<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, 2000
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Commission File Number 2-95114
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LOGAN COUNTY BANCSHARES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
WEST VIRGINIA
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(State or other jurisdiction of incorporation or organization)
55-0660015
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(IRS Employer Identification Number)
P. O. BOX 597, LOGAN, WEST VIRGINIA 25601
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(Address of Principal Executive Offices) (Zip Code)
(304) 752-1166
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(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. 716,991
------------
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LOGAN COUNTY BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS:
Consolidated Statement of Condition As of March 31,
2000 and 1999 and December 31, 1999.
Consolidated Statement of Income For the Three Month
Period Ended March 31, 2000 and 1999.
Consolidated Statement of Changes in Stockholders'
Equity for the Three Month Period Ended March
31, 2000 and 1999.
Consolidated Statement of Cash Flows for the Three
Month Period Ended March 31, 2000 and 1999.
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, 2000 and 1999 and December 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999 1999
---- ---- ----
<S> <C> <C> <C>
ASSETS
------
CASH AND DUE FROM BANKS $ 5,000 $ 5,131 $ 7,184
INVESTMENT SECURITIES:
AVAILABLE FOR SALE 28,967 15,046 30,029
HELD TO MATURITY 0 2,495 0
FEDERAL FUNDS SOLD 750 17,130 0
LOANS:
TOTAL LOANS 109,059 86,997 109,572
RESERVE FOR LOAN LOSSES 701 692 701
------------ ------------ ------------
NET LOANS 108,358 86,305 108,871
BANK PREMISES AND EQUIPMENT 3,732 2,128 3,774
ACCRUED INTEREST AND OTHER ASSETS 3,008 1,585 2,888
------------ ------------ ------------
$ 149,815 $ 129,820 $ 152,746
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
DEPOSITS:
DEMAND DEPOSITS:
NON-INTEREST $ 20,159 $ 14,322 $ 19,332
INTEREST BEARING 22,237 20,691 18,999
SAVINGS DEPOSITS 33,029 30,630 31,024
TIME DEPOSITS 59,040 49,911 58,264
------------ ------------ ------------
TOTAL DEPOSITS 134,465 115,554 127,619
FEDERAL FUNDS PURCHASED 9840
ACCRUED AND OTHER LIABILITIES 448 606 789
INCOME TAXES PAYABLE:
CURRENT 239 260 (18)
DEFERRED 72 71 72
------------ ------------ ------------
TOTAL LIABILITIES 135,224 116,491 138,302
STOCKHOLDERS' EQUITY:
COMMON STOCK-$1.67 PAR VALUE;
AUTHORIZED - 780,000 SHARES
OUTSTANDING 716,991 SHARES
IN 2000 AND 1999 1,300 1,300 1,300
SURPLUS 2,408 2,408 2,408
RETAINED EARNINGS 11,743 10,481 11,596
TREASURY STOCK (860) (860) (860)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 14,591 13,329 14,444
------------ ------------ ------------
$ 149,815 $ 129,820 $ 152,746
============ ============ ============
</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, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME:
INTEREST ON LOANS $2,241 $2,026
INTEREST ON INVESTMENTS 478 437
INTEREST ON FEDERAL FUNDS SOLD 5 105
------ ------
2,724 2,568
INTEREST EXPENSE:
INTEREST ON DEPOSITS 1,156 1,063
------ ------
NET INTEREST INCOME 1,568 1,505
PROVISION FOR LOAN LOSSES 0 23
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,568 1,482
OTHER INCOME:
SERVICE FEES 146 136
OTHER OPERATING INCOME 41 39
------ ------
TOTAL OTHER INCOME 187 175
OTHER EXPENSES:
SALARIES AND BENEFITS 539 486
EXPENSE OF BANK PREMISES AND
EQUIPMENT 137 123
OTHER OPERATING EXPENSES 354 285
------ ------
TOTAL OTHER EXPENSES 1,030 894
INCOME BEFORE INCOME TAXES 725 763
INCOME TAXES 257 272
------ ------
NET INCOME $ 468 $ 491
====== ======
PER SHARE OF COMMON STOCK NET INCOME $ 0.65 $ 0.68
====== ======
</TABLE>
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, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON RETAINED COMPREHENSIVE TREASURY
STOCK SURPLUS EARNINGS INCOME, NET STOCK TOTAL
------ ------- -------- ------------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31
1999 $ 1,300 $ 2,408 $ 12,236 ($641) ($860) $ 14,443
COMPREHENSIVE INCOME
NET INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 2000 0 0 468 0 0 468
CHANGE IN NET UNREALIZED
HOLDING GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES (91) (91)
-------- ------- -------- --------- ------- --------
TOTAL COMPREHENSIVE INCOME 0 0 468 (91) 0 377
DIVIDENDS ON 716,991 SHARES
COMMON STOCK @ $0.32 (229) (229)
-------- ------- -------- --------- ------- --------
$ 1,300 $ 2,408 $ 12,475 ($732) ($860) $ 14,591
======== ======= ======== ========= ======= ========
BALANCE - DECEMBER 31
1998 $ 1,300 $ 2,408 $ 11,171 $40 ($860) $ 14,059
COMPREHENSIVE INCOME
NET INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1999 0 0 491 0 0 491
NET UNREALIZED GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES (109)
-------- ------- -------- --------- ------- --------
TOTAL COMPREHENSIVE INCOME 0 0 491 (109) 0 382
DIVIDENDS ON 716,991 SHARES
COMMON STOCK @ $0.29 (206) (206)
-------- ------- -------- --------- ------- --------
$ 1,300 $ 2,408 $ 11,456 ($69) ($860) $ 14,235
======== ======= ======== ========= ======= ========
</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, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 468 $ 491
------ ------
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
DEPRECIATION 67 40
SECURITY AMORTIZATION AND
ACCREATION 3 (1)
MARKET VALUE AMORTIZATION (1) (1)
PROVISION FOR LOAN LOSSES 0 23
(INCREASE) DECREASE IN OTHER
ASSETS (52) (235)
INCREASE (DECREASE) IN OTHER
LIABILITIES (84) 185
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 401 502
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF SECURITIES AVAILABLE FOR SALE 0 5,500
PROCEEDS FROM MATURITIES OF SECURITIES AVAILABLE FOR SALE 900 2,000
PROCEEDS FROM MATURITIES OF SECURITIES HELD TO MATURITY 0 500
PURCHASE OF SECURITIES AVAILABLE FOR SALE 0 (10,956)
NET (INCREASE) DECREASE IN
FEDERAL FUNDS SOLD (750) 1,630
NET (INCREASE) DECREASE IN LOANS 513 (5,099)
PURCHASE OF BANK PREMISES
AND EQUIPMENT (25) (564)
------ ------
NET CASH PROVIDED BY INVESTING ACTIVITIES 638 (6,989)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET INCREASE (DECREASE) IN
DEMAND DEPOSITS 4,065 3,781
NET INCREASE (DECREASE) IN
SAVINGS DEPOSITS 2,005 1,870
NET INCREASE (DECREASE) IN
TIME DEPOSITS 776 171
NET INCREASE (DECREASE) IN (9,840)
FEDERAL FUNDS PURCHASED
DIVIDENDS PAID (229) (206)
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES (3,223) 5,616
------ ------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,184) (871)
CASH AND CASH EQUIVALENT AT
BEGINNING OF PERIOD 7,184 5,727
------ ------
CASH AND CASH EQUIVALENT AT
END OF PERIOD $5,000 $4,856
====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
March 31, 2000
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Financial Statements:
The foregoing statements are unaudited; however, in the
opinion of the Management, all adjustments (comprising of only
normal recurring accruals) necessary for a fair presentation of the
financial statements have been included.
2. Basis of Consolidation:
The Consolidated Statement of Condition and Consolidated
Statement of Income of Logan County BancShares, Inc. include the
activity of Logan Bank and Trust Company and Bank of Chapmanville,
a wholly owned subsidiary.
3. Year 2000 Assessment
Management has initiated a Company-wide program to assess its
data processing, information systems and customer service programs
to ensure the Company's operating capabilities in the year 2000.
Currently, the Company's subsidiary Bank, LB&T, uses EDS, a
regional provider of financial institution data processing as it's
primary provider of computer services and data processing. EDS has
certified it's hardware and software are Year 2000, and beyond,
compliant.
The Company contracted to have their computer hardware
evaluated for Year 2000 compliance and estimates additional
computer hardware and software costs to be approximately $455,000.
These costs were capitalized and will be amortized over five years.
It is the opinion of management that the cost of converting these
systems and the annual amortization, thereof, will not materially
impact the results of operation or its financial position.
<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 $468,000. for the three months
ended March 31, 2000 compared to $491,000. for the three months ended
March 31, 1999, representing a 4.91% decrease. This decrease was
primarily the result of the increase in net interest income of $63,000.,
increase in other income of $12,000. and increase in all operating
expenses of $136,000. and decrease in income taxes of $15,000.
Earnings per common share were $0.65 for the three months ended March
31, 2000 compared with $0.68 for the same period of 1999.
Logan County Bancshares' annualized return on assets (ROA) for the
three month period ended March 31, 2000 was 1.25% compared to 1.35% for
the three month period ended March 31, 1999. Annualized return on
shareholders' equity (ROE) was 12.83% and 13.80% at March 31, 2000 and
1999, 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 $2,724,000. at March 31, 2000, an
increase of $156,000. from March 31, 1999. Interest expense also
increased $93,000., resulting in an overall increase of $63,000. or 4.19%
in net interest income between March 31, 2000 and March 31, 1999.
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, 2000 and 1999, the
provision for loan losses was $0.00 and $23,000. respectively.
The reserve for loan losses was $701,000. at March 31, 2000 compared
to $721,000. at March 31, 1999. Expressed as a percentage of loans (net
of unearned income), the reserve for loan losses was .64% at March 31,
2000 and .72% at March 31, 1999.
<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)
<TABLE>
<CAPTION>
March 31,
------------------------
2000 1999
------ ------
<S> <C> <C>
Loans past due 90 or more days
still accruing interest $3,266 $3,501
------ ------
Nonperforming assets:
Nonaccruing loans 684 459
Other real estate owned 373 236
------ ------
$1,057 $ 695
====== ======
</TABLE>
NONINTEREST INCOME
Noninterest income includes revenues from all sources other than
interest income. For the three month period ended March 31, 2000,
noninterest income totalled $187,000., representing a increase of
$12,000., or 6.86% from the $175,000. recorded during the same period of
1999. This increase was primarily due to increases in service fees income
of $10,000.
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,
2000, the Company's noninterest expense totalled $1,030,000., increasing
$136,000. over the $894,000. of noninterest expense for the three months
ended March 31, 1999. Expressed as a percentage of assets, annualized
noninterest expense was 2.75% at March 31, 2000, compared to 2.46% at
March 31, 1999.
Salaries and employee benefits are Logan County Bancshares' largest
noninterest cost, representing approximately 52% of total noninterest
expense at March 31, 2000 and 1999. Salaries and employee benefits
increased $53,000., or 10.90% at March 31, 2000 compared to March 31,
1999. 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, 2000, reflected a $15,000. decrease when
compared to the same period of 1999. Income tax expense equalled 35.45%
and 35.65% of income before taxes at March 31, 2000 and 1999,
respectively. For financial reporting purposes, income tax expense does
not equal the statutory income tax rate of 43% when applied to pretax
income, primarily because of tax-exempt interest income included in income
before income taxes.
<PAGE>
Balance Sheet Data:
Total assets decreased by $2,931,000. between year end and March 31,
2000 to a balance of $149,815,000. The major component of this change was
a decrease in Investment Securities of $1,062,000., and loan decreases of
$513,000. and cash decreased by $2,184,000. The primary source of funds
for this change was an increase in deposits of $6,846,000., a decrease in
Federal Funds purchased of $9,840,000., and net income of $468,000.
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, 2000,
Federal Funds Sold amounted to $750,000. and securities maturing within
one year amounted to $2,499,000. These are compared to the balances at
March 31, 1999 of $5,890,000. in Federal Funds Sold and maturing
Investment Securities of $3,460,000. 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 2000 and 1999, banks continue to be
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, it has accumulated Retained Earnings of $12,475,000. and has a
total Stockholders' Equity of $14,591,000. as of March 31, 2000; as
compared to $11,456,000. of Retained Earnings and total Stockholders'
equity of $14,235,000. at March 31, 1999.
The equity capital was 9.74% and 9.79% of total assets at March 31,
2000 and 1999 respectively. 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 ____________________________ ______________________________________
Harvey Oakley, President
(Signature(Signature)
Date ____________________________ ______________________________________
Eddie D. Canterbury, Exec. Vice Pres.
(Signature(Signature)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000760327
<NAME> LOGAN COUNTY BANCSHARES
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS YEAR
<FISCAL-YEAR-END> MAR-31-2000 MAR-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999 DEC-31-1999
<CASH> 5,000 4,856 7,184
<INT-BEARING-DEPOSITS> 0 0 0
<FED-FUNDS-SOLD> 750 5,890 0
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 28,967 28,585 30,029
<INVESTMENTS-CARRYING> 0 1,997 0
<INVESTMENTS-MARKET> 0 2,013 0
<LOANS> 109,059 100,199 109,572
<ALLOWANCE> 701 721 701
<TOTAL-ASSETS> 149,815 145,378 152,746
<DEPOSITS> 134,465 130,242 127,619
<SHORT-TERM> 0 0 9,840
<LIABILITIES-OTHER> 759 901 843
<LONG-TERM> 0 0 0
0 0 0
0 0 0
<COMMON> 1,300 1,300 1,300
<OTHER-SE> 13,291 12,935 13,144
<TOTAL-LIABILITIES-AND-EQUITY> 149,815 145,378 152,746
<INTEREST-LOAN> 2,241 2,026 0
<INTEREST-INVEST> 478 437 0
<INTEREST-OTHER> 5 105 0
<INTEREST-TOTAL> 2,724 2,568 0
<INTEREST-DEPOSIT> 1,156 1,063 0
<INTEREST-EXPENSE> 1,156 1,063 0
<INTEREST-INCOME-NET> 1,568 1,505 0
<LOAN-LOSSES> 0 23 0
<SECURITIES-GAINS> 0 0 0
<EXPENSE-OTHER> 1,030 894 0
<INCOME-PRETAX> 725 763 0
<INCOME-PRE-EXTRAORDINARY> 468 491 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 468 491 0
<EPS-BASIC> 0.65 0.68 0
<EPS-DILUTED> 0.65 0.68 0
<YIELD-ACTUAL> 4.517 4.428 0
<LOANS-NON> 684 459 0
<LOANS-PAST> 3,266 3,501 0
<LOANS-TROUBLED> 389 354 0
<LOANS-PROBLEM> 936 913 0
<ALLOWANCE-OPEN> 701 701 0
<CHARGE-OFFS> 0 4 0
<RECOVERIES> 0 1 0
<ALLOWANCE-CLOSE> 701 721 0
<ALLOWANCE-DOMESTIC> 701 721 0
<ALLOWANCE-FOREIGN> 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0
</TABLE>
