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 March 31, 2006
[ ] 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
894,757 shares outstanding as of May 1, 2006
1
ALLEGHENY BANCSHARES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements 2
Unaudited Consolidated Statements of Income -
Three Months ended March 31, 2006 and 2005 2
Consolidated Balance Sheets - March 31, 2006
(Unaudited) and December 31, 2005 (Audited) 3
Unaudited Consolidated Statements of Changes in
Stockholders' Equity - Three Months Ended
March 31, 2006 and 2005 4
Unaudited Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2006 and 2005 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 14
Item 4. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8K 15
SIGNATURES 16
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)
Three Months Ended
March 31, March 31,
2006 2005
Interest and Dividend Income:
Loans and fees $ 2,389 $ 2,036
Investment securities - taxable 180 154
Investment securities - nontaxable 172 182
Deposits and federal funds sold 17 9
------ ------
Total Interest and Dividend Income 2,758 2,381
------ ------
Interest Expense:
Deposits 805 538
Borrowings 84 46
------ ------
Total Interest Expense 889 584
------ ------
Net Interest Income 1,869 1,797
Provision for loan losses 54 54
------ ------
Net interest income after provision
for loan losses 1,815 1,743
------ ------
Noninterest Income:
Service charges on deposit accounts 158 131
Other income 63 41
Gain on security transactions 2
------ ------
Total Noninterest Income 221 174
------ ------
Noninterest Expense:
Salaries and benefits 650 577
Occupancy expenses 74 67
Equipment expenses 145 123
Other expenses 345 303
------ ------
Total Noninterest Expenses 1,214 1,070
------ ------
Income before Income Taxes 822 847
Income Tax Expense 247 269
------ ------
Net Income $ 575 $ 578
====== ======
Earnings Per Share
Net income $ .64 $ .64
====== =======
Weighted Average Shares Outstanding 894,935 896,596
======= =======
The accompanying notes are an integral part of these statements.
3
Allegheny Bancshares, Inc.
Consolidated Balance Sheets
(In thousands)
March 31, 2006 December 31, 2005
Unaudited Audited
ASSETS
Cash and due from banks $ 1,520 $ 2,882
Federal funds sold 57 1,541
Interest bearing deposits in banks 415 505
Investment securities available for sale 33,169 33,459
Investment securities held to maturity 500 500
Loans receivable, net of allowance for loan
losses of $1,236 and $1,172 respectively 127,056 124,433
Bank premises and equipment, net 6,202 6,049
Other assets 2,117 1,951
-------- --------
Total Assets $ 171,036 $ 171,320
======== ========
LIABILITIES
Deposits
Noninterest bearing demand $ 15,989 $ 16,275
Interest bearing
Demand 18,100 20,276
Savings 28,412 28,522
Time deposits over $100,000 20,047 19,336
Other time deposits 53,757 52,565
-------- --------
Total Deposits 136,305 136,974
Accrued expenses and other liabilities 642 574
Short-term borrowings 2,769 3,799
Long-term debt 6,002 5,109
-------- --------
Total Liabilities 145,718 146,456
-------- --------
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 23,964 23,389
Accumulated other comprehensive income (212) (117)
Treasury stock (at cost, 5,243 shares in 2006 and
4,743 shares in 2005) (234) (208)
-------- ---------
Total Stockholders' Equity 25,318 24,864
-------- --------
Total Liabilities and Stockholders'
Equity $171,036 $171,320
======== ========
The accompanying notes are an integral part of these statements.
4
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,
2005 $ 24,864 $ 900 $ 900 $ 23,389 $ (117) $ (208)
Comprehensive Income
Net income 575 575
Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$(43) (95) (95)
--------
Total Comprehensive
Income 480
Purchase of Treasury
Stock (26) (26)
-------- ------ ------ -------- ------ -----
Balance, March 31,
2006 $ 25,318 $ 900 $ 900 $ 23,964 $ (212) $ (234)
======== ====== ====== ======== ====== =====
Balance, December 31,
2004 $ 24,047 $ 900 $ 900 $ 22,017 $ 371 $ (141)
Comprehensive Income
Net income 578 578
Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$(144) (321) (321)
--------
Total Comprehensive
Income 257
Purchase of Treasury
Stock -------- ------ ------ -------- ------ -----
Balance, March 31,
2005 $ 24,304 $ 900 $ 900 $ 22,595 $ 50 $ (141)
======== ====== ====== ======== ====== =====
The accompanying notes are an integral part of these statements.
5
Allegheny Bancshares, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2006 2005
Cash Flows from Operating Activities:
Net income $ 575 $ 578
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 54 54
Depreciation and amortization 114 99
Net amortization of securities 8 16
Gain on sale of securities (2)
Net change in:
Accrued income (58) (99)
Other assets (108) 96
Accrued expense and other liabilities 111 203
------- ------
Net Cash Provided by Operating Activities 696 945
------- ------
Cash Flows from Investing Activities:
Net change in federal funds sold 1,484 1,645
Net change in interest bearing deposits in banks 90 (11)
Proceeds from sales, calls and maturities
of securities available for sale 263 2,729
Purchase of securities available for sale (119) (2,621)
Net increase in loans (2,678) (3,848)
Purchase of bank premises and equipment (267) (844)
-------- -------
Net Cash Used in Investing Activities (1,227) (2,950)
-------- -------
Cash Flows from Financing Activities:
Net change in:
Demand and savings deposits (2,572) (1,389)
Time deposits 1,903 1,941
Proceeds from borrowings 1,000 1,168
Curtailments of borrowings (1,136) (88)
Purchase of treasury stock (26)
-------- ------
Net Cash Provided by Financing Activities (831) 1,632
-------- ------
Cash and Cash Equivalents
Net decrease in cash and cash equivalents (1,362) (373)
Cash and Cash Equivalents, beginning of period 2,882 2,695
------- ------
Cash and Cash Equivalents, end of period $ 1,520 $ 2,322
======= ======
Supplemental Disclosure of Cash Paid During the Period for:
Interest $ 877 $ 562
Income taxes $ 0 $ 0
The accompanying notes are an integral part of these statements.
6
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 ("GAAP") 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 March 31,
2006, and the results of operations for the periods ended March 31, 2006 and
2005. The notes included herein should be read in conjunction with the notes to
the financial statements included in the 2005 annual report to stockholders of
Allegheny Bancshares, Inc.
NOTE 2 INVESTMENT SECURITIES:
The amortized costs of investment securities and their approximate fair
values at March 31, 2006 and December 31, 2005 follows (in thousands):
March 31, 2006 December 31, 2005
-------------- -----------------
Amortized Fair Amortized Fair
Cost Value Cost Value
Securities available for sale:
U.S. Treasury and agency
obligations $ 10,460 $ 10,321 $10,457 $ 10,370
State and municipal
obligations 18,144 18,181 18,149 18,289
Equity Securities 119 119
Mortgage-backed securities 4,753 4,548 5,022 4,800
------- ------- ------ -------
Total $ 33,476 $ 33,169 $33,628 $ 33,459
======= ======= ====== =======
Securities held to maturity:
U.S. Treasury and agency
obligations $ 500 $ 487 $ 500 $ 488
======= ======= ====== =======
7
ALLEGHENY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 LOANS:
Loans outstanding are summarized as follows (in thousands):
March 31, December 31,
2006 2005
Real estate loans $ 58,000 $57,056
Commercial and industrial loans 57,139 55,780
Loans to individuals, primarily
collateralized by autos 10,936 10,853
All other loans 2,217 1,916
------- ------
Total Loans 128,292 125,605
Less allowance for loan losses 1,236 1,172
------- ------
Net Loans Receivable $127,056 $124,433
======= =======
NOTE 4 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses for the three
months ended March 31, 2006 and 2005 follows (in thousands):
Three Months Ended
March 31,
2006 2005
Balance, beginning of period $ 1,172 $ 1,094
Provision charged to operating expenses 54 54
Recoveries of loans charged off 18 4
Loans charged off (8) (28)
------- -------
Balance, end of period $ 1,236 $ 1,124
======= =======
8
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 $575,000 for the first three months of 2006 represents a
decrease of .52% compared to the same period a year ago. Annualized returns on
average equity and average assets for the three months ended March 31, 2006 were
9.29% and 1.36%, respectively, compared with 9.70% and 1.44% for the same period
in 2005. The reduced earnings for the first quarter 2006 compared to first
quarter 2005 was expected as we are realizing additional expenses as a result of
our new branch location in Marlinton, West Virginia. Prior to May 2005, we had
rented space in Marlinton at relatively low cost, but growth in the market led
to the decision to build a full service branch so starting in the 2nd quarter of
2005, we have higher occupancy costs associated with this location. Also as
expected we are seeing our interest margin drop due to the flat interest rate
yield curve we are experiencing. In the first quarter we have experienced
continued competitive pressures for deposits, and as such we have experienced a
rise in the costs for deposits. Loan demand has remained strong, but rates on
loans are not seeing the same increase due to the flattening of the yield curve,
and for a portion of the first quarter we experienced an inverted yield curve.
This situation has caused our deposit rates to rise faster than our loan rates
and has caused our main source of income, our net interest margin, to decline as
a percentage of earning assets (See Table I). In addition to these two reasons
our noninterest expense has grown as a result of our investment in technology
and the related expenses.
Net Interest Income
The Company's taxable equivalent net interest income increased 3.49% for
the first three months of 2006 compared to the first three months of 2005. This
increase resulted from substantial growth in loans, which served to offset the
increase in the cost of funds. The Company's net yield on earnings assets for
first three months of 2006 was 4.82% compared to 4.89% for same period in 2005
as the cost of funds increased 84 basis points while the yield on earning assets
increased 61 basis points. Increases by the Federal Reserve Board of the target
rate of fed funds since middle of 2004 has caused the average rates earned on
earning assets and the average rates paid on interest bearing liabilities to
continue to increase as compared to recent quarters. Average loan balances for
first three months of 2006 increased $7.5 million as
9
compared to the same period in 2005. The increase in average loan balances was
funded by increases in deposits, increase in retained earnings, 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.
Allowance for Loan Losses and Provision for Loan Losses
The provision for loan losses were $54,000 for each of the three month
periods ended March 31, 2006 and 2005. The allowance for loan losses ("ALL") was
$1,236,000 (.96% of loans) at the end of the first three months of 2006 compared
with $1,172,000 (.93% of loans) at December 31, 2005. The ALL increase has been
boosted the first 3 months of 2006 by an increase in the amount of recoveries of
charged off loans and a decrease in the amount of loans charged off. See Note 4
for the amounts.
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. Managements'
valuation of the ALL is based upon two principals of accounting: 1) SFAS No. 5
Accounting for Contingencies and SFAS No. 114, Accounting by Creditors for
Impairment of a Loan. The Bank utilizes both of theses accounting standards by
first identifying problem loans above a certain threshold and estimating losses
based on the underlying collateral values, and second taking the remainder of
the loan portfolio and separating the portfolio into pools of loans based on
type of loans, size of loans and grade of loans as determined by the Company's
internal grading system. We apply loss percentages based upon our historical
loss rates, and make adjustments based on economic conditions. The determination
of the ALL is subjective and actual losses may be more or less than the amount
of the allowance. However management believes that the allowance is a fair
estimate of losses that exists in the loan portfolio as of the balance sheet
date. The calculation of the ALL is considered to be a critical accounting
policy.
Noninterest Income
Noninterest income increased 27.01% during the first three months of
2006 as compared to the same period in 2005. 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. The increase was due more to the
increase in volume of overdrafts rather than increase in overdraft fees.
Non interest income was also boosted this quarter by an increase in
insurance commissions on credit life and health policies sold with loans. These
commissions are associated mainly with consumer installment loans, and even
though consumer loans have grown by 0.76% in first quarter, the lending staff
has increased the volume of insurance sold.
Noninterest Expenses
Total noninterest expense increased $144,000 or 13.46% for the first three
months of 2006, as compared to 2005. 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 new Marlinton
office completed in May 2005.
10
Equipment expenses also have increased as a result of higher software
maintenance expenses as the Company invests in newer technologies and the
associated costs needed to offset the risks that these new technologies bring to
the Company.
Income Tax Expense
Income tax expense equaled 30.05% of income before income taxes for the
three months ended March 31, 2006 compared with 31.76% for the three months
ended March 31, 2005.
Loans
Total loans were $128,292,000 at March 31, 2006, compared to $125,605,000
at December 31, 2005, representing a 2.14% increase. Loan growth during the
first three months of 2006 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 81% of the loan portfolio is secured by real
estate.
Loan Portfolio Risk Factors
Loans accounted for on a nonaccrual basis were $98,000 at March 31, 2006
(.08% of total loans). Accruing loans which are contractually past due 90 days
or more as to principal or interest totaled $353,000 (.28% 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."
Deposits
The Company's deposits decreased $669,000 or 0.49% during the first three
months of 2006. 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 14.71% and 14.12% of total deposits at March
31, 2006 and December 31, 2005, respectively.
Borrowings
Short-term borrowings decreased during 2006 due to drop in commercial
customers balances in our 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 and 2006, FHLB borrowings have been utilized to help
fund loan growth. These borrowings have a fixed rate of interest and are
amortized over a period of 5 to 20 years. Interest rates on these obligations
range from 3.15% to 5.40%. During the first three months of 2006, the Company
has borrowed $1,000,000 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 14.80% at March 31, 2006 and
significantly exceeded regulatory requirements. The Company is considered to be
well capitalized under the regulatory framework for prompt corrective actions.
11
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 March 31, 2006, the Company had liquid assets
of approximately $2.0 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
March 31, 2006. 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 March 31, 2006, the Company had a negative cumulative Gap Rate
Sensitivity Ratio of -31.38% 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 -0.48%. 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.
12
TABLE I
Allegheny Bancshares, Inc.
Net Interest Margin Analysis
(On a Fully Taxable Equivalent Basis)(Dollar Amounts in Thousands)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
-------------- --------------
Average Income/ Average Income/
Balance Expense Rates Balance Expense Rates
Interest Income
Loans (1) $127,129 $ 2,389 7.52% $119,609 $ 2,036 6.81%
Federal funds sold 968 10 4.13% 1,320 8 2.42%
Interest bearing
deposits 470 7 5.96% 279 1 1.64%
Investments
Taxable 15,880 180 4.53% 15,246 154 4.04%
Nontaxable (2) 17,970 261 5.81% 18,332 277 6.04%
------- ------- ------ ------- ------ -----
Total Earning Assets 162,417 2,847 7.01% 154,786 2,476 6.40%
------- ------- ------ ------- ------ -----
Interest Expense
Demand deposits 19,165 68 1.42% 17,420 46 1.06%
Savings 28,692 118 1.65% 28,586 59 .83%
Time deposits 72,936 619 3.39% 69,923 433 2.48%
Short-term
borrowings 3,573 32 3.58% 2,833 15 2.12%
Long-term debt 5,169 52 4.02% 3,455 31 3.59%
------- ------- ------ ------- ------ -----
Total Interest Bearing
Liabilities $129,532 $ 889 2.75% $122,217 $ 584 1.91%
------- ------- ------ ------- ------ -----
Net Interest
Margin (1) 1,958 1,892
======= ======
Net Yield on Interest
Earning Assets 4.82% 4.89%
====== =====
(1) Interest on loans includes loan fees
(2) An incremental tax rate of 34% was used to calculate the tax equivalent
income
13
TABLE II
Allegheny Bancshares, Inc.
Interest Sensitivity Analysis
March 31, 2006
(In Thousands of Dollars)
0-3 4-12 1-5 Over 5 Total
Months Months Years Years
Uses of Funds:
Loans:
Commercial $ 16,038 $ 14,740 $ 19,347 $ 9,222 $ 59,347
Consumer 682 929 7,655 1,400 10,666
Real estate 6,999 4,977 10,041 35,986 58,003
Credit card 276 276
Federal funds sold 57 57
Interest bearing deposits 116 199 100 415
Investment securities 3,345 16,046 14,278 33,669
------ ------- ------- ------- -------
Total 24,168 24,190 53,189 60,886 162,433
------ ------- ------- ------- -------
Sources of Funds:
Deposits:
Interest bearing demand 18,100 18,100
Savings 28,412 28,412
Time deposits over
$100,000 1,628 10,877 7,542 20,047
Other time deposits 12,276 24,726 16,076 679 53,757
Short-term borrowings 1,926 843 2,769
Long-term debt 135 414 2,435 3,018 6,002
------ ------- ------- ------- -------
Total 62,477 36,860 26,053 3,697 129,087
------ ------- ------- ------- -------
Discrete Gap (38,309) (12,670) 27,136 57,189 33,346
Cumulative Gap (38,309) (50,979) (23,843) 33,346
Ratio of Cumulative Gap
To Total Earning Assets -23.58% -31.38% -14.68% 20.53%
Table II reflects the earlier of the maturity or repricing dates for various
assets and liabilities at March 31, 2006. 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.
14
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 1 A. Risk Factors -
No Material Changes
Item 2. Changes in Securities -
During the 3 month period ending March 31, 2006, the Company purchased back
some of the Company's stock to be held as treasury stock. This was not part of
publicly announced plan. The details of the transaction was as follows:
15
Total Number Average
Of shares Price per
Date Purchased Share
-------- ------------ ----------
February 1, 2006 500 $52.00
Item 3. Defaults Upon Senior Securities -
Not Applicable
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
On February 2, 2006 the Company filed a report on Form 8-K, Item 5.02
announcing the retirement of John D. Heavner from the Board of Directors.
16
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
----------------------------------
William A. Loving, Jr.
Executive Vice President and
Chief Executive Officer
By: /s/ L. KIRK BILLINGSLEY
----------------------------------
L. Kirk Billingsley
Chief Financial Officer
Date: May 1, 2006