SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 000-50151
Allegheny Bancshares, Inc.
(Exact name of registrant as specified in its charter)
West Virginia 22-3888163
- ------------------------ ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 North Main Street
P. O. Box 487
Franklin, West Virginia 26807
(Address of principal executive offices, including zip code)
(304) 358-2311
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes No X
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Stock, par value - $1.00
895,257 shares outstanding as of October 31, 2005
1
ALLEGHENY BANCSHARES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements 2
Unaudited Consolidated Statements of Income -
Nine Months ended September 30, 2005 and 2004 2
Unaudited Consolidated Statements of Income -
Three Months ended September 30, 2005 and 2004 3
Consolidated Balance Sheets - September 30, 2005
(Unaudited) and December 31, 2004 (Audited) 4
Unaudited Consolidated Statements of Changes in
Stockholders' Equity - Nine Months Ended
September 30, 2005 and 2004 5
Unaudited Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2005 and 2004 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 15
Item 4. Controls and Procedures 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8K 16
SIGNATURES 17
2
Part I. Financial Information
Item 1. Consolidated Financial Statements
Allegheny Bancshares, Inc.
Consolidated Statements of Income
(In thousands, except for per share information)
(Unaudited)
Nine Months Ended
September 30, September 30,
2005 2004
Interest and Dividend Income:
Loans and fees $ 6,497 $ 5,895
Investment securities - taxable 440 469
Investment securities - nontaxable 536 538
Deposits and federal funds sold 39 12
------ ------
Total Interest and Dividend Income 7,512 6,914
------ ------
Interest Expense:
Deposits 1,826 1,437
Borrowings 180 124
------ ------
Total Interest Expense 2,006 1,561
------ ------
Net Interest Income 5,506 5,353
Provision for loan losses 163 135
------ ------
Net interest income after provision
for loan losses 5,343 5,218
------ ------
Noninterest Income:
Service charges on deposit accounts 456 178
Other income 165 153
Gain on security transactions 8 47
------ ------
Total Noninterest Income 629 378
------ ------
Noninterest Expense:
Salaries and benefits 1,726 1,606
Occupancy expenses 211 183
Equipment expenses 415 358
Other expenses 995 926
------ ------
Total Noninterest Expenses 3,347 3,073
------ ------
Income before Income Taxes 2,625 2,523
Income Tax Expense 797 763
------ ------
Net Income $ 1,828 $ 1,760
====== ======
Earnings Per Share
Net income $ 2.04 $ 1.96
======= =======
Weighted Average Shares Outstanding 896,470 898,064
======= =======
The accompanying notes are an integral part of these statements.
3
Part I. Financial Information
Item 1. Consolidated Financial Statements
Allegheny Bancshares, Inc.
Consolidated Statements of Income
(In thousands, except for per share information)
(Unaudited)
Three Months Ended
September 30, September 30,
2005 2004
Interest and Dividend Income:
Loans and fees $ 2,295 $ 2,035
Investment securities - taxable 140 146
Investment securities - nontaxable 174 177
Deposits and federal funds sold 22 4
------ ------
Total Interest and Dividend Income 2,631 2,362
------ ------
Interest Expense:
Deposits 680 483
Borrowings 77 41
------ ------
Total Interest Expense 757 524
------ ------
Net Interest Income 1,874 1,838
Provision for loan losses 54 45
------ ------
Net interest income after provision
for loan losses 1,820 1,793
------ ------
Noninterest Income:
Service charges on deposit accounts 164 69
Other income 59 56
Gain on security transactions 6 1
------ ------
Total Noninterest Income 229 126
------ ------
Noninterest Expense:
Salaries and benefits 586 522
Occupancy expenses 75 62
Equipment expenses 153 121
Other expenses 353 305
------ ------
Total Noninterest Expenses 1,167 1,010
------ ------
Income before Income Taxes 882 909
Income Tax Expense 256 276
------ ------
Net Income $ 626 $ 633
====== ======
Earnings Per Share
Net income $ .70 $ .71
======= =======
Weighted Average Shares Outstanding 896,222 897,207
======= =======
The accompanying notes are an integral part of these statements.
4
Allegheny Bancshares, Inc.
Consolidated Balance Sheets
(In thousands)
September 30, 2005 December 31, 2004
Unaudited Audited
ASSETS
Cash and due from banks $ 2,218 $ 2,695
Federal funds sold 3,742 2,018
Interest bearing deposits in banks 403 225
Investment securities available for sale 31,631 33,048
Investment securities held to maturity 500 500
Loans receivable, net of allowance for loan
losses of $1,134 and $1,094 respectively 125,743 117,228
Bank premises and equipment, net 5,840 4,763
Other assets 2,032 1,762
-------- --------
Total Assets $ 172,109 $ 162,239
======== ========
LIABILITIES
Deposits
Noninterest bearing demand $ 17,691 $ 16,348
Interest bearing
Demand 20,148 20,746
Savings 26,874 25,732
Time deposits over $100,000 19,560 18,992
Other time deposits 52,721 49,759
-------- --------
Total Deposits 136,994 131,577
Accrued expenses and other liabilities 536 577
Short-term borrowings 3,785 2,544
Long-term debt 5,214 3,494
-------- --------
Total Liabilities 146,529 138,192
-------- --------
STOCKHOLDERS' EQUITY
Common stock; $1 par value, 2,000,000 shares
Authorized, 900,000 issued 900 900
Additional paid in capital 900 900
Retained earnings 23,845 22,017
Accumulated other comprehensive income 106 371
Treasury stock (at cost, 4,006 shares in
2005 and 3,404 shares in 2004) (171) (141)
-------- ---------
Total Stockholders' Equity 25,580 24,047
-------- --------
Total Liabilities and Stockholders'
Equity $ 172,109 $ 162,239
======== ========
The accompanying notes are an integral part of these statements.
5
Allegheny Bancshares, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
Additional Other
Common Paid In Retained Comprehensive Treasury
Total Stock Capital Earnings Income Stock
Balance, December 31,
2004 $ 24,047 $ 900 $ 900 $ 22,017 $ 371 $ (141)
Comprehensive Income
Net income 1,828 1,828
Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$(119) (265) (265)
---------
Total Comprehensive
Income 1,563
Purchase of Treasury
Stock (30) (30)
--------- --------- ------- --------- ------- ---------
Balance, September 30,
2005 $ 25,580 $ 900 $ 900 $ 23,845 $ 106 $ (171)
======== ======= ======= ========= ======= ========
Balance, December 31,
2003 $ 23,053 $ 900 $ 900 $ 20,619 $ 649 $ (15)
Comprehensive Income
Net income 1,760 1,760
Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$(204) (235) (235)
---------
Total Comprehensive
Income 1,525
Purchase of treasury
stock (106) (106)
--------- -------- ------- --------- -------- --------
Balance, September 30,
2004 $ 24,472 $ 900 $ 900 $ 22,379 $ 414 $ (121)
======== ======= ======= ========= ========= =======
The accompanying notes are an integral part of these statements.
6
Allegheny Bancshares, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2005 2004
Cash Flows from Operating Activities:
Net income $ 1,828 $ 1,760
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 163 135
Depreciation and amortization 325 271
Net amortization of securities 41 69
Gain on sale of securities (8) (47)
Gain on sale of equipment (6)
Gain on sale of other real estate (13)
Net change in:
Accrued income (89) (63)
Other assets (164) (129)
Accrued expense and other liabilities 59 (73)
------- --------
Net Cash Provided by Operating Activities 2,155 1,904
------- -------
Cash Flows from Investing Activities:
Net change in federal funds sold (1,724) (6,390)
Net change in interest bearing deposits in banks (178) 19
Proceeds from sales, calls and maturities
of securities available for sale 5,579 10,749
Proceeds from call of security held to maturity 500
Purchase of securities available for sale (4,580) (5,352)
Purchase of securities held to maturity (500)
Net increase in loans (8,678) (9,031)
Proceeds from sale of other real estate 63
Proceeds from sale of bank premises and equipment 6
Purchase of bank premises and equipment (1,400) (522)
-------- --------
Net Cash Used in Investing Activities (10,981) (10,458)
-------- ---------
Cash Flows from Financing Activities:
Net change in:
Demand and savings deposits 1,887 7,596
Time deposits 3,530 781
Proceeds from borrowings 3,241 1,415
Curtailments of borrowings (279) (1,494)
Purchase of treasury stock (30) (106)
-------- --------
Net Cash Provided by Financing Activities 8,349 8,192
------- -------
Cash and Cash Equivalents
Net decrease in cash and cash equivalents (477) (362)
Cash and Cash Equivalents, beginning of period 2,695 2,975
------- -------
Cash and Cash Equivalents, end of period $ 2,218 $ 2,613
======= =======
The accompanying notes are an integral part of these statements.
7
Allegheny Bancshares, Inc.
Consolidated Statements of Cash Flows (Continued)
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2005 2004
Supplemental Disclosure of Cash Paid During the Period for:
Interest $ 1,931 $ 1,561
Income taxes 774 $ 756
The accompanying notes are an integral part of these statements.
8
ALLEGHENY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ACCOUNTING PRINCIPLES:
The financial statements conform to accounting principles generally
accepted in the United States of America and to general industry practices. In
the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position as of September 30, 2005, and the
results of operations for the periods ended September 30, 2005 and 2004. The
notes included herein should be read in conjunction with the notes to the
financial statements included in the 2004 annual report to stockholders of
Allegheny Bancshares, Inc.
NOTE 2 INVESTMENT SECURITIES:
The amortized costs of investment securities and their approximate fair
values at September 30, 2005 and December 31, 2004 follows (in thousands):
September 30, 2005 December 31, 2004
Amortized Fair Amortized Fair
Cost Value Cost Value
Securities available for sale:
U.S. Treasury and agency
obligations $ 7,968 $ 7,970 $ 7,484 $ 7,601
State and municipal
obligations 18,153 18,452 18,450 18,983
Mortgage-backed securities 5,356 5,209 6,575 6,464
------- ------- ------ -------
Total $ 31,477 $ 31,631 $32,509 $ 33,048
======= ======= ====== =======
Securities held to maturity:
U.S. Treasury and agency
obligations $ 500 $ 499 $ 500 $ 501
======= ======= ====== =======
9
ALLEGHENY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 LOANS:
Loans outstanding are summarized as follows (in thousands):
September 30, December 31,
2005 2004
Real estate loans $ 58,337 $ 55,406
Commercial and industrial loans 54,504 49,023
Loans to individuals, primarily
collateralized by autos 11,137 11,144
All other loans 2,899 2,749
------- ------
Total Loans 126,877 118,322
Less allowance for loan losses 1,134 1,094
------- ------
Net Loans Receivable $125,743 $117,228
======= =======
NOTE 4 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses for the nine
months ended September 30, 2005 and 2004 follows (in thousands):
Nine Months Ended
September 30,
2005 2004
Balance, beginning of period $ 1,094 $ 1,052
Provision charged to operating expenses 163 90
Recoveries of loans charged off 11 13
Loans charged off (134) (117)
------- -------
Balance, end of period $ 1,134 $ 1,038
======= =======
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
The following discussion contains statements that refer to future
expectations, contain projections of the results of operations or of financial
condition or state other information that is "forward-looking."
"Forward-looking" statements are easily identified by the use of words such as
"could," "could anticipate," "estimate," "believe," and similar words that refer
to the future outlook. There is always a degree of uncertainty associated with
"forward-looking" statements. The Company's management believes that the
expectations reflected in such statements are based upon reasonable assumptions
and on the facts and circumstances existing at the time of these disclosures.
Actual results could differ significantly from those anticipated.
Many factors could cause the Company's actual results to differ materially
from the results contemplated by the forward-looking statements. Some factors,
which could negatively affect the results, include:
o General economic conditions, either nationally or within the Company's
markets, could be less favorable than expected;
o Changes in market interest rates could affect interest margins and
profitability;
o Competitive pressures could be greater than anticipated; and
o Legal or accounting changes could affect the Company's results.
Overview
Net income of $1,828,000 for the first nine months of 2005 represents an
increase of 3.87% compared to the same period a year ago. For the quarter ended
September 30, 2005, net income was 1.10% lower than the same quarter ended
September 30, 2004. Annualized returns on average equity and average assets for
the nine months ended September 30, 2005 were 9.83% and 1.47%, respectively,
compared with 9.92% and 1.49% for the same period in 2004.
Net Interest Income
The Company's taxable equivalent net interest income increased 2.74% for
the first nine months of 2005 compared to the first nine months of 2004. This
increase resulted from substantial growth in interest earning assets, primarily
loans, which served to offset the increase in the cost of funds. The Company's
net yield on earnings assets for 2005 was 4.88% compared to 4.97% for 2004 as
the cost of funds increased 40 basis points while the yield on earning assets
increased 23 basis points. Recent increases by the Federal Reserve Board of the
target rate of fed funds has caused the average rates earned on earning assets
and the average rates paid on interest bearing liabilities to increase slightly
as compared to recent quarters. Average loan balances increased $7.5 million
during 2005 as compared to the same period in 2004. The increase in average loan
balances was funded by reductions in balances of taxable securities investments,
increases in deposits, increases in term and daily sweep repurchase agreements,
and long term borrowings. Table I shows the average balances for interest
bearing assets and liabilities, the rates earned on earning assets and the rates
paid on deposits and borrowed funds.
11
Allowance for Loan Losses and Provision for Loan Losses
The provision for loan losses were $163,000 and $135,000 for the nine
months ended September 30, 2005 and 2004, respectively. The allowance for loan
losses ("ALL") was $1,134,000 (.89% of loans) at the end of the first nine
months of 2005 compared with $1,094,000 (.92% of loans) at December 31, 2004.
The ALL is evaluated on a regular basis by management and is based upon
management's periodic review of the collectibility of the loans, industry
historical experience, the nature and volume of the loan portfolio, adverse
situations that may affect the borrower's ability to repay, estimated value of
any underlying collateral and prevailing economic conditions. This evaluation is
inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available. The calculation of
the ALL is considered to be a critical accounting policy.
Noninterest Income
Noninterest income increased 67.20% during the first nine months of 2005
as compared to the same period in 2004 and 84.13% for the third quarter 2005 as
compared to the third quarter of 2004. In both instances, the increase was
largely due to an increase in overdraft fees as a result of the Company's
overdraft bounce protection program introduced in December 2004.
Noninterest Expenses
Total noninterest expense increased $277,000 or 9.01% for the first nine
months of 2005, as compared to 2004 and 15.84% for the third quarter 2005 as
compared to the same period in 2004. Salaries and benefits increased due to the
increase in the number of employees, merit increases, and higher benefit costs.
Occupancy and equipment expenses increased as a result of the completed Franklin
office renovations in December 2004 and the relocation and construction of the
new Marlinton office completed in May 2005. In August 2005, the bank subsidiary
changed its name from Pendleton County Bank to Pendleton Community Bank.
Additional expenses were incurred to replace stationary, supplies, and
promotional items. Other contributors to the increase in noninterest expense
were the costs incurred in connection with implementing and complying with
Sarbanes-Oxley Rule 404.
Income Tax Expense
Income tax expense equaled 30.36% of income before income taxes for the
nine months ended September 30, 2005 compared with 30.24% for the nine months
ended September 30, 2004.
Loans
Total loans were $126,877,000 at September 30, 2005, compared to
$118,322,000 at December 31, 2004, representing a 7.23% increase. Loan growth
during the first nine months of 2005 occurred principally in the commercial and
real estate portfolios. A schedule of loans by type is shown in Note 3 to the
financial statements. Approximately 82% of the loan portfolio is secured by real
estate.
Loan Portfolio Risk Factors
Loans accounted for on a nonaccrual basis were $109,000 at September 30,
2005 (.09% of total loans). Accruing loans which are contractually past due 90
days or more as to principal or interest totaled $442,000 (.35% of total loans).
Loans are placed in a nonaccrual status when management has information that
indicates that principal or interest may not be collectable. Management has not
identified any additional loans as "troubled debt restructurings" or "potential
problem loans."
12
Deposits
The Company's deposits increased $5,417,000 or 4.11% during the first nine
months of 2005. As rates continue to increase, competition for deposits
increased. A schedule of deposits by type is shown in the balance sheets. Time
deposits of $100,000 or more were 14.28% and 14.43% of total deposits at
September 30, 2005 and December 31, 2004, respectively.
Borrowings
Short-term borrowings increased during 2005 due to commercial customers
utilizing Term and Daily Sweep Repurchase Agreements.
The Company borrows funds from the Federal Home Loan Bank (FHLB) to
provide liquidity and to reduce interest rate risk. As competition for deposits
have increased during 2005, FHLB borrowings have been utilized to fund loan
growth. These borrowings have a fixed rate of interest and are amortized over a
period of 10 to 20 years. Interest rates on these obligations range from 3.15%
to 4.77%. During the first nine months of 2005, the Company has borrowed
$2,000,000 in additional long-term borrowings from the FHLB.
Capital
The Company continues to maintain a strong capital position to provide an
attractive financial return to our shareholders and to support future growth.
Capital as a percentage of total assets was 14.86% at September 30, 2005 and
significantly exceeded regulatory requirements. The Company is considered to be
well capitalized under the regulatory framework for prompt corrective actions.
Uncertainties and Trends
Management is not aware of any known trends, events or uncertainties that
will have or that are reasonably likely to have a material effect on liquidity,
capital resources or operations. Additionally, management is not aware of any
current recommendations by the regulatory authorities which, if they were to be
implemented, would have such an effect.
Liquidity and Interest Sensitivity
Liquidity reflects our ability to ensure that funds are available to meet
present and future obligations. At September 30, 2005, the Company had liquid
assets of approximately $6.3 million in the form of cash and due from banks and
federal funds sold. Management believes that the Company's liquid assets are
adequate at September 30, 2005. Additional liquidity may be provided by the
growth in deposit accounts and loan repayments. In the event the Company would
need additional funds, it has the ability to purchase federal funds and borrow
under established lines of credit of $18.2 million.
At September 30, 2005, the Company had a negative cumulative Gap Rate
Sensitivity Ratio of -29.78% for the one year repricing period. This rate does
not reflect the historical movement of funds during varying interest rate
environments. Adjusted for historical repricing trends in response to interest
rate changes, the adjusted Gap Ratio is .05%. This generally indicates that net
interest income would remain stable in both a declining and increasing interest
rate environment. Management constantly monitors the Company's interest rate
risk and has decided that the current position is an acceptable risk for a
growing community bank operating in a rural environment. Table II shows the
Company's interest sensitivity.
13
TABLE I
Allegheny Bancshares, Inc.
Net Interest Margin Analysis
(On a Fully Taxable Equivalent Basis)(Dollar Amounts in Thousands)
Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
Average Income/ Average Income/
Balance Expense Rates Balance Expense Rates
Interest Income
Loans (1) $123,196 $ 6,497 7.03% $115,691 $ 5,895 6.79%
Federal funds sold 1,470 34 3.08% 1,169 9 1.03%
Interest bearing
deposits 260 5 2.56% 229 3 1.75%
Investments
Taxable 14,526 440 4.04% 16,411 469 3.81%
Nontaxable (2) 18,442 813 5.88% 17,545 815 6.19%
------ ------ ------ ------ ------ -----
Total Earning Assets 157,894 7,789 6.58% 151,045 7,191 6.35%
------- ------ ------ ------- ------ -----
Interest Expense
Demand deposits 18,339 172 1.25% 16,087 96 .80%
Savings 27,587 202 .98% 28,988 165 .76%
Time deposits 71,089 1,452 2.72% 68,117 1,176 2.30%
Short-term
borrowings 3,362 64 2.54% 1,854 24 1.33%
Long-term debt 4,084 115 3.75% 3,714 100 3.59%
------ ------ ------ ------ ------ -------
Total Interest Bearing
Liabilities $124,461 $ 2,005 2.15% $118,760 $ 1,561 1.75%
------- ------- -------- ------- ------ -----
Net Interest
Margin (1) 5,784 5,630
======= =====
Net Yield on Interest
Earning Assets 4.88% 4.97%
======= =====
(1) Interest on loans includes loan fees
(2) An incremental tax rate of 34% was used to calculate the tax equivalent
income
14
TABLE II
Allegheny Bancshares, Inc.
Interest Sensitivity Analysis
September 30, 2005
(In Thousands of Dollars)
0-3 4-12 1-5 Over 5 Total
Months Months Years Years
Uses of Funds:
Loans:
Commercial $ 16,817 $ 8,388 $ 20,676 $11,522 $ 57,403
Consumer 838 841 7,687 1,489 10,855
Real estate 7,969 5,423 9,381 35,564 58,337
Credit card 282 282
Federal funds sold 3,742 3,742
Interest bearing deposits 403 403
Investment securities 14,606 17,525 32,131
------- ------- ------ ------- ------
Total 30,051 14,652 52,350 66,100 163,153
------ ------- ------ ------- -------
Sources of Funds:
Deposits:
Interest bearing
demand 20,148 20,148
Savings 26,874 26,874
Time deposits
over $100,000 3,034 5,239 11,287 19,560
Other time deposits 16,535 17,239 18,298 649 52,721
Short-term borrowings 2,180 1,605 3,785
Long-term debt 106 323 1,886 2,899 5,214
------ ------- ------ ------- ------
Total 68,877 24,406 31,471 3,548 128,302
------ ------- ------ ------- -------
Discrete Gap (38,826) (9,754) 20,879 62,552 34,851
Cumulative Gap (38,826) (48,580) (27,701) 34,851
Ratio of Cumulative Gap
To Total Earning Assets -23.80% -29.78% -16.98% 21.36%
Table II reflects the earlier of the maturity or repricing dates for various
assets and liabilities at September 30, 2005. In preparing the above table, no
assumptions are made with respect to loan prepayments or deposit run offs. Loan
principal payments are included in the earliest period in which the loan matures
or can be repriced. Principal payments on installment loans scheduled prior to
maturity are included in the period of maturity or repricing. A loan with a
floating rate that has reached a contractual floor or ceiling level is being
treated as a fixed rate loan until the rate is again free to float.
15
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in Quantitative and Qualitative
Disclosures about Market Risk as reported in the 2004 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As a result of the enactment of the Sarbanes-Oxley Act of 2002, issuers
that file periodic reports under the Securities Exchange Act of 1934 (the "Act")
are now required to include in those reports certain information concerning the
issuer's controls and procedures for complying with the disclosure requirements
of the federal securities laws. Under rules adopted by the Securities and
Exchange Commission effective August 29, 2002, these disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports it
files or submits under the Act, is communicated to the issuer's management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding disclosure.
We have established disclosure controls and procedures to ensure that
material information related to Allegheny Bancshares, Inc. and its subsidiary is
made known to our principal executive officer and principal financial officer on
a regular basis, in particular during the periods in which our quarterly and
annual reports are being prepared. These disclosure controls and procedures
consist principally of communications between and among the Chief Executive
Officer and the Chief Financial Officer to identify any new transactions,
events, trends, contingencies or other matters that may be material to the
Company's operations. As required, we have evaluated the effectiveness of these
disclosure controls and procedures as of the end of the period covered by this
quarterly report. Based on this evaluation, the Company's management, including
the Chief Financial Officer, concluded that such disclosure controls and
procedures were operating effectively as designed as of the date of such
evaluation.
Changes in Internal Controls
During the period reported upon, there were no significant changes in the
Company's internal controls pertaining to its financial reporting and control of
its assets or in other factors that could significantly affect these controls.
Part II. Other Information
Item 1. Legal Proceedings -
Not Applicable
Item 2. Changes in Securities -
Not Applicable
Item 3. Defaults Upon Senior Securities -
Not Applicable
16
Item 4. Submission of Matters to a Vote of Security Holders -
Not Applicable
Item 5. Other Information -
Not Applicable
Item 6. Exhibits and Reports on 8-K -
a. Exhibits
The following Exhibits are filed as part of this Form 10-Q
No. Description
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (filed
herewith).
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (filed
herewith).
32 Certifications of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).
The following exhibit is incorporated by reference to the Exhibits to
Allegheny Bancshares, Inc. Form 10-KSB filed March 30, 2003.
No. Description Exhibit Number
3.1 Articles of Incorporation - Allegheny Bancshares, Inc. E2
The following exhibit is incorporated by reference to the Exhibits to
Allegheny Bancshares, Inc. Form 10-KSB filed March 26, 2004.
No. Description Exhibit Number
3.3 Bylaws of Allegheny Bancshares, Inc. 3.3
b. Reports on 8K
No reports were filed for the quarter ended September 30, 2005.
17
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant causes this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLEGHENY BANCSHARES, INC.
By: /s/ WILLIAM A. LOVING
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William A. Loving, Jr.
Executive Vice President and
Chief Executive Officer
By: /s/ L. KIRK BILLINGSLEY
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L. Kirk Billingsley
Chief Financial Officer
Date: November 10, 2005