<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1997
.......................................................
Commission File Number 2-95114
.................................................
LOGAN COUNTY BANCSHARES, INC.
........................................................................
(Exact Name of Registrant as Specified in Its Charter)
WEST VIRGINIA
........................................................................
(State or other jurisdiction of incorporation or organization)
55-0660015
........................................................................
(IRS Employer Identification Number)
P. O. BOX 597, LOGAN, WEST VIRGINIA 25601
........................................................................
(Address of Principal Executive Offices) (Zip Code)
(304) 752-1166
........................................................................
(Registrant's telephone number including area code)
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. Yes X No
---- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding, of each of the issuer's
classes of common stock, as of the latest practicable date. 467,612
------------
<PAGE>
LOGAN COUNTY BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS:
Consolidated Statement of Condition As of March 31,
1997 and 1996 and December 31, 1996.
Consolidated Statement of Income For the Three Month
Period Ended March 31, 1997 and 1996.
Consolidated Statement of Changes in Stockholders'
Equity for the Three Month Period Ended March
31, 1997 and 1996.
Consolidated Statement of Cash Flows for the Three
Month Period Ended March 31, 1997 and 1996.
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
PART II - OTHER INFORMATION
SIGNATURES
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement of Condition
March 31, 1997 and 1996 and December 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
------ March 31, December 31,
1997 1996 1996
---- ---- -------
<S> <C> <C> <C>
CASH AND DUE FROM BANKS $4,817 $3,670 $4,435
INVESTMENT SECURITIES:
AVAILABLE FOR SALE 15,220 8,560 14,326
HELD TO MATURITY 7,065 9,149 7,069
FEDERAL FUNDS SOLD 9,210 8,635 7,275
LOANS:
TOTAL LOANS 73,988 63,346 71,553
RESERVE FOR LOAN LOSSES 681 666 681
---------- ---------- ----------
NET LOANS 73,307 62,680 70,872
BANK PREMISES AND EQUIPMENT 2,136 1,951 2,121
ACCRUED INTEREST AND OTHER ASSETS 1,383 1,021 1,282
---------- ---------- ----------
$113,138 $95,666 $107,380
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
DEPOSITS:
DEMAND DEPOSITS $30,891 $26,907 $28,030
SAVINGS DEPOSITS 30,606 28,807 30,560
TIME DEPOSITS 39,178 28,659 36,643
---------- ---------- ----------
TOTAL DEPOSITS 100,675 84,373 95,233
LONG-TERM BORROWINGS 0 187 0
ACCRUED AND OTHER LIABILITIES 543 300 689
INCOME TAXES PAYABLE:
CURRENT 237 134 39
DEFERRED -3 3 4
---------- ---------- ----------
TOTAL LIABILITIES 101,452 84,997 95,965
STOCKHOLDERS' EQUITY:
COMMON STOCK-$2.50 PAR VALUE;
AUTHORIZED-520,000 SHARES;
ISSUED & OUTSTANDING-509,612. 1,274 1,274 1,274
SURPLUS 2,071 2,071 2,071
RETAINED EARNINGS 9,201 8,184 8,930
TREASURY STOCK (860) (860) (860)
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 11,686 10,669 11,415
------------ ------------ ------------
$113,138 $95,666 $107,380
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement of Income
For the Three Month Periods Ended March 31, 1997 and 1996
(In Thousands)
1997 1996
---- ----
INTEREST INCOME:
INTEREST ON LOANS $1,559 $1,338
INTEREST ON INVESTMENTS 327 217
INTEREST ON FEDERAL FUNDS SOLD 118 134
---------- ----------
2,004 1,689
INTEREST EXPENSE:
INTEREST ON DEPOSITS 818 701
OTHER INTEREST EXPENSE 0 7
---------- ----------
NET INTEREST INCOME 1,186 981
PROVISION FOR LOAN LOSSES 0 10
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,186 971
OTHER INCOME:
SERVICE FEES 272 151
OTHER OPERATING INCOME 17 20
---------- ----------
TOTAL OTHER INCOME 289 171
OTHER EXPENSES:
SALARIES AND BENEFITS 416 385
EXPENSE OF BANK PREMISES AND
EQUIPMENT 88 79
OTHER OPERATING EXPENSES 267 269
---------- ----------
TOTAL OTHER EXPENSES 771 733
INCOME BEFORE INCOME TAXES 704 409
FEDERAL INCOME TAXES 232 139
---------- ----------
NET INCOME $472 $270
=========== ==========
PER SHARE OF COMMON STOCK NET INCOME $1.01 $0.58
========== ==========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement in Changes in Stockholders' Equity
For the Three Month Periods Ended March 31, 1997 and 1996
(In Thousands)
<TABLE>
<CAPTION>
Net Unrealized
(losses) on
Common Retained Available-for- Treasury
Stock Surplus Earnings Sale Securities Stock Total
------ ------- -------- --------------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31
1996 $1,274 $2,071 $8,986 ($56) ($860) $11,415
DIVIDENDS ON 467,612 SHARES
COMMON STOCK @ $0.30 (140) (140)
CHANGE IN NET UNREALIZED
HOLDING GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES (61) (61)
NET INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1997 0 0 472 0 0 472
---------- ---------- ---------- ------------- ---------- ----------
$1,274 $2,071 $9,318 ($117) ($860) $11,686
========== ========== ========== ============= ========== ==========
BALANCE - DECEMBER 31
1995 $1,274 $2,071 $7,986 ($79) ($860) $10,392
CHANGE IN NET UNREALIZED
HOLDING GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES 7 7
NET INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1996 0 0 270 0 0 270
---------- ---------- ---------- ------------- ---------- ----------
$1,274 $2,071 $8,256 ($72) ($860) $10,669
========== ========== ========== ============= ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $472 $270
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
DEPRECIATION 36 36
SECURITY AMORTIZATION AND
ACCREATION 3 5
MARKET VALUE AMORTIZATION 1 1
PROVISION FOR LOAN LOSSES 0 10
(GAIN) LOSS ON SALE OF
INVESTMENT SECURITIES 0 0
(INCREASE) DECREASE IN OTHER
ASSETS (56) 7
INCREASE (DECREASE) IN OTHER
LIABILITIES 45 (173)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 501 156
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF SECURITIES AVAILABLE FOR SALE 0 500
PROCEEDS FROM MATURITIES OF SECURITIES HELD TO MATURITY 0 2,500
PURCHASE OF SECURITIES AVAILABLE FOR SALE (1,000) (3,250)
PURCHASE OF SECURITIES HELD TO MATURITY 0 (1,000)
NET (INCREASE) DECREASE IN
FEDERAL FUNDS SOLD (1,935) (1,165)
NET (INCREASE) DECREASE IN LOANS (2,435) 995
PURCHASE OF BANK PREMISES
AND EQUIPMENT (51) (270)
------- -------
NET CASH PROVIDED BY INVESTING ACTIVITIES (5,421) (1,690)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET INCREASE (DECREASE) IN
DEMAND DEPOSITS 2,861 (338)
NET INCREASE (DECREASE) IN
SAVINGS DEPOSITS 46 358
NET INCREASE (DECREASE) IN
TIME DEPOSITS 2,535 636
PROCEEDS FROM LONG-TERM BORROWINGS 0 187
DIVIDENDS PAID (140) 0
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NET CASH PROVIDED BY FINANCING ACTIVITIES 5,302 843
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 382 (691)
CASH AND CASH EQUIVALENT AT
BEGINNING OF PERIOD 4,435 4,361
------- -------
CASH AND CASH EQUIVALENT AT
END OF PERIOD $4,817 $3,670
======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis focused on significant
changes in the financial condition and results of operations of Logan
County Bancshares, Inc.
EARNINGS SUMMARY
The Company reported net income of $472,000. for the three months
ended March 31, 1997 compared to $270,000. for the three months ended
March 31, 1996, representing a 74.81% increase. This increase was
primarily the result of the increase in net interest income of $205,000.,
increase in other income of $118,000. and increase in all operating
expenses net of other income of $121,000.
Earnings per common share were $1.01 for the three months ended
March 31, 1997 compared with $0.58 for the same period of 1996.
Logan County Bancshares' annualized return on assets (ROA) for the
three month period ended March 31, 1997 was 1.67% compared to 1.13% for
the three month period ended March 31, 1996. Annualized return on
shareholders' equity (ROE) was 16.16% and 10.13% at March 31, 1997 and
1996, respectively.
NET INTEREST INCOME
The most significant component of Logan County Bancshares' net
earnings is net interest income, which represents the excess of interest
income earned on earning assets over the interest expense paid for sources
of funds. Net interest income is affected by changes in volume resulting
from growth and alteration of the balance sheet composition, as well as by
fluctuations in market interest rates and maturities of sources and uses
of funds.
Interest income amounted to $2,004,000. at March 31, 1997, an
increase of $315,000. from March 31, 1996. Interest expense also
increased $110,000., resulting in an overall increase of $205,000. or
20.90% in net interest income between March 31, 1997 and March 31, 1996.
PROVISION FOR LOAN LOSSES AND ASSET QUALITY
The provision for loan losses represents charges to earnings
necessary to maintain an adequate allowance for potential future loan
losses. Management's determination of the appropriate level of the
allowance is based on an ongoing analysis of credit quality and loss
potential in the loan portfolio, actual loan loss experience relative to
the size and characteristics of the loan portfolio, change in the
composition and risk characteristics of the loan portfolio and the
anticipated influence of national and local economic conditions. The
adequacy of the allowance for loan losses is reviewed quarterly and
adjustments are made as considered necessary.
For the three month period ended March 31, 1997, the provision for
loan losses decreased $10,000. to $0. or 100.00% compared to the same
period ended March 31, 1996.
The reserve for loan losses was $681,000. at March 31, 1997 compared
to $666,000. at March 31, 1996. Expressed as a percentage of loans (net
of unearned income), the reserve for loan losses was .92% at March 31,
1997 and 1.05% at March 31, 1996.
<PAGE>
A summary of the Company's past due loans and nonperforming assets is
provided in the following table.
SUMMARY OF PAST DUE LOANS AND NONPERFORMING ASSETS
(in thousands of dollars)
March 31,
--------------------
1997 1996
------- -------
Loans past due 90 or more days
still accruing interest $246 $217
------- -------
Nonperforming assets:
Nonaccruing loans 683 1,719
Other real estate owned 259 180
------- -------
$942 $1,899
======= =======
NONINTEREST INCOME
Noninterest income includes revenues from all sources other than
interest income. For the three month period ended March 31, 1997,
noninterest income totalled $289,000., representing an increase of
$118,000., or 69.01% from the $171,000. recorded during the same period of
1996. This increase was primarily due to increases in service fees income
of $121,000.
Logan County Bancshares intends to strive in the future to enhance
its overall profitability by identifying new opportunities for earning
additional noninterest income.
NONINTEREST EXPENSE
Noninterest expense comprises overhead costs which are not related to
interest expense or to losses from loans or securities. As of March 31,
1997, the Company's noninterest expense totalled $771,000., remaining
consistent with total noninterest expense for the three months ended March
31, 1996. Expressed as a percentage of assets, annualized noninterest
expense was 2.73% at March 31, 1997, compared to 3.06% at March 31, 1996.
Salaries and employee benefits are Logan County Bancshares' largest
noninterest cost, representing approximately 54% of total noninterest
expense at March 31, 1997 and 1996. Salaries and employee benefits
increased $31,000., or 8.05% at March 31, 1997 compared to March 31, 1996.
This increase is primarily due to increased personnel.
INCOME TAXES
Logan County Bancshares' federal income tax expense, for the three
month period ended March 31, 1997, reflected a $93,000. increase when
compared to the same period of 1996. Income tax expense equalled 32.95%
and 33.98% of income before taxes at March 31, 1997 and 1996,
respectively. For financial reporting purposes, income tax expense does
not equal the Federal statutory income tax rate of 34% when applied to
pretax income, primarily because of tax-exempt interest income included in
income before income taxes.
<PAGE>
Balance Sheet Data:
Total assets grew by $5,758,000. between year end and March 31, 1997
to a balance of $113,138,000. The major component of this growth was an
increase in Investment Securities of $1,000,000. and an increase in
Federal Funds Sold of $1,935,000., and loan increases of $2,435,000. The
primary source of funds for this growth was an increase in deposits of
$5,442,000., and net income of $472,000.
Liquidity:
Managing Logan's liquidity requirements primarily involves meeting
the loan demand, deposit withdrawal and the cash flow requirements.
Logan's primary sources of liquid assets are federal funds sold and
investment securities maturing in less than one year. These items can be
converted into funds in a short period of time. At March 31, 1997,
Federal Funds Sold amounted to $9,210,000. and securities maturing within
one year amounted to $7,180,000. These are compared to the balances at
March 31, 1996 of $8,635,000. in Federal Funds Sold and maturing
Investment Securities of $5,337,000. due within one year.
Traditionally, banks have been able to manage liquidity based on a
relatively stable group of core deposits. The deposits, demand and
consumer deposits under $l00,000. are considered the most stable and least
expensive source of funds. During 1997 and 1996, banks have been faced
with more volatile, interest sensitive funds and have had to match their
funding requirements by using assets and liability management techniques.
Capital Resources:
Logan's capital position is based on its stockholders' equity and the
primary source of such equity has been retained earnings. Since Logan's
formation and merger, it has accumulated Retained Earnings of $9,318,000.
and has a total Stockholders' Equity of $11,686,000. as of March 31, 1997;
as compared to $8,256,000. of Retained Earnings and total Stockholders'
equity of $10,669,000. at March 31, 1996.
The equity capital was 10.33% and 11.15% of total assets at March
31, 1997 and 1996 respectively. At present, there are no plans for any
significant capital expenditures. Logan County Bancshares exceeds all
regulatory capital guide lines and has not been advised by any regulatory
agency of any minimum capital requirement.
Effects of Inflation:
The impact of inflation on a financial institution differs
significantly from that exerted on an industrial concern, primarily
because a financial institution's assets and liabilities consist almost
entirely of monetary items. The low proportion of the Bank's net fixed
assets to total assets reduces both the potential of inflated earnings
resulting from understated depreciation charges and the potential
significant understatement of asset values. However, inflation does have
a considerable indirect impact on banks, including increased loan demand,
as it becomes necessary for producers and consumers to acquire additional
funds to maintain the same levels of consumption, inventories, and new
investments. Inflation also frequently results in higher interest rates
which can affect both yields on earning assets and rates paid on deposits
and other interest-bearing liabilities.
<PAGE>
PART II. - OTHER INFORMATION
NONE.
----
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LOGAN COUNTY BANCSHARES, INC.
-------------------------------------
(Registrant)
Date
---------------------------- -------------------------------------
Frank Oakley, President
(Signature)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000760327
<NAME> LOGAN COUNTY BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 JAN-01-1997
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
<CASH> 4,817 0
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 9,210 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 15,220 0
<INVESTMENTS-CARRYING> 7,065 0
<INVESTMENTS-MARKET> 7,048 0
<LOANS> 73,988 0
<ALLOWANCE> 681 0
<TOTAL-ASSETS> 113,138 0
<DEPOSITS> 100,675 0
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 777 0
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 1,274 0
<OTHER-SE> 10,412 0
<TOTAL-LIABILITIES-AND-EQUITY> 113,138 0
<INTEREST-LOAN> 1,559 0
<INTEREST-INVEST> 327 0
<INTEREST-OTHER> 118 0
<INTEREST-TOTAL> 2,004 0
<INTEREST-DEPOSIT> 818 0
<INTEREST-EXPENSE> 818 0
<INTEREST-INCOME-NET> 1,186 0
<LOAN-LOSSES> 0 0
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 771 0
<INCOME-PRETAX> 704 0
<INCOME-PRE-EXTRAORDINARY> 704 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 472 0
<EPS-PRIMARY> 1.01 0
<EPS-DILUTED> 1.01 0
<YIELD-ACTUAL> 4.643 0
<LOANS-NON> 683 0
<LOANS-PAST> 246 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 681 0
<CHARGE-OFFS> 0 0
<RECOVERIES> 0 0
<ALLOWANCE-CLOSE> 0 0
<ALLOWANCE-DOMESTIC> 681 0
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
