 (190,052)
Cash Account:
Beginning of Year....................................................... 265,395 182,415 372,467
------------ ------------ ------------
End of Year............................................................. $ 354,485 $ 265,395 $ 182,415
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
51
<PAGE>
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing on Page 57 of the Corporation's Proxy Statement,
dated April 2, 1997, is incorporated herein by reference in response to this
item.
Executive Officers of the Registrant:
<TABLE>
<CAPTION>
Name Age Position and Office
---- --- -------------------
<S> <C> <C>
Harvey Oakley 76 Chairman of the Board - Logan
County BancShares, Inc. Mr. Oakley
has been an officer and Director of
Logan Bank & Trust Company since
1963, a attorney at law, and Circuit
Judge, State of West Virginia.
Frank H. Oakley 82 President - Logan County BancShares,
Inc. Mr. Oakley has been the President
of Logan Bank & Trust Company since
1963 and is Chairman of the Board of
Bray and Oakley Insurance Agency, Inc.
Eddie D. Canterbury 48 Executive Vice President and CEO of
Logan County BancShares, Inc. Mr.
Canterbury has been the Executive Vice
President/CEO of Logan Bank & Trust
Company since 1983 and Sr. Vice
President since 1980. He is a Director
of Logan Bank & Trust Company.
</TABLE>
52
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
The information appearing in the Corporation's Definitive Proxy Statement,
dated April 2, 1997, is incorporated herein by reference in response to this
item.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information appearing in the Corporation's Definitive Proxy Statement,
dated April 2, 1997, is incorporated herein by reference in response to this
item.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing in the Corporation's Definitive Proxy Statement,
dated April 2, 1997 is incorporated herein by reference in response to this
item.
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
None.
53
<PAGE>
Logan County BancShares, Inc.
POST OFFICE BOX 597 LOGAN, WEST VIRGINIA 25601 (304) 752-0280
(304) 752-4649
April 2, 1997
Dear Stockholder:
Your Board of Directors is pleased to invite you to attend the Annual
Meeting of Stockholders of Logan County BancShares, Inc. on April 22, 1997,
at 3:00 p.m. The Notice of Meeting and Proxy Statement are attached.
The meeting will be held at Logan Bank and Trust Company's lobby,
Washington and Main Street, Logan, West Virginia. The business of the meeting
will be the election of the Directors and to transact such other business as
may properly come before the meeting.
We hope that you can attend the meeting. In any event, please mark, date
and sign the enclosed proxy and return it in the accompanying envelope.
LOGAN COUNTY BANCSHARES, INC.
/s/ Frank H. Oakley /s/ Eddie Canterburya
Frank H. Oakley Eddie Canterburya
President Executive Vice President/CEO
Logan Bank & Trust Chapmanville Bank of Man Bank Of Harts Bank Of
LB&T LB&T LB&T
54
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 2, 1997
The Annual Meeting of Stockholders of Logan County BancShares, Inc. will
be held at Logan Bank and Trust Company's lobby at 3:00 p.m. on April 22,
1997, for the following purposes:
1. To elect Directors of the Corporation
2. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 24, 1997
are entitled to notice of and to vote at the meeting.
55
<PAGE>
LOGAN COUNTY BANCSHARES, INC.
Proxy for the Annual Meeting of Shareholders
To be Held April 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank H. Oakley, Harvey Oakley and Eddie
Canterbury, or any of them, proxies or proxy of the undersigned with full
power of substitution to vote, as designated below, the shares of the
undersigned at the Annual Meeting of the Shareholders of Logan County
BancShares, Inc. to be held at Logan Bank and Trust Company's office, Corner
of Washington Avenue and Main Street, Logan, West Virginia, on April 22, 1996
at 3:00 p.m. and at any and all adjournments thereof, with all of the powers
the undersigned would possess if personally present.
1. Proposal to approve the nominated Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such
other business and on such other matters as may properly come before
the meeting or any adjournments thereof.
The shares as represented by this Proxy will be voted as specified by the
undersigned. If no specification is made, this Proxy will be cast FOR
Proposal.
Number of Shares: ___________ Date:__________, 1997
_____________________________ _____________________
_____________________________ _____________________
Certificate Name(s) Signature(s)
Please sign in the manner in which your stock is registered. When
signing as attorney, trustee or guardian, please give your full title as
such. For joint accounts, each Joint Tenant should sign. If a corporation,
please sign in full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
56
<PAGE>
LOGAN COUNTY BANCSHARES, INC.
P.O. BOX 597
LOGAN, WEST VIRGINIA 25601
APRIL 2, 1997
PROXY STATEMENT
Solicitation and Revocability of Process
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Logan County BancShares, Inc. (Corporation) of
proxies for the Annual meeting of Stockholders of the Corporation to be held
April 22, 1997, and any adjournment thereof. Shares represented by properly
executed proxies which are received in time and not revoked will be voted at
the meeting in the manner described in the proxies. Any proxy may be revoked
at any time before it is exercised.
Information as to Voting Securities
The Board of Directors has fixed the close of business on March 24,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. At the record date, 467,612
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.
Election of Directors
The Board of Directors of the Corporation has, in accordance with the
bylaws, fixed the number of Directors of the Corporation at not less than
three. Accordingly, eight Directors are proposed to be elected to serve until
the next Annual Meeting of Stockholders and until their respective successors
are duly elected and have qualified. It is intended that shares represented
by proxies solicited by the Board of Directors will, unless contrary
instructions are given, be voted in favor of the election as Directors of the
nominees listed below. If any nominee is unavailable for election, the shares
may be voted for a substitute nominee. The following nominees have been
proposed to serve as Directors of the Corporation. They are:
COMMON STOCK
NAME AGE PRINCIPAL OCCUPATION BENEFICIALLY OWNED
Frank H. Oakley 82 President, Logan County (A) 85,808
BancShares, Inc.; Chair-
man, Bray & Oakley Insur-
ance Agency, Inc.; President,
Logan Bank and Trust
57
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
NAME AGE PRINCIPAL OCCUPATION BENEFICIALLY OWNED
<S> <C> <C> <C>
Harvey Oakley 76 Chairman of the Board, Logan (B) 44,955
County BancShares, Inc.;
Attorney at Law; Chairman of the
Board of Logan Bank and Trust.
Clell Peyton 60 Director, Logan Bank and Trust; 6,614
Agency Manager, Nationwide
Insurance Company.
Earle B. Queen 69 Director, Logan Bank and Trust; (C) 12,100
President, Logan Planing Mill;
President, James Funeral Home
LaVeta Jean Ray 65 Retired Counselor, Chapmanville 4,000
High School.
William W. Wagner 64 Director, Logan Bank and Trust; (D) 7,200
Director, United BancShares;
Former Chairman, Eagle Bancorp,
Inc.
Eddie Canterbury 48 Director and Executive Vice 2,738
President/CEO Logan County
BancShares, Inc.; Director and
Executive Vice President/CEO,
Logan Bank and Trust.
Walter D. Vance 46 Vice President, Logan County (E) 3,046
BancShares, Inc.; Vice
President, Aracoma Drug
Company.
</TABLE>
58
<PAGE>
(A) Includes 33,458 shares for which voting and investment powers are deemed
shared; 11,000 shares owned by Bray & Oakley Insurance Agency, Inc; 4,349
shares owned by Sarah Ann Oakley Matteson; 3,909 shares owned by Bruce
McDonald Holding Company; 13,750 shares owned by W. W. McDonald Land Company;
450 shares owned by Triadelphia Land Company. As to the last three companies,
Mr. Oakley and his brother, Harvey Oakley, are officers and are empowered to
vote the shares. These 18,109 shares are included as beneficially owned by
both Frank Oakley and Harvey Oakley.
(B) Includes 3,623 jointly owned with spouse. See also (A) for 18,109 company
owned shares.
(C) Included 12,000 shares owned by Earle B. Queen, Trust.
(D) Includes 436 shares jointly owned with spouse.
(E) Includes 566 shares owned by Aracoma Drug Company.
Executive Compensation
All Executive Officers of Logan County BancShares, Inc. were compensated
$48,923.00 in salaries and $9,600.00 in Director's fees during 1996.
Other Matters
As of the date of this Proxy Statement, the Board of Directors was not
aware of any matters not referred to in the form proxy that would be
presented for action at the meeting. If any other business comes before the
meeting, the persons named in the proxy will have discretionary authority to
vote the shares represented by them in accordance with their best judgement.
Date for Submission of Stockholder Proposals
All proposals must be submitted to the Board of Directors 30 days prior
to the Annual Meeting of Stockholders.
59
<PAGE>
NOTICE TO SHAREHOLDERS
----------------------
The Annual Disclosure Statement, which contains certain financial
information, of Logan Bank and Trust Company is available upon
request.
Please contact the New Accounts Department at:
Logan Bank and Trust Company
43 Washington Avenue
Post Office 597
Logan, West Virginia 25601-0597
Phone: (304) 752-1166
60
<PAGE>
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.
LOGAN COUNTY BANCSHARES, INC.
(Registrant)
/s/ Eddie Canterburya
-----------------------------
Eddie Canterburya
Executive Vice President/CEO
March 25, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on the dates indicated.
SIGNATURE
Frank H. Oakley Director, President
Harvey Oakley Director, Chairman of the
Board
Clell Peyton Director By: /s/ Eddie Canterbury
---------------------
Earle B. Queen Director Eddie Canterbury
Attorney in Fact
Lavetta J. Ray Director Date:
March 25, 1997
Walter D. Vance Director
William W. Wagner
/s/ Eddie Canterbury Executive Vice President
- ------------------------------ and Director
Eddie Canterbury
Director
61
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,435
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,275
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,326
<INVESTMENTS-CARRYING> 7,069
<INVESTMENTS-MARKET> 7,079
<LOANS> 71,553
<ALLOWANCE> 681
<TOTAL-ASSETS> 107,380
<DEPOSITS> 95,233
<SHORT-TERM> 0
<LIABILITIES-OTHER> 732
<LONG-TERM> 0
0
0
<COMMON> 1,274
<OTHER-SE> 10,140
<TOTAL-LIABILITIES-AND-EQUITY> 107,380
<INTEREST-LOAN> 5,699
<INTEREST-INVEST> 1,135
<INTEREST-OTHER> 525
<INTEREST-TOTAL> 7,359
<INTEREST-DEPOSIT> 2,980
<INTEREST-EXPENSE> 2,988
<INTEREST-INCOME-NET> 4,371
<LOAN-LOSSES> 40
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,027
<INCOME-PRETAX> 2,305
<INCOME-PRE-EXTRAORDINARY> 1,538
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,538
<EPS-PRIMARY> 3.29
<EPS-DILUTED> 3.29
<YIELD-ACTUAL> 4.64
<LOANS-NON> 687
<LOANS-PAST> 739
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 622
<CHARGE-OFFS> 25
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 681
<ALLOWANCE-DOMESTIC> 681
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
