First West Virginia Bancorp (FWV) 10-Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the Quarterly Period Ended March 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            .

Commission File No. 1-13652

First West Virginia Bancorp, Inc.

(Exact name of registrant as specified in its charter)

West Virginia	55-6051901
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1701 Warwood Avenue

Wheeling, West Virginia 26003

(Address of principal executive offices)

Registrant’s telephone number, including area code:(304) 277-1100

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 report(s), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer as defined by Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ¨ Accelerated Filer  ¨ Non-accelerated filer  ¨ Smaller Reporting Company  x

Indicate by check mark whether the Registrant is a shell company as defined by Rule 12b-2 of the Exchange Act.    ¨  Yes    x  No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    ¨  Yes    ¨  No    x  N/A

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 practible date.

The number of shares outstanding of the issuer’s common stock as of May 8, 2009: Common Stock, $5.00 Par Value, shares outstanding: 1,589,411 shares

FORM 10-Q INDEX

PART I - Financial Information
Item 1	Financial Statements and Accompanying Notes	3-13
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14-28
Item 3	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4	Controls and Procedures	29
PART II - Other Information
Item 1	Legal Proceedings	30
Item 1A	Risk Factors	30
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3	Defaults upon Senior Securities	30
Item 4	Submission of matters to a Vote of Security Holders	30
Item 5	Other Information	30
Item 6	Exhibits and Reports on Form 8-K	30
	Reports on Form 8-K	30
	Signatures	31
	Exhibit Index	32

PAGE 2

FIRST WEST VIRGINIA BANCORP, INC.

PART I

FINANCIAL INFORMATION

PAGE 3

First West Virginia Bancorp, Inc.

CONSOLIDATED BALANCE SHEETS

	March 31, 2009			December 31, 2008
ASSETS
	(Unaudited)
Cash and due from banks	$	5,262,616		$	5,992,400
Due from banks - interest bearing		5,696,736			360,334
Federal funds sold		2,447,000			2,748,000
Total cash and cash equivalents		13,406,352			9,100,734
Investment securities:
Available-for-sale (at fair value)		114,693,714			112,046,054
Held-to-maturity (fair value of $102,184 and $323,716, respectively)		100,565			320,256
Loans		127,509,291			124,634,785
Less allowance for loan losses		(1,889,202	)		(1,923,455	)
Net loans		125,620,089			122,711,330
Premises and equipment, net		4,764,485			4,713,897
Accrued income receivable		1,333,177			1,252,753
Goodwill		1,644,119			1,644,119
Bank owned life insurance		3,583,029			3,553,984
Other assets		2,593,750			2,820,510
Total assets	$	267,739,280		$	258,163,637
LIABILITIES
Noninterest bearing deposits:
Demand	$	24,168,470		$	24,108,459
Interest bearing deposits:
Demand		37,681,239			33,782,737
Savings		58,939,146			55,716,792
Time		94,025,395			92,777,279
Total deposits		214,814,250			206,385,267
Federal funds purchased and securities sold under agreements to repurchase		11,555,347			11,013,195
Federal Home Loan Bank borrowings		10,910,938			10,929,369
Accrued interest payable		497,187			566,590
Other liabilities		562,286			532,658
Total liabilities		238,340,008			229,427,079
STOCKHOLDERS’ EQUITY
Common stock - 2,000,000 shares authorized at $5 par value:
1,599,411 shares issued at March 31, 2009 and December 31, 2008		7,997,055			7,997,055
Treasury stock - 10,000 shares at cost:		(228,100	)		(228,100	)
Surplus		5,609,357			5,609,357
Retained earnings		14,714,342			14,492,736
Accumulated other comprehensive income		1,306,618			865,510
Total stockholders’ equity		29,399,272			28,736,558
Total liabilities and stockholders’ equity	$	267,739,280		$	258,163,637

The accompanying notes are an integral part of the unaudited consolidated financial statements.

PAGE 4

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended, March 31,
	2009			2008
	(Unaudited)
INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	1,781,557		$	1,931,800
Tax-exempt		141,136			136,487
Debt securities:
Taxable		1,205,653			1,103,790
Tax-exempt		171,374			201,093
Dividends		—			12,114
Other interest income		4,234			36,380
Federal funds sold		144			61,122
Total interest and dividend income		3,304,098			3,482,786
INTEREST EXPENSE
Deposits		1,030,218			1,178,756
Federal funds purchased and repurchase agreements		27,635			57,092
FHLB and other long-term borrowings		135,677			117,092
Total interest expense		1,193,530			1,352,940
Net interest income		2,110,568			2,129,846
PROVISION FOR LOAN LOSSES		—			—
Net interest income after provision for loan losses		2,110,568			2,129,846
NONINTEREST INCOME
Service charges and other fees		158,460			204,593
Net gains (losses) on available for sale securities		(7,393	)		112,501
Other operating income		138,441			143,391
Total noninterest income		289,508			460,485
NONINTEREST EXPENSE
Salary and employee benefits		910,019			959,754
Net occupancy expense of premises		333,774			304,349
Other operating expenses		493,232			498,381
Total noninterest expense		1,737,025			1,762,484
Income before income taxes		663,051			827,847
INCOME TAXES		139,457			191,506
Net income	$	523,594		$	636,341
WEIGHTED AVERAGE SHARES OUTSTANDING		1,589,411			1,589,411
EARNINGS PER COMMON SHARE	$	0.33		$	0.40
DIVIDENDS PER COMMON SHARE	$	0.19		$	0.18

The accompanying notes are an integral part of the unaudited consolidated financial statements.

PAGE 5

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock				Surplus			Retained Earnings			Treasury Stock			Accumulated Other Compre-		Compre-		Total
	Shares	Amount												hensive Income (loss)		hensive Income
BALANCE, DECEMBER 31, 2008	1,599,411	$	7,997,055		$	5,609,357		$	14,492,736		$	(228,100	)	$	865,510			$	28,736,558
Comprehensive income:
Net income	—		—	��		—			523,594			—			—	$	523,594		523,594
Other comprehensive income, net of tax
Unrealized gains on securities net of reclassification adjustment (see disclosure)	—		—			—			—			—			441,108		441,108		441,108
Comprehensive income																$	964,702
Cash dividend ($.19 per share)	—		—			—			(301,988	)		—			—				(301,988	)
BALANCE, MARCH 31, 2009	1,599,411	$	7,997,055		$	5,609,357		$	14,714,342		$	(228,100	)	$	1,306,618			$	29,399,272
	Common Stock				Surplus			Retained Earnings			Treasury Stock			Accumulated Other Compre-		Compre-		Total
	Shares	Amount												hensive Income (loss)		hensive Income
BALANCE, DECEMBER 31, 2007	1,538,443	$	7,692,215		$	4,982,606		$	14,394,610		$	(228,100	)	$	373,268			$	27,214,599
Comprehensive income:
Net income	—		—			—			636,341			—			—	$	636,341		636,341
Other comprehensive income, net of tax
Unrealized gains on securities net of reclassification adjustment (see disclosure)	—		—			—			—			—			629,434		629,434		629,434
Comprehensive income																$	1,265,775
Cash dividend ($.18 per share)	—		—			—			(290,404	)		—			—				(290,404	)
BALANCE, MARCH 31, 2008	1,538,443	$	7,692,215		$	4,982,606		$	14,740,547		$	(228,100	)	$	1,002,702			$	28,189,970
					For the Three Months Ended March 31,
					2009			2008
Disclosure of reclassification amount, net of tax:
Unrealized holding gains arising during the period					$	436,497		$	699,601
Less reclassification adjustment for gains (losses) included in net income						(4,611	)		70,167
Net unrealized gains on securities					$	441,108		$	629,434

The accompanying notes are an integral part of the unaudited consolidated financial statements.

PAGE 6

First West Virginia Bancorp, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended March 31,
	2009			2008
OPERATING ACTIVITIES
Net income	$	523,594		$	636,341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		106,727			119,252
Accretion of investment securities, net		(45,986	)		(177,475	)
Investment security (gains) losses		7,393			(112,501	)
Increase in cash surrender value of bank-owned life insurance		(29,045	)		(30,965	)
Decrease (increase) in interest receivable		(80,424	)		110,051
Increase (decrease) in interest payable		(69,403	)		1,007
Other, net		(9,749	)		96,636
Net cash provided by operating activities		403,107			642,346
INVESTING ACTIVITIES
Net (increase) decrease in loans, net of charge-offs		(2,911,760	)		777,044
Proceeds from sales of securities available-for-sale		14,733			6,995,487
Proceeds from maturities of securities available-for-sale		8,483,018			31,361,847
Proceeds from maturities of securities held-to-maturity		220,000			—
Principal collected on mortgage-backed securities		3,207,825			2,538,882
Purchases of securities available-for-sale		(13,607,709	)		(38,035,487	)
Recoveries on loans previously charged-off		3,002			3,367
Purchases of premises and equipment		(157,315	)		(136,906	)
Net cash provided by (used in) investing activities		(4,748,206	)		3,504,234
FINANCING ACTIVITIES
Net increase in deposits		8,428,984			4,723,299
Dividends paid		(301,988	)		(290,404	)
Increase (decrease) in short-term borrowings		542,152			(368,096	)
Principal payments on FHLB and other long-term borrowings		(18,431	)		(11,389	)
Net cash provided by financing activities		8,650,717			4,053,410
INCREASE IN CASH AND CASH EQUIVALENTS		4,305,618			8,199,990
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR		9,100,734			12,925,180
CASH AND CASH EQUIVALENTS,
END OF PERIOD	$	13,406,352		$	21,125,170
Supplemental Disclosures:
Cash Paid for Interest	$	1,262,933		$	1,351,933
Cash Paid for Income Taxes	$	—		$	120,000

The accompanying notes are an integral part of the unaudited consolidated financial statements.

PAGE 7

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

Note 1 - Summary of Significant Accounting Policies

The accounting and reporting policies of First West Virginia Bancorp, Inc. ( the “Company”) and its subsidiary were prepared in accordance with accounting principles generally accepted in the United States of America, (“US GAAP”) and to general practices within the financial services industry. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management has identified the accounting policies described below as those that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company’s consolidated financial statements and management’s discussion and analysis. A summary of the significant accounting and reporting policies applied in the presentation of the accompanying financial statements follows.

Nature of Operations and Basis of Presentation: First West Virginia Bancorp, Inc. (the “Company”) is a West Virginia Company. The Company provides a variety of banking services to individuals and businesses through the branch network of its affiliate bank (the “Bank”). The Bank operates nine full service branches located in Wheeling (3), Wellsburg, Moundsville, New Martinsville, Buckhannon, and Weston, West Virginia and Bellaire, Ohio. Primary deposit products consist of checking accounts, savings accounts, and certificates of deposit. Primary lending products consist of commercial and residential real estate loans, consumer loans, and business loans.

Principles of Consolidation: The consolidated financial statements of the Company include the financial statements of the parent and its wholly-owned subsidiary, Progressive Bank, N.A. All significant intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Material estimates that are particularly susceptible to material change in the near term relate to the determination of the allowance for loan losses and the valuation of deferred tax assets.

Cash and Cash equivalents: Cash and cash equivalents consist of cash on hand and amounts due from banks and federal funds sold.

Investment Securities: Investment securities are classified at the time of purchase, based on management’s intention and ability, as securities available for sale or held to maturity. Debt securities classified as held to maturity are stated at cost adjusted for amortization of premium and accretion of discount which are computed using the interest method and recognized as adjustments of interest income. Certain other debt and equity securities have been classified as available for sale to serve principally as a source of liquidity. Unrealized holding gains and losses for available-for-sale securities are reported as a separate component of stockholders’ equity, net of tax, until realized. Realized securities gains and losses are computed using the specific identification method. Interest and dividends on investment securities are recognized as income when earned.

While temporary changes in the market value of available-for-sale securities are not recognized in earnings, a decline in fair value below amortized cost deemed to be other-than-temporary results in an adjustment to the cost basis of the investment, with a corresponding loss charged against earnings. Management evaluates the investment securities for other-than-temporary declines in estimated fair value on a quarterly basis. This analysis requires management to consider various factors in order to determine if a decline in estimated fair value is temporary or other-than-temporary. These factors include duration and magnitude of the decline in value, the financial condition of the issuer, and the company’s ability and intent to continue holding the investment for a period of time sufficient to allow for any anticipated recovery in market value. At March 31, 2009 there were no investment securities identified by management to be other-than-temporarily impaired. If investments decline in fair value due to adverse changes in the financial markets, charges to income could occur in future periods.

Common stock of the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank represents ownership interest in institutions that are wholly owned by other financial institutions. These equity securities are accounted for at cost and are classified with other assets.

Loans and Loans Held for Sale: Loans are generally reported at the principal balance outstanding, net of unearned income. Interest income on loans is accrued based on the principal outstanding. It is the Company’s policy to discontinue the accrual of interest when either the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. The Company accounts for impaired loans in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114 and No. 118, “Accounting for Creditors for Impairment of a Loan.” It is the Company’s policy not to recognize interest income on specific impaired loans unless the likelihood of future loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amount amortized over the contractual life of the related loans or commitments as an adjustment of the related loan’s yield. Loans held for sale are carried at the lower of cost or estimated market value in the aggregate. There were no loans held for sale as of March 31, 2009 and December 31, 2008 respectively.

The Company has entered into an agreement with the Federal Home Loan Bank of Pittsburgh (“FHLB”) under which the bank may sell conforming one-to-four family residential mortgage loans to the FHLB. The agreement provides for a maximum commitment of $5,000,000. Loans sold to the FHLB are sold with limited recourse or credit risk up to a maximum amount of $125,000 based upon utilization of the original commitment. The bank also maintains the servicing of these loans, for which it is paid a servicing fee. The total amount of loans sold under this agreement is $2,159,755 as of March 31, 2009 which are subject to recourse obligation or credit risk in the amount of $64,768. As of December 31, 2008 the loans sold under this agreement amounted to $1,817,036 and were subject to a recourse obligation or credit risk in the amount of $41,635. The amount of income recognized as of a result of this agreement was $3,086 and $1,724 for the period ending March 31, 2009 and 2008, respectively.

PAGE 8

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses: The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses that is charged to operations. The provision is based on management’s evaluation of the adequacy of the allowance for loan losses which encompasses the overall risk characteristics of the various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to significant changes in the near term.

Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances concerning the loan, the credit worthiness and payment history of the borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and interest owed.

Impaired loans are commercial and commercial real estate loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The Company individually evaluates such loans for impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility while not classifying the loan as impaired, provided the loan is not a commercial or commercial real estate classification. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Individual loan reviews are based upon specific quantitative and qualitative criteria, including the size of the loan, loan quality ratings, value of collateral, repayment ability of borrowers, and historical experience factors. The historical experience factors utilized for individual loan reviews are based upon past loss experience, known trends in losses and delinquencies, the growth of loans in particular markets and industries, and known changes in economic conditions in the particular lending markets. Allowances for homogeneous loans (such as residential mortgage loans, personal loans, etc.) are evaluated based upon -historical loss experience, trends in losses and delinquencies, growth of loans in particular markets, and known changes in economic conditions in each lending market. There can be no assurance the allowance for loan losses will be adequate to cover all losses, but management believes the allowance for loan losses in the amount of $1,889,202 at March 31, 2009, was adequate to provide for probable losses from existing loans based on information currently available. While management uses available information to provide for loan losses, the ultimate collectibility of a substantial portion of the loan portfolio, and the need for future additions to the allowance, will be based on changes in economic conditions and other relevant factors. As such, an adverse change in economic activity could reduce cash flows for both commercial and individual borrowers, which would likely cause the Company to experience increases in problem assets, delinquencies and losses on loans.

Premises and Equipment: Premises and equipment are stated at cost, less accumulated depreciation and amortization. Provisions for depreciation and amortization are computed generally using the straight-line method over the estimated useful lives of the assets. When units of property are disposed of, the premises and equipment accounts are relieved of the cost and the accumulated depreciation related to such units. Any resulting gains or losses are credited to or charged against income. Cost of repairs and maintenance is charged to expense as incurred. Additions and improvements are capitalized at cost.

Other Real Estate Owned: Other real estate owned are carried at the lower of cost or their estimated current fair value, less estimated costs to sell and are included in other assets. Other real estate owned consist primarily of properties acquired through, or in lieu of foreclosures. Any subsequent declines in fair value, and gains or losses on the disposition of these assets are credited to or charged against income.

Goodwill and Other Intangible Assets: Goodwill resulted from the Company’s purchase of a less-than-whole financial institution (the “branch”). The goodwill value of $1.6 million is supported ultimately by revenue that is driven by the volume of business transacted. A decline in earnings as a result of a lack of growth or the inability to deliver cost effective services over sustained periods can lead to impairment of goodwill that could adversely impact earnings in future periods.

An identifiable intangible asset resulted from the purchase of the core deposits of another financial institution in 2001 and, as such, are amortized into noninterest expense on the straight-line basis over the period the Company expects to benefit from such assets (7 years). The Company recognized amortization expense of $-0- and $14,792 in the three month periods ended March 31, 2009 and 2008, respectively. The unamortized balance from the purchase of these core deposit intangible assets was $-0- at March 31, 2009 and December 31, 2008, respectively. While management feels the assumptions and variables used to value the acquisition were reasonable, the use of different, but still reasonable, assumptions could produce different results.

Goodwill and other intangibles are periodically reviewed for impairment. No impairment losses were recognized. Additionally, future events could cause management to conclude that impairment indicators exist and that the goodwill is impaired, which would result in the Company recording an impairment loss. Any resulting impairment loss could have a material, adverse impact on the Company’s financial condition and results of operations.

PAGE 9

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Bank-owned Life Insurance Bank owned life insurance consists of investments in life insurance policies on executive officers and other members of the bank’s management. The policies are carried at their net cash surrender value. Changes in the policy value are recorded as an adjustment to the carrying value with the corresponding amount recognized as non-interest income or expense. Earnings on these policies are based on the net earnings on the cash surrender value of the policies. The net cash surrender value of bank-owned life insurance was $3,583,029 and $3,553,984 at March 31, 2009 and December 31, 2008, respectively. The face value of the bank-owned life insurance at March 31, 2009 was approximately $9.4 million. An agreement has been executed with all officers whereby a $40,000 death benefit is payable upon the participant’s death while employed by the Company to their designated beneficiary.

Income Taxes: The Company and its subsidiary file a consolidated federal income tax return. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Deferred income tax expenses or benefits are based on the changes in the deferred tax asset or liability from period to period.

Advertising Costs: Advertising costs are expensed as the costs are incurred. Advertising expenses amounted to $8,849 and $7,853 for the three month periods ended March 31, 2009 and 2008, respectively.

Earnings Per Common Share: Earnings per common share are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. The Company has no securities which would be considered potential common stock.

Comprehensive Income: The Company is required to present comprehensive income in a full set of general-purpose financial statements for all periods presented. The following represents comprehensive income for the three month periods ended March 31, 2009 and 2008, respectively. Other comprehensive income comprises unrealized holding gains (losses) on the available-for-sale securities portfolio. The Company has elected to report the effects of other comprehensive income as part of the Consolidated Statement of Changes in Stockholders’ Equity.

The following table represents other comprehensive income before tax and net of tax:

	For the three months ended March 31,
	2009			2008
Before-tax amount	$	707,244		$	1,009,194
Tax effect		(266,136	)		(379,760	)
Net of tax effect		441,108			629,434
Net income as reported		523,594			636,341
Total comprehensive income	$	964,702		$	1,265,775

Fair Value Measurements:In September 2006, the FASB issued FASB No. 157,Fair Value Measurements, to provide consistency and comparability in determining fair value measurements and to provide for expanded disclosures about fair value measurements. The definition of fair value maintains the exchange price notion in earlier definitions of fair value but focuses on the exit price of the asset or liability. The exit price is the price that would be received to sell the asset or paid to transfer the liability adjusted for certain inherent risks and restrictions. Expanded disclosures are also required about the use of fair value to measure assets and liabilities.

As required by FASB No. 157, each financial asset and liability must be identified as having been valued according to specified level of input, 1, 2 or 3. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, within which the fair value measurement in its entirety falls, has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset.

PAGE 10

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of March 31, 2009, the Company did not have any assets measured at fair value on a nonrecurring basis. The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. As of March 31, 2009, all of the financial assets measured at fair value utilized the market approach.

The following table presents the assets and liabilities reported on the consolidated statements of financial condition at their fair value as of March 31, 2009 by level within the fair value hierarchy. As required by SFAS No. 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	March 31, 2009
	Level I		Level II		Level III		Total
	(In thousands)
Assets:
Securities available for sale	$	231	$	114,463	$	—	$	114,694
Impaired loans	$	—	$	3,881	$	—	$	3,881

Recent Accounting Pronouncements: In December 2007, the FASB issued FAS No. 141 (revised 2007),Business Combinations (“FAS 141(R)), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. FAS No. 141^®) is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position.

In September 2006, the FASB issued FAS No. 157,Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The Standard does not expand the use of fair value in any new circumstances. FAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued Staff Position No. 157-1,Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, which removed leasing transactions accounted for under FAS No. 13 and related guidance from the scope of FAS No. 157. Also in February 2008, the FASB issued Staff Position No.157-2,Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position.

In December 2007, the FASB issued FAS No. 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. FAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. FAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position.

PAGE 11

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In March 2008, the FASB issued FAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, to require enhanced disclosures about derivative instruments and hedging activities. The new standard has revised financial reporting for derivative instruments and hedging activities by requiring more transparency about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FAS No. 133,Accounting for Derivative Instruments and Hedging Activities; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FAS No. 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also requires entities to provide more information about their liquidity by requiring disclosure of derivative features that are credit risk-related. Further, it requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. FAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encourage. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position.

In June 2008, the FASB ratified EITF Issue No. 08-4,Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios. This Issue provides transition guidance for conforming changes made to EITF Issue No. 98-5,Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios, that resulted from EITF Issue No. 00-27,Application of Issue No. 98-5 to Certain Convertible Instruments,and FAS No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liability and Equity. The conforming changes are effective for financial statements issued for fiscal years ending after December 15, 2008, with earlier application permitted. The adoption of this FSP did not have a material effect on the Company’s results of operations or financial position.

In February 2008, the FASB issued FSP No. FAS 140-3,Accounting for Transfers of Financial Assets and Repurchase Financing Transactions. This FSP concludes that a transferor and transferee should not separately account for a transfer of a financial asset and a related repurchase financing unless (a) the two transactions have a valid and distinct business or economic purpose for being entered into separately and (b) the repurchase financing does not result in the initial transferor regaining control over the financial asset. The FSP is effective for financial statements issued for fiscal years beginning on or after November 15, 2008, and interim periods within those fiscal years. The adoption of this FSP did not have a material effect on the Company’s results of operations or financial position.

In April 2008, the FASB issued FASB Staff Position No. 142-3,Determination of the Useful Life of Intangible Assets(“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing assumptions about renewal or extension used in estimating the useful life of a recognized intangible asset under FAS No. 142, Goodwill and Other Intangible Assets. This standard is intended to improve the consistency between the useful life of a recognized intangible asset under FAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under FAS No. 141R and other GAAP. FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The measurement provisions of this standard will apply only to intangible assets of the Company acquired after the effective date.

In May 2008, the FASB issued FSP No. APB 14-1,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement. This FSP provides guidance on the accounting for certain types of convertible debt instruments that may be settled in cash upon conversion. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscalyears. The adoption of this FSP did not have a material effect on the Company’s results of operations or financial position.

In June 2008, the FASB issued FASB Staff Position (FSP) No. EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, to clarify that instruments granted in share-based payment transactions can be participating securities prior to the requisite service having been rendered. A basic principle of the FSP is that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of EPS pursuant to the two-class method. The provisions of this FSP are effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. All prior-period EPS data presented (including interim financial statements, summaries of earnings, and selected financial data) are required to be adjusted retrospectively to conform with the provisions of the FSP. The adoption of this FSP did not have a material effect on the Company’s results of operations or financial position.

In December 2008, the FASB issued FASB Staff Position (FSP) No. FAS 132(R)-1,Employers’ Disclosures about Postretirement Benefit Plan Assets. This FSP amends FASB Statement No. 132 (revised 2003),Employers’ Disclosures about Pensions and Other Postretirement Benefits, to improve an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets required by the FSP are to be provided for fiscal years ending after December 15, 2009. The Company is currently evaluating the impact the adoption of the FSP will have on the Company’s results of operations.

PAGE 12

First West Virginia Bancorp, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009 AND 2008

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)

In April 2009, the FASB issued FSP No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.This FSP requires companies acquiring contingent assets or assuming contingent liabilities in business combination to either (a) if the assets’ or liabilities’ fair value can be determined, recognize them at fair value, at the acquisition date, or (b) if the assets’ or liabilities’ fair value cannot be determined, but (I) it is probable that an asset existed or that a liability had been incurred at the acquisition date and (ii)the amount of the asset or liability can be reasonably estimated, recognize them at their estimated amount, at the acquisition date. If the fair value of these contingencies cannot be determined and they are not probable or cannot be reasonably estimated, then companies should not recognize these contingencies as of the acquisition date and instead should account for them in subsequent periods by following other applicable GAAP. This FSP also eliminates the FAS 141R requirement of disclosing in the footnotes to the financial statements the range of expected outcomes for a recognized contingency. This FSP shall be effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company is currently evaluating the impact the adoption of the FSP will have on the Company’s results of operations.

In April 2009, the FASB issued FSP No. FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This FSP relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP No. FAS 157-4 is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial Instruments, which relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP No. FAS 107-1 and APB 28-1 is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,Recognition and Presentation of Other-Than-Temporary Impairments, which provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. FSP No. FAS 115-2 and FAS 124-2 is effective for interim and annual periods ending after June 15, 2009, but entities may early adopt this FSP for the interim and annual periods ending after March 15, 2009. The adoption of this FSP is not expected to have a material effect on the Company’s results of operations or financial position.

PAGE 13

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table One

SELECTED FINANCIAL DATA(Dollars in thousands, except per share data)

	(Unaudited) Three Months Ended March 31,						Years ended December 31,
	2009			2008			2008			2007			2006			2005
SUMMARY OF OPERATIONS
Total interest income	$	3,304		$	3,483		$	13,514		$	13,708		$	13,772		$	13,128
Total interest expense		1,194			1,353			5,275			5,431			4,943			4,070
Net interest income		2,110			2,130			8,239			8,277			8,829			9,058
Provision for loan losses		—			—			—			(100	)		—			180
Total other income		290			460			1,488			1,410			1,433			1,378
Total other expenses		1,737			1,762			7,009			7,272			7,614			7,451
Income before income taxes		663			828			2,718			2,515			2,648			2,804
Net income		524			636			2,206			2,036			2,144			2,262
PER SHARE DATA (1)
Net income	$	0.33		$	0.40		$	1.39		$	1.28		$	1.35		$	1.42
Cash dividends declared		0.19			0.18			0.74			0.73			0.73			0.73
Book value per share		18.50			17.74			18.08			17.12			15.90			15.07
AVERAGE BALANCE SHEET SUMMARY
Total loans, net	$	126,147		$	120,667		$	120,722		$	120,409		$	129,997		$	144,528
Investment securities		109,658			103,279			108,114			109,278			109,533			102,882
Deposits - interest bearing		186,922			180,264			182,450			182,682			190,160			200,902
Stockholders’ equity		28,961			26,926			27,295			26,223			25,416			24,409
Total assets		262,290			254,260			258,275			253,930			262,946			270,500
BALANCE SHEET
Investments	$	114,794		$	105,086		$	112,366		$	106,647		$	110,894		$	107,998
Loans		127,509			120,954			124,635			121,739			120,709			135,214
Allowance for loan losses		(1,889	)		(2,038	)		(1,923	)		(2,043	)		(2,297	)		(2,320	)
Other assets		27,325			34,694			23,086			26,844			25,132			25,321
Total Assets	$	267,739		$	258,696		$	258,164		$	253,187		$	254,438		$	266,213
Deposits	$	214,814		$	207,850		$	206,385		$	203,127		$	210,409		$	218,817
Federal funds purchased and repurchase agreements		11,555			11,828			11,013			12,196			15,240			19,084
FHLB borrowings		10,911			9,287			10,929			9,298			2,343			2,385
Other long term borrowings		—			—			—			—			—			1,000
Other liabilities		1,060			1,541			1,100			1,351			1,169			968
Stockholders’ equity		29,399			28,190			28,737			27,215			25,277			23,959
Total Liabilities and Stockholders’ equity	$	267,739		$	258,696		$	258,164		$	253,187		$	254,438		$	266,213
SELECTED RATIOS
Return on average assets		0.81	%		1.01	%		0.85	%		0.80	%		0.82	%		0.84	%
Return on average equity		7.34	%		9.50	%		8.08	%		7.76	%		8.44	%		9.27	%
Average equity to average assets		11.04	%		10.59	%		10.57	%		10.33	%		9.67	%		9.02	%
Dividend payout ratio (1)		57.58	%		45.00	%		53.24	%		57.03	%		54.07	%		51.41	%
Loan to Deposit ratio		59.36	%		58.19	%		60.39	%		59.93	%		57.37	%		61.79	%

(1) Adjusted for the 4 percent common stock dividend to stockholders of record as of October 1, 2008.

PAGE 14

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Forward-Looking Information: Certain information contained in this report, which are not historical facts, may be forward-looking statements that involve risks and uncertainties. These statements are subject to important factors that could cause action results to differ materially from those contemplated by such statements, including without limitation, the effect of changing economic conditions, changes in interest rates, changes in lending activities, changes in state and federal regulations, and other external factors which may materially impact the Company’s operational and financial performance.

Critical Accounting Policies: The Company’s accounting policies are integral to understanding the results reported. The accounting policies are described in detail in Note 1 of the Consolidated Financial Statements. Our most complex accounting policies require management’s judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. Detailed policies and control procedures have been established and are intended to ensure valuation methods are well controlled and applied consistently from period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies involving significant management valuation judgments.

Other Than Temporary Impairment of Equity Securities: Equity securities are evaluated periodically to determine whether a decline in their value is other than temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other than temporary. The term “other than temporary” is not intended to indicate that the decline is permanent. It indicates that the prospects for a near term recovery of value are not necessarily favorable, or that there is a lack of evidence to support fair values equal to, or greater than, the carrying value of the investment. Once a decline in value is determined to be other than temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

Allowance for Loan Losses: Arriving at an appropriate level of allowance for loan losses involves a high degree of judgment. The Company’s allowance for loan losses provides for probable losses based upon evaluations of known, and inherent risks in the loan portfolio. Management uses historical information to assess the adequacy of the allowance for loan losses as well as the prevailing business environment; as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. The allowance is increased by provisions for loan losses and by recoveries of loans previously charged-off and reduced by loans charged-off. For a full discussion of the Company’s methodology of assessing the adequacy of the reserve for loan losses, refer to Note 1 of the Consolidated Financial Statements.

Goodwill and Other Intangible Assets: As discussed in Note 1 of the notes to the Consolidated Financial Statements, the Company must assess goodwill and other intangible assets each year for impairment. This assessment involves estimating cash flows for future periods. If the future cash flows were less than the recorded goodwill and other intangible assets balances, we would be required to take a charge against earnings to write down the assets to the lower value.

Deferred Tax Assets: The Company uses an estimate of future earnings to support its position that the benefit of the deferred tax assets will be realized. If future income should prove non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced. The deferred tax assets are described further in Note 1 of the Consolidated Financial Statements.

OVERVIEW

The Company reported net income of $523,594 or $.33 per share for the three months ended March 31, 2009 as compared to $636,341 or $.40 per share for the same period during 2008. The decline in net income for the three months ended March 31, 2009 as compared to the same period in 2008 of $112,747 or 17.7% was primarily the result of the decrease in net interest income and noninterest income, offset in part by the decrease in noninterest expenses and the decrease in income tax expense. As compared to the prior year, noninterest income declined $170,977 or 37.1% primarily due to decreases in the net gains (losses) on sales of investment securities, service charges and other fee income and in other operating income. Net interest income decreased $19,278 or .9%, primarily due to the decrease in the interest and fees earned on loans, offset in part by the increase in the income earned on investment securities combined with the decrease in the interest paid on interest bearing liabilities. Noninterest expenses decreased $25,459 or 1.4% during the first quarter of 2009 as compared to 2008 primarily due to decreases in salary and employee benefits expenses and other operating expenses, offset in part by increases in occupancy expenses.

The ROA was .81% for the three months ended March 31, 2009 as compared to 1.01% for the same period of the prior year. For the three months ended March 31, 2009 compared to March 31, 2008, the ROE was 7.34% and 9.50%, respectively.

Table One is a summary of Selected Financial Data of the Company. The sections that follow discuss in more detail the information summarized in Table One.

PAGE 15

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS - For the three months ended March 31, 2009

Net Interest Income

Net interest income, which is the primary source of earnings for the Company, is the difference between interest earned on loans and investments and interest paid on deposits and other liabilities. Changes in the volume and mix of earning assets and interest bearing liabilities combined with changes in market rates of interest greatly effect net interest income. Table Two presents the average balance sheets and an interest rate analysis for the three months ended March 31, 2009 and 2008 and the year ended December 31, 2008.

For the three months ended March 31, 2009, net interest income fell $19,278 or .9%, from the same period in 2008. The decrease in net interest income was primarily due to the decline in the interest earned on loans, offset in part by the increase in the interest earned on investment securities and the decrease in the interest paid on interest bearing liabilities. The changes in the volume and mix of earning assets and interest bearing liabilities combined with the changes in market rates of interest resulted in taxable equivalent net yield on average earning assets of 3.83% at March 31, 2009 as compared to 3.97% at March 31, 2008. The average earning assets increased $6.4 million or 2.7% from March 31, 2008 to 2009.

Interest and fees on loans decreased $145,594 or 7.0%, from the same period in 2008 due to the decrease in the yield earned on loans, offset in part by the increase in the average loan volume. The taxable equivalent yield on loans fell 72 basis points, to 6.48% at March 31, 2009 from 7.20% at March 31, 2008. The average balance on loans increased $5.4 million or 4.5% since December 31, 2008. The increase in loan volume was primarily due to an increased demand for commercial and commercial real estate loans.

During the first quarter of 2009, interest income on investment securities increased $72,144 or 5.5% as compared to the same period of the prior year. The increase in interest income on investment securities was due to the rise in the yields earned combined with the increase in the average volume. The taxable equivalent yield on investment securities rose 12 basis points, to 5.51% at March 31, 2009 from 5.39% at December 31, 2008 and fell 9 basis points from March 31, 2008. The activity of the investment portfolio increased with the average volume increasing approximately $1.5 million or 1.4% since December 31, 2008 and $6.4 million or 6.2% since March 31, 2008.

Interest expense decreased $159,410 or 11.8% during the three months ended March 31, 2009 as compared to the same period in 2008. The decrease in interest expense was primarily due to decreases in the average interest rates paid on interest bearing liabilities which were offset in part by an increase in the average balances of interest bearing liabilities. The average yield on interest bearing liabilities fell 37 basis points, from 2.69% at March 31, 2008 to 2.32% at March 31, 2009, while the average volume grew $6.3 million or 3.1% during this same period. The decline in the average yield on interest bearing liabilities was primarily due to the decline in the interest rates on certificates of deposit accounts. The yield paid on certificate of deposit accounts fell 45 basis points, to 3.75% at March 31, 2009 from 4.20% at December 31, 2008 and fell 64 basis points from March 31, 2008. The increase in the average volume was primarily in savings and interest bearing demand deposits.

Noninterest Income

Noninterest income decreased $170,977 or 37.1% for the three months ended March 31, 2009 as compared to same period of the prior year. The decrease in noninterest income was primarily due to the change in the net gains (losses) on sales of investment securities combined with the decline in service charges and other fee income and the decrease in other operating income.

The net gains (losses) on investment securities decreased $119,894 or 106.6% for the three month period ended March 31, 2009 as compared to the same period in 2008. The decrease in net gains (losses) on sales of investment securities was primarily attributable to sales recorded by the Company and its subsidiary bank in 2008. During the first quarter of 2008 the Company’s subsidiary bank sold approximately $6.9 million of investment securities to take advantage of reinvestment opportunities within the current market interest rate environment. A net gain was recorded related to those sales of investment securities and amounted to $112,713. The Company accounted for securities losses of $7,393 during the three month period ended March 31, 2009 and securities gains of $114,253 and securities losses of $1,752 during the three month period ended March 31, 2008.

Service charges and other fees represent the major component of noninterest income. These charges are earned from assessments made on checking and savings accounts. Service charges and other fee income fell $46,133 in the first three months of 2009 as compared to the same period in 2008, down 22.6%, from 2008. The decrease was primarily due to a decline in overdraft charges of approximately $41,800. Also service charges on deposit accounts declined.

Other operating income represents fees from safe deposit box rentals, sales of checkbooks, sales of cashiers’ checks and money orders, utility collections, ATM charges and card fees, credit life commissions, credit card fees and commissions, income earned on bank owned life insurance and various other charges and fees related to normal customer banking relationships. Other operating income decreased $4,950 or 3.5% in the three month period ended March 31, 2009 as compared to the same period in 2008. During the first quarter of 2009, the decline in other operating income was primarily due to decreases in credit card fees, checkbook sales, other miscellaneous income and a decrease in the earnings related to the cash surrender value of the bank owned life insurance on its key officers, offset in part by increases in ATM fees and FHLB fee income.

PAGE 16

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Two Average Balance Sheets and Interest Rate Analysis(dollars in thousands)

The following table presents an average balance sheet, interest earned on interest bearing assets, interest paid on interest bearing liabilities, average interest rates and interest differentials for the three months ended March 31, 2009 and 2008 and the year ended December 31, 2008. Average balance sheet information for the periods ended March 31, 2009 and 2008 and December 31, 2008 was compiled using the daily averages. Total loans are gross of the allowance for loan losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average balance computations; however, no interest was included in income subsequent to the non-accrual status classification. Loan fees and unearned discounts were included in income for average rate calculation purposes. Average yields on investment securities available for sale have been calculated based on amortized cost.

	(Unaudited)														(Unaudited)
	March 31, 2009							December 31, 2008							March 31, 2008
	Average Volume			Interest		Average Rate		Average Volume			Interest		Average Rate		Average Volume			Interest		Average Rate
ASSETS:
Investment securities:
U.S. Treasury and U. S. Government agencies	$	26,750		$	335	5.08	%	$	23,179		$	1,169	5.04	%	$	22,902		$	338	5.94	%
Mortgage backed securities		62,188			833	5.43	%		63,200			3,296	5.22	%		57,785			746	5.19	%
States and political subdivisions		18,933			185	3.96	%		20,412			797	3.90	%		22,258			216	3.90	%
Other securities		1,787			24	5.45	%		1,323			73	5.52	%		334			5	6.02	%
Total Investment securities:		109,658			1,377	5.09	%		108,114			5,335	4.93	%		103,279			1,305	5.08	%
Interest bearing deposits		2,359			—	0.00	%		3,631			69	1.90	%		4,827			33	2.75	%
Federal funds sold		5,533			—	0.00	%		8,566			141	1.65	%		8,793			61	2.79	%
Loans, net of unearned income		126,147			1,923	6.18	%		120,722			7,917	6.56	%		120,667			2,068	6.89	%
Other earning assets		1,450			4	1.12	%		1,349			52	3.85	%		1,199			16	5.37	%
Total earning assets		245,147			3,304	5.47	%		242,382			13,514	5.58	%		238,765			3,483	5.87	%
Other assets		19,052							17,816							17,538
Allowance for loan losses		(1,909	)						(1,923	)						(2,043	)
Total Assets	$	262,290						$	258,275						$	254,260
LIABILITIES
Time deposits	$	94,427		$	874	3.75	%	$	94,845		$	3,979	4.20	%	$	95,725		$	1,044	4.39	%
Savings deposits		56,659			121	0.87	%		52,738			458	0.87	%		50,865			101	0.80	%
Interest bearing demand deposits		35,836			35	0.40	%		34,867			151	0.43	%		33,674			34	0.41	%
Federal funds purchased and repurchase agreements		10,722			28	1.06	%		12,090			173	1.43	%		12,670			57	1.81	%
FHLB and other long-term borrowings		10,920			136	5.05	%		10,209			514	5.03	%		9,293			117	5.06	%
Total interest bearing liabilities		208,564			1,194	2.32	%		204,749			5,275	2.58	%		202,227			1,353	2.69	%
Demand deposits		23,783							24,839							23,614
Other liabilities		982							1,392							1,493
Total Liabilities		233,329							230,980							227,334
STOCKHOLDERS’ EQUITY		28,961							27,295							26,926
Total Liabilities and Stockholders’ Equity	$	262,290						$	258,275						$	254,260
Net yield on earning assets				$	2,110	3.49	%				$	8,239	3.40	%				$	2,130	3.59	%

The fully taxable equivalent basis of interest income from obligations of states and political subdivisions has been determined using a combined Federal and State corporate income tax rate of 40% for the three months ended March 31, 2009 and 2008, and the year ended December 31, 2008, respectively. The effect of this adjustment is presented below.

Investment securities	$	109,658	$	1,491	5.51	%	$	108,114	$	5,829	5.39	%	$	103,279	$	1,439	5.60	%
Loans		126,147		2,017	6.48	%		120,722		8,289	6.87	%		120,667		2,159	7.20	%
Total earning assets	$	245,147	$	3,512	5.81	%	$	242,382	$	14,380	5.93	%	$	238,765	$	3,708	6.25	%
Taxable equivalent net yield on earning assets			$	2,318	3.83	%			$	9,105	3.76	%			$	2,355	3.97	%

PAGE 17

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

EARNINGS ANALYSIS - For the three months ended March 31, 2009 (Continued)

Noninterest Expense

Noninterest expense decreased $25,459 or 1.4% for the three months ended March 31, 2009 as compared to same period of the prior year. Noninterest expense declined primarily due to decreased salary and employee benefits expenses and other operating expenses, offset in part by an increase in occupancy expenses.

Salary and employee benefits decreased $49,735 or 5.2% during the three months ended March 31, 2009 over the same period in 2008. Salary and employee benefit expense in 2009 compared to 2008 decreased primarily as a result of the decline in salary expenses, offset in part by an increase in employee benefits expense and payroll taxes.

Other operating expenses decreased $5,149, or 1.0%, compared to the same period of the prior year. The decline in other operating expenses was attributable primarily to a decrease in stationery and supplies expense, service expenses, postage and transportation expenses, directors’ fees and other taxes, offset in part by increased regulatory assessments, other expenses and advertising expenses.

Other operating expenses for the three months ended March 31 included the following:

Unaudited	2009		2008
Directors’ fees	$	27,050		32,875
Stationery and supplies		26,051		45,993
Regulatory assessment and deposit insurance		56,444		25,576
Advertising		8,849		7,853
Postage and transportation		35,886		44,993
Other taxes		50,563		51,386
Service expense		92,306		103,944
Other		196,083		185,761
Total	$	493,232	$	498,381

Income Taxes

Income tax expense for the three month period ended March 31, 2009 was $139,457, decreasing 27.2% compared to the same period in 2008. Income tax expense decreased primarily due to the decline in pre-taxable income of $164,796 combined with the decrease in tax-exempt income of $25,070 during the first three months of 2009 over the same period in 2008. Components of the income tax expense for March 31, 2009 were $113,052 for federal taxes and $26,405 for West Virginia corporate net income taxes.

Federal income tax rates and West Virginia corporate net income tax rates remain consistent at 34% and 9%, respectively, for the three months ended March 31, 2009 and 2008 and for the year ended December 31, 2008.

Balance Sheet Analysis

Investments

Investment securities increased approximately $2.4 million or 2.2% from December 31, 2008 to March 31, 2009. The investment portfolio is managed to attempt to achieve an optimum mix of asset quality, liquidity and maximum yield on investment. The investment portfolio consists of U.S. Treasury securities, U.S. Government agency and corporation securities, obligations of states and political subdivisions, corporate debt securities, mortgage-backed securities and equity securities. Taxable securities comprised 84.7% of total securities at March 31, 2009, as compared to 84.1% at December 31, 2008. Other than the normal risks inherent in purchasing U.S. Treasury securities, U.S. Government agency and corporation securities, corporate debt securities, mortgage-backed securities and obligations of states and political subdivisions, i.e., interest rate risk, management has no knowledge of other market or credit risk involved in these investments. The Company does not have any high risk hybrid/derivative instruments.

Investment securities that are classified available for sale are available for sale at any time based upon management’s assessment of changes in economic or financial market conditions. These securities are carried at fair value and the unrealized holding gains and losses, net of taxes, are reflected as a separate component of stockholder’s equity until realized. As the investment portfolio consists primarily of fixed rate debt securities, changes in the market rates of interest will effect the carrying value of securities available for sale, adjusted upward or downward under the requirements of FAS 115 and represent temporary adjustments in values. The carrying value of securities available for sale was above book value by $2,094,945 and $1,387,702 at March 31, 2009 and December 31, 2008, respectively. The fair value of securities classified as held to maturity was above book value by $1,619 and $3,460 at March 31, 2009 and December 31, 2008, respectively.

PAGE 18

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Investments - Continued

Table Three - Investment Portfolio

The following table presents the book values of investment securities.

	(Unaudited)
(dollars in thousands)	March 31, 2009		December 31, 2008
Securities held-to-maturity:
Obligations of states and political subdivisions	$	100	$	320
Total held-to-maturity		100		320
Securities available-for-sale:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies		28,935		26,888
Obligations of states and political subdivisions		18,423		18,523
Corporate debt securities		1,136		1,322
Mortgage-backed securities		65,991		65,076
Equity securities		209		237
Total available-for-sale		114,694		112,046
Total	$	114,794	$	112,366

Table Four - Information on unrealized losses of investment securities

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at March 31, 2009:

	(Expressed in thousands)
	March 31, 2009
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Treasury securities and U.S. Government corporations and agencies	$	7,878	$	(23	)	$	—	$	—		$	7,878	$	(23	)
Obligations of states and political subdivisions		4,785		(103	)		—		—			4,785		(103	)
Corporate debt securities		1,136		(368	)		—		—			1,136		(368	)
Mortgage-backed securities		457		(1	)		332		(10	)		789		(11	)
Total debt securities		14,256		(495	)		332		(10	)		14,588		(505	)
Equity securities		109		(30	)		44		(37	)		153		(67	)
Total	$	14,365	$	(525	)	$	376	$	(47	)	$	14,741	$	(572	)

The Company’s investment securities portfolio contains unrealized losses of direct obligations of the U.S. Treasury and U.S. Government agency securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, and debt obligations of a U.S. state or political subdivision.

On a monthly basis, the Company evaluates the severity and duration of impairment for its investment securities portfolio unless the company has the ability to hold the security to maturity without incurring a loss. Generally, impairment is considered other than temporary when an investment security has sustained a decline in market value of ten percent or more for a period of six months. The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the noncollection of principal and interest during the period. There are 32 positions that are temporarily impaired at March 31, 2009.

PAGE 19

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Five - Maturity distribution of Investment Portfolio

The maturity distribution using book value including accretion of discounts and amortization of premiums and approximate yield of investment securities at March 31, 2009 and December 31, 2008 are presented in the following table. Tax equivalent yield basis was used on tax exempt obligations. Approximate yield was calculated using a weighted average of yield to maturities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(Unaudited)
	March 31, 2009								December 31, 2008
	Securities Held to Maturity				Securities Available for Sale				Securities Held to Maturity				Securities Available for Sale
(dollars in thousands)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
U. S. Treasury and other U.S. Government Agencies
Within One Year	$	—	—	%	$	3,081	4.53	%	$	—	—	%	$	2,066	4.35	%
After One But Within Five Years		—	—			48	0.99			—	—			1,591	4.42
After Five But Within Ten Years		—	—			25,802	4.75			—	—			23,228	5.14
After Ten Years		—	—			4	0.90			—	—			3	2.69
		—	—			28,935	4.72			—	—			26,888	5.04
States & Political Subdivisions
Within One Year		100	7.85			1,453	3.86			320	7.85			1,456	3.86
After One But Within Five Years		—	—			5,642	5.09			—	—			6,090	5.18
After Five But Within Ten Years		—	—			4,087	5.70			—	—			3,591	5.89
After Ten Years		—	—			7,241	5.94			—	—			7,386	6.12
		100	7.85			18,423	5.46			320	7.85			18,523	5.59
Corporate Debt Securities
Within One Year		—	—			—	—			—	—			—	—
After One But Within Five Years		—	—			1,136	7.85			—	—			1,322	6.74
After Five But Within Ten Years		—	—			—	—			—	—			—	—
After Ten Years		—	—			—	—			—	—			—	—
		—	—			1,136	7.85			—	—			1,322	6.74
Mortgage-Backed Securities		—	—			65,991	5.14			—	—			65,076	5.35
Equity Securities		—	—			209	2.14			—	—			237	5.22
Total	$	100	7.85	%	$	114,694	5.11	%	$	320	7.85	%	$	112,046	5.33	%

Assets carried at $34,349,000 and $34,199,000 at March 31, 2009 and December 31, 2008, respectively, were pledged to secure United States Government and other public funds and for other purposes as required or permitted by law.

PAGE 20

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Loans

Loans represent the largest asset on the Company’s balance sheet. Total loans, net of unearned income, increased approximately $2.9 million or 2.3% from December 31, 2008 to March 31, 2009. The increase in loans during the first quarter of 2009 was primarily due to increases in commercial loans, residential real estate loans, and in other loans which increased approximately $2,411,000, $534,000 and $58,000, respectively, offset by an increase in installment loans which decreased approximately $139,000. The increase in commercial loans was primarily due to the increased demand for commercial real estate and commercial loans during the first quarter of 2009. The increase in residential real estate loans was primarily due to the increased demand for multifamily residential properties, offset in part by a decline in loans secured by one-to-four family residential properties. Other loans increased primarily due to the increased demand for loans to states an political subdivisions. Installment loans were relatively flat during the first quarter of 2009.

Real estate residential loans which include real estate construction, real estate farmland, and real estate residential loans comprised thirty-five percent (35%) of the loan portfolio. Commercial loans which include real estate secured by non-farm, non-residential and commercial and industrial loans comprised forty-four percent (44%) of the loan portfolio. Installment loans comprised eleven percent (11%) of the loan portfolio. Other loans which include non-rated industrial development obligations, direct financing leases and other loans comprised ten percent (10%) of the loan portfolio. The changes in the composition of the loan portfolio since December 31, 2008 were a 1% increase in commercial and industrial loans and a 1% decrease in real estate residential loans.

Table Six - Loan Portfolio

Loans outstanding are as follows:

	(Unaudited)
(dollars in thousands)	March 31, 2009		December 31, 2008
Real Estate - residential:
Real estate - construction	$	699	$	711
Real estate - farmland		315		295
Real estate - residential		44,318		43,792
	$	45,332	$	44,798
Commercial:
Real estate-secured by nonfarm nonresidential	$	45,299	$	43,914
Commercial and industrial		10,675		9,649
	$	55,974	$	53,563
Installment:
Installment and other loans to individuals	$	13,947	$	14,086
Other:
Nonrated industrial development obligations	$	12,422	$	12,342
Other loans		20		42
	$	12,442	$	12,384
Total		127,695		124,831
Less unearned interest		186		196
	$	127,509	$	124,635

PAGE 21

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Seven - Maturities and sensitivities of Loans to Changes in Interest Rates

The following table presents the contractual maturities of loans other than installment loans and residential mortgages as of March 31, 2009 and December 31, 2008:

(dollars in thousands	March 31, 2009						December 31, 2008
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Real estate construction	$	62	$	392	$	245	$	63	$	400	$	248
Commercial real estate - secured by nonfarm, nonresidential property		516		5,451		39,332		332		4,782		38,800
Commercial and industrial		2,427		3,781		4,467		2,305		2,696		4,648
Nonrated industrial development obligations		1,284		5,334		5,804		1,324		2,585		8,433
Total	$	4,289	$	14,958	$	49,848	$	4,024	$	10,463	$	52,129
The following table presents an analysis of fixed and variable rate loans as of March 31, 2009 and December 31, 2008 along with the contractual maturities of loans other than installment loans and residential mortgages:
(dollars in thousands	March 31, 2009						December 31, 2008
	In one Year or Less		After one Year Through Five Years		After Five Years		In one Year or Less		After one Year Through Five Years		After Five Years
Fixed Rates	$	2,431	$	10,338	$	6,171	$	2,535	$	8,884	$	6,791
Variable Rates		1,858		4,620		43,677		1,489		1,579		45,338
Total	$	4,289	$	14,958	$	49,848	$	4,024	$	10,463	$	52,129

Non-performing assets include non-accrual loans on which the collectibility of the full amount of interest is uncertain; loans which have been renegotiated to provide for a reduction or deferral of interest on principal because of a deterioration in the financial position of the borrower; loans past due ninety days or more as to principal or interest; and other real estate owned. A summary of nonperforming assets is presented in Table Eight.

Total non-performing loans were $4,189,000 at March 31, 2009 as compared to $3,283,000 at December 31, 2008. The increase in non-performing loans was primarily due to an increase in non-accrual loans combined with the increase in loans past due 90 days or more. Loans are placed in non-accrual when the principal or interest is past due 90 days or more, unless the loan is both well secured and in the process of collection. Non-accrual loans were $3,881,000 or 3.0% of total loans outstanding as of March 31, 2009, as compared to $3,275,000 or 2.6% of total loans at December 31, 2008. The increase in non-accrual loans during the first quarter of 2009 was primarily due to the addition of three commercial real estate loans totaling approximately $637,000 and two residential real estate loans totaling approximately $72,000 offset in part by payments and/or charge-offs. Management continues to monitor the nonperforming assets to ensure against deterioration in collateral values.

PAGE 22

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Loans - Continued

Table Eight - Risk Elements

Loans which are in the process of collection, but are contractually past due 90 days or more as to interest or principal, renegotiated, non-accrual loans and other real estate are as follows:

	(Unaudited)
(dollars in thousands)	March 31, 2009			December 31, 2008
Past Due 90 Days or More:
Real estate - residential	$	292		$	—
Commercial		—			—
Installment		8			—
	$	300		$	—
Non-accrual:
Real estate - residential	$	1,005		$	939
Commercial		2,869			2,320
Installment		7			16
	$	3,881		$	3,275
Other Real Estate	$	8		$	8
Total non-performing assets	$	4,189		$	3,283
Total non-performing assets to total loans and other real estate		3.29	%		2.63	%

Generally, all banks recognize interest income on the accrual basis, except for certain loans which are placed on a non-accrual status. Loans are placed on a non-accrual status, when in the opinion of management doubt exists as to its collectibility. In accordance with the Office of the Comptroller of the Currency Policy, banks may not accrue interest on any loan which either the principal or interest is past due 90 days or more unless the loan is both well secured and in the process of collection. The amount of interest income that would have been recognized had the loans performed in accordance with their original terms was approximately $71,600, $43,100 and $214,000 for the three months ended March 31, 2009 and 2008 and for the year ended December 31, 2008, respectively.

PAGE 23

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Table Nine - Analysis of Allowance for Loan Losses

The following table presents a summary of loans charged off and recoveries of loans previously charged off by type of loan.

	(Unaudited)						December 31, 2008
	March 31,
(dollars in thousands)	2009			2008
Allowance for loan losses:
Balance at beginning of period:	$	1,923		$	2,043		$	2,043
Loans charged off:
Real estate - residential		—			—			—
Commercial		—			—			165
Installment		37			8			29
		37			8			194
Recoveries:
Real estate - residential		—			—			—
Commercial		3			3			72
Installment		—			—			2
		3			3			74
Net charge-offs		34			5			120
Additions charged to operations		—			—			—
Balance at end of period:	$	1,889		$	2,038		$	1,923
Average loans outstanding	$	126,147		$	120,667		$	120,722
Ratio of net charge-offs to average loans outstanding for the period		0.03	%		0.00	%		0.10	%
Ratio of the allowance for loan losses to loans outstanding for the period		1.48	%		1.68	%		1.54	%

The additions to the allowance for loan losses are based on management’s evaluation of characteristics of the loan portfolio, current and anticipated economic conditions, past loan experiences, net loans charged-off, specific problem loans and delinquencies, and other factors.

PAGE 24

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Allowance for Loan Losses

In all lending activities there is an inherent risk that borrowers will be unable to repay their obligations. The Company maintains an allowance for loan losses to absorb probable loan losses. The Company has historically maintained the allowance for loan losses at a level greater than actual charge-offs. Although a subjective evaluation is determined by management, the Company believes it has appropriately assessed the risk of loans in the loan portfolio and has provided for an allowance which is adequate based on that assessment. Because the allowance is an estimate, any change in the economic conditions of the Company’s market area could result in new estimates which could affect the Company’s earnings. Management monitors the quality of the loan portfolio through reviews of past due loans and all significant loans which are considered to be potential problem loans on a monthly basis. The internal loan review function provides for an independent review of commercial, real estate, and installment loans in order to measure the asset quality of the portfolio. Management’s review of the loan portfolio has not indicated any material loans, not disclosed in the accompanying tables and discussions which are known to have possible credit problems that cause management to have serious doubts as to the ability of each borrower to comply with their present loan repayment terms.

The allowance for loan losses decreased $34,253 or 1.8%, since December 31, 2008. The allowance for loan losses represented 1.5% of outstanding loans as of March 31, 2009 and at December 31, 2008. Loan charge-offs amounted to $37,254 for the three month period ended March 31, 2009, compared to loan charge-offs of $8,178 for the same period in 2008. There was no provision made to the allowance for loan losses during the first three months of 2009 and 2008. The credit quality of the loan portfolio combined with the recent level of net charge-offs and nonperforming assets continue to be considered in the calculation of the provision for loan losses. The Company has allocated the allowance for possible loan losses to specific portfolio segments based upon historical net charge-off experience, changes in the level of nonperforming assets, local economic conditions and management’s experience as presented in Table Ten.

Table Ten - Allocation of allowance for possible loan losses

The following table presents an allocation of the allowance for possible loan losses at each of the four year periods ended December 31, 2008, and the three month period ended March 31, 2009. The allocation presented below is based on the historical average of net charge offs per category combined with the change in loan growth and management’s review of the loan portfolio.

	(Unaudited) March 31, 2009
					December 31,
					2008				2007				2006				2005
(dollars in thousands)	Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans
Real estate - residential	$	485	35.4	%	$	298	35.8	%	$	298	38.3	%	$	327	35.8	%	$	327	33.4	%
Commercial		1,197	43.9			1,184	43.0			1,277	41.2			1,483	43.3			1,465	44.5
Installment		132	10.9			420	11.3			447	10.5			466	11.2			507	12.3
Others		75	9.8			21	9.9			21	10.0			21	9.7			21	9.8
Total	$	1,889	100.0	%	$	1,923	100.0	%	$	2,043	100.0	%	$	2,297	100.0	%	$	2,320	100.0	%

PAGE 25

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Deposits

A stable core deposit base is the major source of funds for the Company’s subsidiary bank. The deposit mix depends upon many factors including competition from other financial institutions, depositor interest in certain types of deposits, changes in the interest rate and the Company’s need for certain types of deposit growth. Total deposits increased approximately $8.4 million or 4.1% during the first three months of 2009. Since year end the increase in total deposits was primarily due to increases in interest bearing demand deposits, certificates of deposit and savings deposits which increased approximately $3,899,000, $1,248,000 and $3,222,000, respectively. At March 31, 2009, noninterest bearing deposits comprised 11% of total deposits and interest bearing deposits which include NOW, money market, savings and time deposits comprised 89% of total deposits. The change in the deposit mix from December 31, 2008 to March 31, 2009 was a 1% decrease in noninterest bearing deposits and a 1% increase in interest bearing deposits.

Table Eleven - Maturity Distribution of Time Certificates of Deposit

A maturity distribution of time certificates of deposit at March 31, 2009 and December 31, 2008, follows:

	Maturities of Time Deposits
(dollars in thousands)	(Unaudited) March 31, 2009		December 31, 2008
Due in 2009	$	40,254	$	58,109
Due in 2010		33,649		16,985
Due in 2011		8,277		7,722
Due in 2012		7,096		6,580
Due in 2013		3,677		3,364
Due in 2014 and thereafter		1,073		17
Total	$	94,026	$	92,777

Time deposits include certificates of deposit issued in denominations of $100,000 or more which amounted to $27,313,000 and $25,790,000 at March 31, 2009 and December 31, 2008, respectively. Interest expense on certificates of deposit of $100,000 or more was $265,861 and $313,614 at March 31, 2009 and 2008, respectively.

Table Twelve - Maturity of Time Deposits of $100,000 or more

The following table presents other time deposits of $100,000 or more issued by domestic offices by time remaining until maturity of 3 months or less; over 3 through 6 months; over 6 through 12 months; and over 12 months.

	Maturities of Time Deposits in Excess of $100,000
	(Unaudited)
(dollars in thousands)	March 31, 2009		December 31, 2008
Three Months or Less	$	3,355	$	8,393
Over Three and Less than Six Months		4,290		2,818
Over Six and Less than Twelve Months		11,709		6,335
Over Twelve Months		7,959		8,244
Total	$	27,313	$	25,790

PAGE 26

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Federal Funds Purchased and Repurchase Agreements

Federal funds purchased and repurchase agreements represent borrowings of a short duration, usually less than 30 days. For repurchase agreements, the securities underlying the agreements remained under the Bank’s control. There were no Federal funds purchased at March 31, 2009 and December 31, 2008. Repurchase agreements increased $542,152 or 4.9%, from December 31, 2008 to March 31, 2009. The increase in repurchase agreements since year end was primarily due to the increase in the balances maintained by commercial customers.

Federal Home Loan Bank and Other Long-term Borrowings

The subsidiary Bank is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). The FHLB borrowings are secured by a blanket lien by the FHLB on certain residential real estate loans or securities with a market value at least equal to the outstanding balances. The remaining maximum borrowing capacity with the FHLB at March 31, 2009 was approximately $92.8 million subject to the purchase of additional FHLB stock. The FHLB borrowings were $10,910,938 and $10,929,369 at March 31, 2009 and December 31, 2008, respectively. The subsidiary bank has two fixed rate bullet advances which amount to $7,000,000, with a weighted average interest rate of 5.08% which will mature in 2009 and 2010. The subsidiary bank also has three fixed rate amortizing advances with a weighted average interest rate of 4.78% , which approximately $2.2 million will mature in 2018 and $1.7 million will mature in 2023.

The subsidiary bank also has a one year line of credit agreement with the Federal Home Loan Bank (“FHLB”). The maximum credit available under this agreement is $7.0 million and expires December 2011. There were no borrowings outstanding under this agreement at March 31, 2009 and December 31, 2008, respectively.

Contractual maturities of FHLB borrowings as of March 31, 2009 were as follows:

2009	$	3,556,629
2010		3,578,725
2011		82,570
2012		86,602
2013		90,832
Thereafter		3,515,580
	$	10,910,938

The Company has a non-revolving line of credit of $3.0 million from a financial institution. The line of credit is secured by 126,200 shares of Progressive Bank, N.A. stock. The note bears an interest rate of prime and is adjustable quarterly. The note matures in May 2015. The Company’s initial borrowing under the loan amounted to $2.0 million. There were no outstanding borrowings as of March 31, 2009 and as of December 31, 2008.

Capital Resources

Stockholders’ equity increased .8% during the three month period ended March 31, 2009 entirely from current earnings after quarterly dividends, and a 1.5% increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income is primarily attributable to the effect of the change in the net unrealized loss on securities available for sale. Stockholders’ equity amounted to 11.0% and 11.1% of total assets at March 31, 2009 and December 31, 2008, respectively. The Company paid dividends of $.19 per share during the three month periods ended March 31, 2009 and paid dividends of $.18 in the three month period ended March 31, 2008.

The Company’s primary source of funds for payment of dividends to shareholders is from the dividends from its subsidiary bank. The approval of the Comptroller of the Currency is required to pay dividends if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits (as defined) for the year, combined with its retained net profits of the preceding two years. Under this formula, the Company’s subsidiary bank can declare dividends in 2009, without approval of the Comptroller of the Currency, of approximately $1,981,000, plus an additional amount equal to the bank’s net profit for 2009 up to the date of any such dividend declaration.

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk, weighting, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to adjusted total assets (as defined).

PAGE 27

First West Virginia Bancorp, Inc.

Management’s Discussion and Analysis of the Financial Condition and Results of Holding Company Operations

Capital Resources - Continued

As of March 31, 2009, the most recent notifications from the Office of the Comptroller of the Currency categorized the bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes has changed the capital category. The capital ratios of the Company and its subsidiary bank, along with the regulatory framework for adequately capitalized and well capitalized institutions are depicted as set forth in the following table:

	Actual				For Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Provisions
(Amounts Expressed in Thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
First West Virginia Bancorp, Inc.
As of March 31, 2009
Total Capital (to Risk Weighted Assets)	$	28,257	18.53	%	$	12,198	8.0	%	$	15,248	10.0	%
Tier I Capital (to Risk Weighted Assets)		26,368	17.29	%		6,099	4.0	%		9,149	6.0	%
Tier I Capital (to Adjusted Total Assets)		26,368	10.15	%		10,390	4.0	%		12,987	5.0	%
As of December 31, 2008
Total Capital (to Risk Weighted Assets)	$	28,045	18.86	%	$	11,897	8.0	%	$	14,871	10.0	%
Tier I Capital (to Risk Weighted Assets)		26,191	17.61	%		5,949	4.0	%		8,923	6.0	%
Tier I Capital (to Adjusted Total Assets)		26,191	10.14	%		10,334	4.0	%		12,917	5.0	%
Progressive Bank, N.A.
As of March 31, 2009
Total Capital (to Risk Weighted Assets)	$	28,048	18.45	%	$	12,163	8.0	%	$	15,204	10.0	%
Tier I Capital (to Risk Weighted Assets)		26,159	17.21	%		6,082	4.0	%		9,123	6.0	%
Tier I Capital (to Adjusted Total Assets)		26,159	10.09	%		10,369	4.0	%		12,961	5.0	%
As of December 31, 2008
Total Capital (to Risk Weighted Assets)	$	27,788	18.74	%	$	11,861	8.0	%	$	14,826	10.0	%
Tier I Capital (to Risk Weighted Assets)		25,934	17.49	%		5,930	4.0	%		8,895	6.0	%
Tier I Capital (to Adjusted Total Assets)		25,934	10.06	%		10,316	4.0	%		12,895	5.0	%

Liquidity

Liquidity management ensures that funds are available to meet loan commitments, deposit withdrawals, and operating expenses. Funds are provided by loan repayments, investment securities maturities, or deposits, and can be raised by liquidating assets or through additional borrowings. The Company had investment securities with an estimated fair value of $114,693,714 classified as available for sale at March 31, 2009. These securities are available for sale at any time based upon management’s assessment in order to provide necessary liquidity should the need arise. The fair value of temporarily impaired investment securities that the company has the intent and ability to hold until the anticipated recovery in market value is $14,741,000. In addition, the Company’s subsidiary bank, Progressive Bank, N.A., is a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”). Membership in the FHLB provides an additional source of funding in the form of collateralized advances. The remaining maximum borrowing capacity with the FHLB at March 31, 2009 was approximately $92.8 million subject to the purchase of additional FHLB stock. At March 31, 2009, the subsidiary bank had a short term line of credit in the aggregate amount of approximately $7 million available with the FHLB. There were no short term borrowings outstanding pursuant to this agreement as of March 31, 2009. At March 31, 2009 and December 31, 2008, the Company had outstanding loan commitments and unused lines of credit totaling $19,062,000 and $18,973,000, respectively. As of March 31, 2009, management placed a high probability for required funding within one year of approximately $11.7 million. Approximately $4.4 million is principally unused home equity and credit card lines on which management places a low probability for required funding.

PAGE 28

FIRST WEST VIRGINIA BANCORP, INC.

PART I

Item 3 Quantitative and Qualitative Disclosures About Market Risk

The Company’s subsidiary bank uses an asset/liability model to measure the impact of changes in interest rates on net interest income on a periodic basis. Assumptions are made to simulate the impact of future changes in interest rates and/or changes in balance sheet composition. The effect of changes in future interest rates on the mix of assets and liabilities may cause actual results to differ from simulated results. Guidelines established by the Company’s subsidiary bank provides that the estimated net interest income may not change by more than 10% in a one year period given a +/- 200 basis point parallel shift in interest rates. Excluding the potential effect of interest rate changes on assets and liabilities of the Holding Company which are not deemed material, the anticipated impact on net interest income of the subsidiary bank at March 31, 2009 was as follows: given a 200 basis point increase scenario net interest income would be reduced by approximately .6%, and given a 200 basis point decrease scenario net interest income would be increased by approximately 1.7%. The results using a +/-100 basis point interest rate scenario are also presented. Under the 100 basis point increase scenario net interest income would be increased by approximately .1%, and given a 100 basis point decrease scenario net interest income would be increased by 2.3%. The projections provided by the model are not intended as an actual forecast of the bank’s performance in a particular rate environment, and should not be relied upon. Actual changes in the interest rate environment normally do not take place instantaneously, but over a period of time, and do not occur in a parallel fashion. Additionally, the balance sheet composition, spread relationships for new dollars invested, non interest income and expenses, investment practices, and deposit practices all change as a result of changes in interest rates and would need to be considered by the Asset Liability committee.

Item 4 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chairman, President and Chief Executive Officer, Sylvan J. Dlesk, and Executive Vice President, Chief Administrative Officer and Chief Financial Officer, Francie P. Reppy, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to the filing of this report (the “Evaluation Date”), have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in Internal Controls

During the quarter, there were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the date of their evaluation, nor were there any significant deficiencies or material weaknesses in the Company’s internal controls. As a result, no corrective actions were required or undertaken.

PAGE 29

FIRST WEST VIRGINIA BANCORP, INC.

PART II

OTHER INFORMATION

Item 1 Legal Proceedings

The nature of the business of the Holding Company’s subsidiary generates a certain amount of litigation involving matters arising in the ordinary course of business. The Company is unaware of any litigation other than ordinary routine litigation incidental to the business of the Company, to which it or its subsidiary is a party or of which any of their property is subject.

Item 1A Risk Factors

Please refer to the Company’s report on Form 10-K for the year ended December 31, 2008 for disclosures with respect to risk factors. There have been no material changes since year-end 2008 in the specified risk factors disclosed in the Annual Report on Form 10-K.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

Inapplicable

Item 3 Defaults Upon Senior Securities

Inapplicable

Item 4 Submission of Matters to Vote of Security Holders

a. Inapplicable

b. Inapplicable

c. Inapplicable

d. Inapplicable

Item 5 Other Information

Inapplicable

Item 6 Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K

On March 9, 2009 a report on Form 8-K was filed which contained a press release dated March 5, 2009 that reported the announcement of First West Virginia Bancorp Inc.’s fourth quarter and year end earnings.

(b) Exhibits

The exhibits listed in the Exhibit Index on page 31 of this FORM 10-Q are incorporated by reference and/or filed herewith.

PAGE 30

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.

First West Virginia Bancorp, Inc. (Registrant)
By:	/s/ Sylvan J. Dlesk
	Sylvan J. Dlesk
	Chairman, President and Chief Executive Officer
By:	/s/ Francie P. Reppy
	Francie P. Reppy
	Executive Vice President, Chief Administrative Officer and Chief Financial Officer

Dated: May 8, 2009

PAGE 31

EXHIBIT INDEX

The following exhibits are filed herewith and/or are incorporated herein by reference.

Exhibit Number	Description
3.1	Certificate and Articles of Incorporation of First West Virginia Bancorp, Inc. Incorporated herein by reference.
3.2	Bylaws of First West Virginia Bancorp, Inc. Incorporated herein by reference.
10.3	Lease dated July 20, 1993 between Progressive Bank, N.A., formerly known as “First West Virginia Bank, N.A.”, and Angela I. Stauver. Incorporated herein by reference.
10.5	Lease dated March 7, 2006 between Progressive Bank, N.A. and O. V. Smith & Sons of Big Chimney, Inc. Incorporated herein by reference.
10.7	Lease dated May 12, 2001 between Progressive Bank, N.A. and Sylvan J. Dlesk and Rosalie J. Dlesk doing business as Dlesk Realty & Investment Company. Incorporated herein by reference.
10.8	Lease dated January 1, 2005 between Progressive Bank, N.A. and Elm Grove Properties LLC. Incorporated herein by reference.
11.1	Statement regarding computation of per share earnings. Filed herewith and incorporated herein by reference.
13.3	Summarized Quarterly Financial Information. Filed herewith and incorporated herein by reference.
15	Letter re unaudited interim financial information. Incorporated herein by reference. See Part 1, Notes to Consolidated Financial Statements
31	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Executive Officer pursuant to section 302 of the Securities and Exchange Act of 1934. Filed herewith and incorporated herein by reference.
31.1	Rule 13a-14(a) / 15d/14(a) Certifications - Certification of Chief Financial Officer pursuant to section 302 of the Securities and Exchange Act of 1934. Filed herewith and incorporated herein by reference.
32	Certification pursuant to 18 U.S.C. §1350,as adopted pursuant to section 906 of the SARBANES-OXLEY ACT of 2002. Filed herewith and incorporated herein by reference.
99.1	Independent Accountant’s Report. Filed herewith and incorporated herein by reference.

PAGE 32