<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 June 30, 2000
.......................................................
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. 716,991
------------
<PAGE>
LOGAN COUNTY BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS:
Consolidated Statement of Condition As of June 30,
2000 and 1999 and December 31, 1999.
Consolidated Statement of Income For the Three Month
Period Ended June 30, 2000 and 1999.
Consolidated Statement of Income For the Six Month
Period Ended June 30, 2000 and 1999.
Consolidated Statement of Changes in Stockholders'
Equity for the Six Month Period Ended June
30, 2000 and 1999.
Consolidated Statement of Cash Flows for the Six Month Period
Ended June 30, 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
June 30, 2000 and 1999 and December 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
ASSETS
------ June 30, December 31,
2000 1999 1999
---- ---- ------------
<S> <C> <C> <C>
CASH AND DUE FROM BANKS $6,013 $5,183 $7,184
INVESTMENT SECURITIES:
AVAILABLE FOR SALE 28,409 31,080 30,029
HELD TO MATURITY 0 497 0
FEDERAL FUNDS SOLD 0 810 0
LOANS:
TOTAL LOANS 112,895 104,050 109,572
RESERVE FOR LOAN LOSSES 613 720 701
-------- -------- --------
NET LOANS 112,282 103,330 108,871
BANK PREMISES AND EQUIPMENT 3,706 2,687 3,774
ACCRUED INTEREST AND OTHER ASSETS 2,846 2,054 2,888
-------- -------- --------
$153,256 $145,641 $152,746
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
DEPOSITS:
DEMAND DEPOSITS:
NON-INTEREST $20,524 $20,146 $19,332
INTEREST BEARING 20,213 20,889 18,999
SAVINGS DEPOSITS 33,498 31,851 31,024
TIME DEPOSITS 59,673 57,968 58,264
-------- -------- --------
TOTAL DEPOSITS 133,908 130,854 127,619
FEDERAL FUNDS PURCHASED AND SECURITIES
SOLD UNDER AGREEMENTS TO REPURCHASE 3,810 0 9,840
ACCRUED AND OTHER LIABILITIES AND 555 651 789
INCOME TAXES PAYABLE:
CURRENT 69 84 (18)
DEFERRED 72 (219) 72
-------- -------- --------
TOTAL LIABILITIES 138,414 131,370 138,302
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 11,994 11,423 11,596
TREASURY STOCK (860) (860) (860)
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 14,842 14,271 14,444
-------- -------- --------
$153,256 $145,641 $152,746
======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement of Income
For the Six Month Periods Ended June 30, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME:
INTEREST ON LOANS $2,315 $2,105
INTEREST ON INVESTMENTS 469 475
INTEREST ON FEDERAL FUNDS SOLD 9 86
------ ------
2,793 2,666
INTEREST EXPENSE:
INTEREST ON DEPOSITS 1,081 1,072
INTEREST OTHER 69 0
------ ------
NET INTEREST INCOME 1,643 1,594
PROVISION FOR LOAN LOSSES 0 0
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,643 1,594
OTHER INCOME:
SERVICE FEES 184 161
OTHER OPERATING INCOME 8 7
------ ------
TOTAL OTHER INCOME 192 168
OTHER EXPENSES:
SALARIES AND BENEFITS 522 493
EXPENSE OF BANK PREMISES AND
EQUIPMENT 134 80
OTHER OPERATING EXPENSES 374 339
------ ------
TOTAL OTHER EXPENSES 1,030 912
INCOME BEFORE INCOME TAXES 805 850
INCOME TAXES 292 305
------ ------
NET INCOME $513 $545
====== ======
PER SHARE OF COMMON STOCK NET INCOME $0.72 $0.76
====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement of Income
For the Six Month Periods Ended June 30, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
INTEREST INCOME:
INTEREST ON LOANS $4,556 $4,131
INTEREST ON INVESTMENTS 947 912
INTEREST ON FEDERAL FUNDS SOLD 14 191
------ ------
5,517 5,234
INTEREST EXPENSE:
INTEREST ON DEPOSITS 2,237 2,135
INTEREST OTHER 69 0
------ ------
NET INTEREST INCOME 3,211 3,099
PROVISION FOR LOAN LOSSES 0 23
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,211 3,076
OTHER INCOME:
SERVICE FEES 330 297
OTHER OPERATING INCOME 49 46
------ ------
TOTAL OTHER INCOME 379 343
OTHER EXPENSES:
SALARIES AND BENEFITS 1061 979
EXPENSE OF BANK PREMISES AND
EQUIPMENT 271 203
OTHER OPERATING EXPENSES 728 624
------ ------
TOTAL OTHER EXPENSES 2,060 1,806
INCOME BEFORE INCOME TAXES 1530 1613
INCOME TAXES 549 577
------ ------
NET INCOME $981 $1,036
====== ======
PER SHARE OF COMMON STOCK NET INCOME $1.37 $1.44
====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statement in Changes in Stockholders' Equity
For the Six Month Periods Ended June 30, 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 SIX MONTHS
ENDED JUNE 30, 2000 0 0 981 0 0 981
CHANGE IN NET UNREALIZED
HOLDING GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES (124) (124)
------ ------ ------- ----- ----- -------
TOTAL COMPREHENSIVE INCOME 0 0 981 (124) 0 857
DIVIDENDS ON 716,991 SHARES
COMMON STOCK @ $0.64 (458) (458)
------ ------ ------- ----- ----- -------
$1,300 $2,408 $12,759 ($765) ($860) $14,842
====== ====== ======= ===== ===== =======
BALANCE - DECEMBER 31
1998 $1,300 $2,408 $11,171 $40 ($860) $14,059
COMPREHENSIVE INCOME
NET INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1999 0 0 1,036 0 0 1,036
NET UNREALIZED GAINS (LOSSES)
ON AVAILABLE FOR-SALE
SECURITIES (410)
------ ------ ------- ----- ----- -------
TOTAL COMPREHENSIVE INCOME 0 0 1036 (410) 0 626
DIVIDENDS ON 716,991 SHARES
COMMON STOCK @ $0.57 (414) (414)
------ ------ ------- ----- ----- -------
$1,300 $2,408 $11,793 ($370) ($860) $14,271
====== ====== ======= ===== ===== =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
LOGAN COUNTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $981 $1,036
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
DEPRECIATION 133 82
SECURITY AMORTIZATION AND
ACCREATION 5 (2)
MARKET VALUE AMORTIZATION (2) (2)
PROVISION FOR LOAN LOSSES 0 23
(INCREASE) DECREASE IN OTHER
ASSETS 134 (305)
INCREASE (DECREASE) IN OTHER
LIABILITIES (147) (4)
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,104 828
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF SECURITIES AVAILABLE FOR SALE 0 6,500
PROCEEDS FROM MATURITIES OF SECURITIES AVAILABLE FOR SALE 3,400 2,000
PROCEEDS FROM MATURITIES OF SECURITIES HELD TO MATURITY 0 2,000
PURCHASE OF SECURITIES AVAILABLE FOR SALE (2,000) (14,969)
NET (INCREASE) DECREASE IN
FEDERAL FUNDS SOLD 0 6,710
NET (INCREASE) DECREASE IN LOANS (3,411) (8,951)
PURCHASE OF BANK PREMISES
AND EQUIPMENT (65) (682)
------ ------
NET CASH PROVIDED BY INVESTING ACTIVITIES (2,076) (7,392)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET INCREASE (DECREASE) IN
DEMAND DEPOSITS 2,406 2,099
NET INCREASE (DECREASE) IN
SAVINGS DEPOSITS 2,474 2,034
NET INCREASE (DECREASE) IN
TIME DEPOSITS 1,409 2,301
NET INCREASE (DECREASE) IN (6,030) 0
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD
UNDER AGREEMENT TO REPURCHASE
DIVIDENDS PAID (458) (414)
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES (199) 6,020
------ ------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,171) (544)
CASH AND CASH EQUIVALENT AT
BEGINNING OF PERIOD 7,184 5,727
------ ------
CASH AND CASH EQUIVALENT AT
END OF PERIOD $6,013 $5,183
====== ======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
June 30, 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 $981,000. for the six months ended June
30, 2000 compared to $1,036,000. for the six months ended June 30, 1999,
representing a 5.30% decrease. This decrease was primarily the result of the
increase in net interest income of $135,000., increase in other income of
$36,000. and increase in all operating expenses of $254,000. and decrease in
income taxes of $28,000.
Earnings per common share were $1.37 for the six months ended June 30, 2000
compared with $1.44 for the same period of 1999.
Logan County Bancshares' annualized return on assets (ROA) for the six
month period ended June 30, 2000 was 1.28% compared to 1.42% for the six month
period ended June 30, 1999. Annualized return on shareholders' equity (ROE) was
13.21% and 14.52% at June 30, 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 $5,517,000. at June 30, 2000, an increase of
$283,000. from June 30, 1999. Interest expense also increased $171,000.,
resulting in an overall increase of $112,000. or 3.61% in net interest income
between June 30, 2000 and June 30, 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 six month period ended June 30, 2000 and 1999, the provision for
loan losses was $0.00 and $0. respectively.
The reserve for loan losses was $613,000. at June 30, 2000 compared to
$720,000. at June 30, 1999. Expressed as a percentage of loans (net of unearned
income), the reserve for loan losses was .54% at June 30, 2000 and .69% at June
30, 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>
June 30,
------------------------
2000 1999
------ ------
<S> <C> <C>
Loans past due 90 or more days
still accruing interest $2,738 $3,465
------ ------
Nonperforming assets:
Nonaccruing loans 596 489
Other real estate owned 384 244
------ ------
$980 $733
====== ======
</TABLE>
NONINTEREST INCOME
Noninterest income includes revenues from all sources other than interest
income. For the six month period ended June 30, 2000, noninterest income
totalled $379,000., representing a increase of $36,000., or 10.50% from the
$343,000. recorded during the same period of 1999. This increase was primarily
due to increases in service fees income of $33,000.
NONINTEREST EXPENSE
Noninterest expense comprises overhead costs which are not related to
interest expense or to losses from loans or securities. As of June 30, 2000, the
Company's noninterest expense totalled $2,060,000., increasing $254,000. over
the $1,806,000. of noninterest expense for the six months ended June 30, 1999.
Expressed as a percentage of assets, annualized noninterest expense was 2.69% at
June 30, 2000, compared to 2.48% at June 30, 1999.
Salaries and employee benefits are Logan County Bancshares' largest
noninterest cost, representing approximately 52% of total noninterest expense at
June 30, 2000 and 1999. Salaries and employee benefits increased $82,000., or
8.37% at June 30, 2000 compared to June 30, 1999. This increase is primarily due
to increased personnel.
INCOME TAXES
Logan County Bancshares' federal income tax expense, for the six month
period ended June 30, 2000, reflected a $28,000. decrease when compared to the
same period of 1999. Income tax expense equalled 35.88% and 35.77% of income
before taxes at June 30, 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 timing differences included
in income before income taxes.
<PAGE>
Balance Sheet Data:
Total assets increased by $510,000. between year end and June 30, 2000 to a
balance of $153,256,000. The major component of this change was a decrease in
Investment Securities of $1,620,000., and loan increases of $3,323,000. and cash
decreased by $1,171,000. The primary source of funds for this change was an
increase in deposits of $6,289,000., a decrease in Federal Funds purchased of
$6,030,000., and net income of $981,000.
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 June 30, 2000, Federal Funds Sold amounted to $0 and
securities maturing within one year amounted to $2,100,000. These are compared
to the balances at June 30, 1999 of $810,000. in Federal Funds Sold and maturing
Investment Securities of $1,982,000. 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 $11,994,000. and has a total
Stockholders' Equity of $14,842,000. as of June 30, 2000; as compared to
$11,456,000. of Retained Earnings and total Stockholders' equity of $14,271,000.
at June 30, 1999.
The equity capital was 9.68% and 9.80% of total assets at June 30, 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)
Date ____________________________ _____________________________________
Eddie D. Canterbury, Exec. Vice Pres.
(Signature)
