1
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, 2001
[ ] 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 (I.R.S. Employer
incorporation or organization) Identification No.)
1701 Warwood Avenue
Wheeling, West Virginia 26003
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(Address of principal executive offices)
Registrant's telephone number, including area code: (304) 277-1100
----------------
N/A
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(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
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 10,
2001: Common Stock, $5.00 Par Value, shares outstanding 1,538,443 shares
2
FIRST WEST VIRGINIA BANCORP, INC.
PART I
FINANCIAL INFORMATION
2
3
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
March 31, December 31, March 31,
2001 2000 2000
------------- ------------- --------------
(Unaudited)
ASSETS
Cash and due from banks $ 5,052,957 $ 4,944,650 $ 4,440,502
Due from banks - interest bearing 9,345,209 7,491,600 6,572,176
------------- ------------- -------------
Total cash and cash equivalents 14,398,166 12,436,250 11,012,678
Federal funds sold 6,770,000 4,396,000 5,346,000
Investment securities
Available for sale (at fair value) 69,501,917 61,364,015 54,354,002
Held to maturity - fair value of
$10,388,938 at March 31, 2001;
$10,920,799 at December 31, 2000;
and $11,010,251 at March 31, 2000 10,180,277 10,878,166 11,218,657
Loans, net of unearned income 114,761,411 114,053,003 111,918,593
Less allowance for possible loan losses (1,400,543) (1,302,044) (1,176,097)
------------- ------------- -------------
Net loans 113,360,868 112,750,959 110,742,496
Premises and equipment, net 3,914,424 2,754,739 2,788,177
Accrued income receivable 1,524,899 1,543,124 1,388,104
Other assets 2,228,318 1,769,956 2,166,576
------------- ------------- -------------
Total assets $ 221,878,869 $ 207,893,209 $ 199,016,690
============= ============= =============
LIABILITIES
Noninterest bearing deposits:
Demand $ 16,366,235 $ 16,518,451 $ 14,659,076
Interest bearing deposits:
Demand 25,733,278 24,055,457 25,797,049
Savings 64,959,200 59,943,940 56,481,196
Time 77,768,710 73,150,730 70,777,857
------------- ------------- -------------
Total deposits 184,827,423 173,668,578 167,715,178
------------- ------------- -------------
Federal funds purchased and
repurchase agreements 16,509,818 14,526,328 13,573,124
Accrued interest on deposits 645,826 598,235 540,611
Other liabilities 960,833 874,968 909,392
------------- ------------- -------------
Total liabilities 202,943,900 189,668,109 182,738,305
------------- ------------- -------------
STOCKHOLDERS' EQUITY
Common Stock - 2,000,000 shares authorized
at $5 par value 1,538,443 shares issued at
March 31, 2001 and December 31, 2000;
1,508,526 shares issued at March 31, 2000 7,692,215 7,692,215 7,542,630
Surplus 4,982,606 4,982,606 4,739,381
Retained Earnings 5,908,598 5,587,967 4,956,921
Accumulated other comprehensive income 351,550 (37,688) (960,547)
------------- ------------- -------------
Total stockholders' equity 18,934,969 18,225,100 16,278,385
------------- ------------- -------------
Total liabilities and stockholders' equity $ 221,878,869 $ 207,893,209 $ 199,016,690
============= ============= =============
The accompanying notes are an integral part of the financial statements
4
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
2001 2000
---------- ----------
(Unaudited)
INTEREST INCOME
Interest and fees on loans and lease financing:
Taxable $2,419,957 $2,338,913
Tax-exempt 70,621 51,679
Investment Securities:
Taxable 952,412 821,167
Tax-exempt 130,464 128,816
Dividends 9,382 8,728
Other interest income 115,213 94,807
Interest on Federal Funds Sold 82,837 53,228
---------- ----------
Total interest income 3,780,886 3,497,338
INTEREST EXPENSE
Deposits 1,654,060 1,476,417
Other borrowings 138,472 116,150
---------- ----------
Total interest expense 1,792,532 1,592,567
---------- ----------
Net interest income 1,988,354 1,904,771
PROVISION FOR POSSIBLE LOAN LOSSES 141,000 97,500
---------- ----------
Net interest income after provision
for possible loan losses 1,847,354 1,807,271
NONINTEREST INCOME
Service charges and other fees 127,084 113,090
Securities gains (losses) 1,647 23,443
Other operating income 78,860 94,093
---------- ----------
Total noninterest income 207,591 230,626
NONINTEREST EXPENSES
Salary and employee benefits 633,215 652,379
Net occupancy expense of premises 202,998 207,287
Other operating expenses 380,115 367,745
---------- ----------
Total noninterest expense 1,216,328 1,227,411
---------- ----------
Income before income taxes 838,617 810,486
---------- ----------
INCOME TAXES 256,452 250,943
---------- ----------
Net income $ 582,165 $ 559,543
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,538,443 1,538,443
========== ==========
EARNINGS PER COMMON SHARE $ 0.38 $ 0.36
========== ==========
The accompanying notes are an integral part of the financial statements
5
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated
Common Stock Other
--------------------- Retained Comprehensive Comprehensive
Shares Amount Surplus Earnings Income Income Total
--------- ---------- ---------- ---------- ------------- ------------- ------------
Balance, December 31, 2000 1,538,443 $7,692,215 $4,982,606 $5,587,967 $ (37,688) $ $18,225,100
Comprehensive income
Net income for the three months
ended March 31, 2001 -- -- -- 582,165 -- 582,165 582,165
Other comprehensive income,
net of tax
Unrealized gains (losses)
on securities, net of
reclassification adjustment
(see disclosure) -- -- -- -- 389,238 389,238 389,238
--------
Comprehensive income $971,403
========
Cash dividend
($.17 per share) -- -- -- (261,534) -- (261,534)
-------- ---------- ---------- ---------- --------- ----------
Balance, March 31, 2001(Unaudited) 1,538,443 $7,692,215 $4,982,606 $5,908,598 $ 351,550 $18,934,969
========= ========== ========== ========== ========= ===========
Accumulated
Common Stock Other
--------------------- Retained Comprehensive Comprehensive
Shares Amount Surplus Earnings Income Income Total
--------- ---------- ---------- ---------- ------------- ------------- -------------
Balance, December 31, 1999 1,508,526 $7,542,630 $4,739,381 $4,638,742 $(865,281) $ $16,055,472
Comprehensive income
Net income for the three months
ended March 31, 2000 -- -- -- 559,543 -- 559,543 559,543
Other comprehensive income,
net of tax
Unrealized gains (losses)
on securities, net of
reclassification adjustment
(see disclosure) -- -- -- -- (95,266) (95,266) (95,266)
--------
Comprehensive income $464,277
========
Cash dividend
($.16 per share) -- -- -- (241,364) -- (241,364)
--------- ---------- ---------- ---------- --------- -----------
Balance, March 31, 2000(Unaudited) 1,508,526 $7,542,630 $4,739,381 $4,956,921 $(960,547) $16,278,385
========= ========== ========== ========== ========= ===========
For the three months ended
March 31,
2001 2000
---------- --------
Disclosure of reclassification amount, net of tax:
Unrealized holding gains (losses)
arising during the period $390,270 $(80,572)
Less: reclassification adjustment for
gains (losses) included in net income 1,032 14,694
-------- --------
Net unrealized gains (losses) on securities $389,238 $(95,266)
======== ========
The accompanying notes are an integral part of the financial statements
6
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2001 2000
------------ -------------
(Unaudited)
OPERATING ACTIVITIES
Net Income $ 582,165 $ 559,543
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 141,000 97,500
Depreciation and amortization 76,650 84,355
Amortization of investment securities, net (81,317) (53,958)
Investment security losses (gains) (1,647) (23,443)
Decrease (increase) in interest receivable 18,225 (31,685)
Increase (decrease) in interest payable 47,591 41,259
Other, net 17,008 (46,141)
------------ ------------
Net cash provided by operating activities 799,675 627,430
------------ ------------
INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold (2,374,000) (2,861,000)
Net (increase) decrease in loans, net of charge offs (759,732) (1,518,700)
Proceeds from sales of securities available for sale 558,334 877,703
Proceeds from maturities of securities available for sale 30,188,923 2,500,000
Proceeds from maturities of securities held to maturity 700,000 105,000
Principal collected on mortgage-backed securities 1,417,050 907,115
Purchases of securities available for sale (39,600,364) (9,963,455)
Purchases of securities held to maturity -- (678,984)
Recoveries on loans previously charged-off 8,823 19,416
Cash acquired in purchase of branch office 8,990,870 --
Purchases of premises and equipment (1,236,335) (31,195)
------------ ------------
Net cash used by investing activities (2,106,431) (10,644,100)
------------ ------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 11,158,845 6,157,246
Deposits acquired in purchase of branch office (9,612,129) --
Dividends paid (261,534) (241,364)
Increase (decrease) in short term borrowings 1,983,490 3,299,199
------------ ------------
Net cash provided by financing activities $ 3,268,672 $ 9,215,081
------------ ------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,961,916 (801,589)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 12,436,250 11,814,267
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 14,398,166 $ 11,012,678
============ ============
The accompanying notes are an integral part of the financial statements
7
First West Virginia Bancorp, Inc. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001 AND 2000
1. The accompanying financial statements are unaudited. However in the opinion
of management, they contain the adjustments ( all of which are normal and
recurring in nature) necessary to present fairly the financial position and the
results of operations. The notes to the financial statements contained in the
annual report for December 31, 2000, should be read in conjunction with these
financial statements.
2. The provision for income taxes is at a rate which management believes will
approximate the effective rate for the year.
3. Certain prior year amounts have been reclassified to conform to the 2001
presentation.
8
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
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First West Virginia Bancorp, Inc., a West Virginia corporation
headquartered in Wheeling, West Virginia, has two wholly-owned subsidiaries:
Progressive Bank, N.A., which operates in Wheeling, Wellsburg, Moundsville, and
New Martinsville, West Virginia and Bellaire, Ohio; and Progressive Bank,
N.A.-Buckhannon, which operates in Buckhannon and Weston, West Virginia.
Following is a discussion and analysis of the significant changes in the
financial condition and results of operations of First West Virginia Bancorp,
Inc., (the Holding Company), and its subsidiaries for the three months ended
March 31, 2001 and 2000. This discussion and analysis should be read in
conjunction with the Consolidated Financial Statements, Notes, and tables
contained in this report, as well as with the Holding Company's 2000 financial
statements, the notes thereto and the related Management's Discussion and
Analysis.
OVERVIEW
The Holding Company reported net income of $582,165 for the three months ended
March 31, 2001 as compared to $559,543 for the same period during 2000. The 4.0%
increase in earnings during the first quarter of 2001 over 2000 can be primarily
attributed to increased net interest income and the decrease in noninterest
expenses, partially offset by the decrease in noninterest income and the
increase in the provision for loan losses. Earnings per common share were $.38
in 2001 compared to $.36 in 2000.
Operational earnings improved with net interest income increasing $83,583 or
4.4%, to $1,988,354 during the three months ended March 31, 2001 as compared to
the same period in 2000. Net interest income increased primarily due to the
increase in the average loan volume and the increase in interest rates on loans
combined with the increase in the average volume of investment securities.
The return on average assets (ROA), which measures the effectiveness of asset
utilization to produce net income, was 1.12% and 1.16% at March 31, 2001 and
2000, respectively. The return on average equity (ROE), which measures the
return on the stockholders' investment, was 12.90% and 13.22% at March 31, 2001
and 2000, respectively. The Board of Directors declared and paid cash dividends
of $.17 per share during the first quarter of 2001 as compared to $.16 during
the same period in 2000.
During the first quarter of 2001, the Corporation's subsidiary, Progressive
Bank, N.A., opened two full-service offices in West Virginia, one in
Moundsville, and one in New Martinsville. In October, 2000, Progressive Bank,
N.A. entered into a Purchase and Assumption Agreement with United National Bank
to purchase the building and deposits of United's New Martinsville, West
Virginia branch office located at 425 Third Street. Progressive Bank also
entered into a Real Estate Purchase Agreement to purchase the building and land
of United's Moundsville, West Virginia branch office located at 809 Lafayette
Avenue. The acquisition of the two offices added approximately $11.5 million in
assets during the first quarter of 2001. Total deposits acquired in the New
Martinsville transaction were approximately $9.6 million.
The Holding Company as of March 31, 2001 had total assets of $221,878,869 an
increase of 6.7% over the $207,893,209 reported for the year ended December 31,
2000. Loans net of reserves increased during the first quarter of 2001 by
$609,909 to $113,360,868, as compared to $112,750,959 reported at December 31,
2000. Total deposits increased in 2001 by $11,158,845, from $173,668,578 at
December 31, 2000 to $184,827,423 at March 31, 2001.
The allowance for loan losses amounted to $1,400,543 at March 31, 2001 or 1.2%
of total loans, compared to $1,302,044 or 1.1% of total loans at December 31,
2000. Non- performing assets were $2,693,000 at March 31, 2001, as compared to
$2,283,000 at December 31, 2000.
Table One is a five-year summary of Selected Financial Data of the Holding
Company. The sections that follow discuss in more detail the information
summarized in Table One.
9
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
(Unaudited, figures in thousands, except per share data)
First West Virginia Bancorp, Inc.
Three months ended Years ended
March 31, December 31,
---------------------- ----------------------------------------------
2001 2000 2000 1999 1998 1997
--------- -------- -------- --------- --------- --------
SUMMARY OF OPERATIONS
Total interest income $ 3,781 $ 3,497 $ 14,869 $ 13,207 $ 12,452 $11,507
Total interest expense 1,793 1,592 7,155 5,602 5,324 4,745
Net interest income 1,988 1,905 7,714 7,605 7,128 6,762
Provision for loan losses 141 98 436 348 256 131
Total other income 208 231 880 1,073 787 639
Total other expenses 1,216 1,227 4,816 4,740 4,674 4,377
Income before income taxes 839 811 3,341 3,590 2,985 2,893
Net income 582 560 2,326 2,450 2,033 1,931
PER SHARE DATA (1)
Net income $ .38 $ .36 $ 1.51 $ 1.59 $ 1.32 $ 1.25
Cash dividends declared .17 .16 .64 .54 .48 .43
Book value per share 12.31 10.58 11.85 10.44 10.05 9.18
AVERAGE BALANCE SHEET SUMMARY
Total loans, net $ 114,303 $110,764 $112,579 $ 105,775 $ 99,345 $ 86,609
Investment securities 71,112 64,327 69,548 59,716 47,911 51,203
Deposits - Interest Bearing 159,635 149,348 155,172 141,768 127,520 120,589
Stockholders' equity 18,292 17,031 17,448 16,087 14,697 13,400
Total Assets 209,977 194,556 203,529 183,436 164,630 153,290
BALANCE SHEET
Investments $ 79,682 $ 65,572 $ 72,242 $ 59,394 $ 54,080 $ 44,883
Loans 114,761 111,919 114,053 110,489 103,555 95,374
Other Assets 27,436 21,526 21,598 19,290 13,760 15,886
--------- -------- -------- ---------- -------- --------
Total Assets $ 221,879 $199,017 $207,893 $ 189,173 $171,395 $156,143
========= ======== ======== ========== ======== ========
Deposits $ 184,827 $167,715 $173,669 $ 161,558 $147,785 $137,045
Federal funds purchased and
Repurchase Agreements 16,510 13,573 14,526 10,274 6,994 4,075
Other Liabilities 1,607 1,450 1,473 1,285 1,155 894
Shareholders' Equity 18,935 16,279 18,225 16,056 15,461 14,129
--------- -------- -------- ---------- -------- -------
Total Liabilities and
Shareholders' Equity $ 221,879 $199,017 $207,893 $ 189,173 $171,395 $156,143
========= ======== ======== ========== ======== ========
SELECTED RATIOS
Return on average assets 1.12% 1.16% 1.14% 1.34% 1.23% 1.26%
Return on average equity 12.90% 13.22% 13.33% 15.23% 13.83% 14.41%
Average equity to average assets 8.71% 8.75% 8.57% 8.77% 8.93% 8.74%
Dividend payout ratio (1) 44.74% 44.44% 42.38% 33.96% 36.36% 34.40%
Loan to Deposit ratio 62.09% 66.73% 65.67% 68.39% 70.07% 69.59%
(1) Adjusted for the 2 percent common stock dividend to stockholders of record
as of December 1, 2000, a 6 for 5 stock split in the effect of a twenty
(20) percent common stock dividend, declared October 12, 1999 to
shareholders of record as of November 1, 1999, a 4 percent common stock
dividend to stockholders of record as of October 1, 1998, and a 3 for 2
stock split in the effect of a fifty (50) percent common stock dividend to
shareholders of record as of October 1, 1997.
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10
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
EARNINGS ANALYSIS
Net Interest Income
Net interest income, which is the difference between interest earned on loans
and investments and interest paid on deposits and other liabilities, is the
primary source of earnings for the Holding Company. 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, 2001 and 2000.
Net interest income was $1,988,354 for the three months ended March 31, 2001, an
increase of $83,583 or 4.4%, from the same period in 2000. Net interest income
increased during the first quarter of 2001 compared to the same period in 2000
primarily due to an increase in investment securities, increased loans combined
with an increase in interest rates earned on such loans, offset in part by an
increase in savings deposits and in the interest rates paid on time deposits.
Interest income on investment securities increased $132,893 or 14.0% during the
three months ended March 31, 2001 over 2000. The increase in the average volume
of investment securities primarily contributed to the increase in net interest
income during the first quarter of 2001. The average volume of investment
securities increased $1,564,000 since December 31, 2000. The average yield on
investment securities increased .15%, from 6.03% at December 31, 2000 to 6.18%
at March 31, 2001.
Interest and fees on loans increased $99,986 or 4.2% for the three month period
ended March 31, 2001 as compared the same period in 2000. The increased interest
income on loans and lease financing resulted primarily from an increase in the
average loan volume combined with an increase in average rates earned. Increases
in commercial loans primarily contributed to the loan growth. The average yield
on loans increased from 8.75% at December 31, 2000 to 8.84% at March 31, 2001.
During the three months ended March 31, 2001, interest expense increased
$199,965 or 12.6% as compared to the same period in 2000. Interest expense
increased as a result of an increase in the average volume of interest bearing
liabilities. Average volume increases of interest bearing liabilities during the
first quarter of 2001 were primarily the result of the growth in savings
deposits. The average yield paid on interest bearing liabilities decreased .06%,
from 4.23% at December 31, 2000 to 4.17% at March 31, 2001. The decrease in the
average yield on interest bearing liabilities during the first quarter of 2001
was primarily due to the decrease in the interest rates paid on savings deposits
and repurchase agreements offset in part by the increase in interest rates paid
on time deposits.
The changes in the volume and mix of earning assets and interest bearing
liabilities combined with the changes in the market rates of interest resulted
in taxable equivalent net interest yields on average earning assets of 4.24% at
March 31, 2001, as compared to 4.21% at December 31, 2000 and 4.37% at March 31,
2000.
11
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Noninterest Income
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 increased $13,994 during the three months ended March
31, 2001, up 12.4%, from the same period in 2000.
Sales of investment securities for the three month periods ended March 31, 2001
and 2000 were primarily the result of sales by the Holding Company. The Holding
Company accounted for securities gains of $11,129 and securities losses of
$9,387 during the period ended March 31, 2001 and securities gains of $37,940
and securities losses of $14,508 during the period ended March 31, 2000 and
those sales were attributable to sales of marketable equity securities.
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, home equity credit line fees, credit life commissions,
credit card fees and commissions and various other charges and fees related to
normal customer banking relationships. During the first quarter of 2001, other
operating income was $78,860, a decrease of $15,233 or 16.2% compared to the
same period in 2000. The decrease in other operating income primarily was due to
a loss of other credit card income and other miscellaneous fees and commissions
during the first quarter of 2001.
Non-Interest Expense
Salary and employee benefits is the largest component of noninterest expense.
Salary and employee benefits decreased $19,164 or 2.9% during the three months
ended March 31, 2001 over the same period in 2000. The decrease in salary and
employee benefits in 2001 compared to 2000 was primarily due to the
redistribution of responsibilities and duties within the Company after the
retirement of the former President and CEO in 2000, offset in part by the hiring
of personnel for the Moundsville and New Martinsville, West Virginia offices
combined with the normal annual merit adjustments.
The major components of other operating expenses include: stationery and
supplies, directors' fees, service expense, postage and transportation, other
taxes, advertising, and regulatory assessment and deposit insurance. Other
operating expenses increased $12,370 or 3.4% for the three months ended March
31, 2001 over 2000. The increase in other operating expenses during the first
quarter of 2001 was primarily due to the increases in deposit premium
amortization, other taxes, director's fees, advertising, and donations.
Income Taxes
Income tax expense for the period ended March 31, 2001 was $256,452, an increase
of 2.2% over the same period in 2000. The increase was primarily due to the
increase in pre-taxable income of $28,131 for the period ended March 31, 2001
over 2000. Components of the income tax expense for March 31, 2001 were $213,888
for federal taxes and $42,564 for West Virginia corporate net income taxes.
For federal income tax purposes, tax-exempt income is based on qualified state,
county, and municipal bonds and loans. Tax-exempt income was $201,085 and
$180,495 for the three month periods ended March 31, 2001 and 2000,
respectively.
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,
2001 and 2000 and for the year ended December 31, 2000.
12
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Table Two
Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates and
Interest Differential
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,
2001 and March 31, 2000 and the year ended December 31, 2000. Average balance
sheet information as of March 31, 2001 and March 31, 2000 and the year ended
December 31, 2000 was compiled using the daily average balance sheet. Loan fees
and unearned discounts were included in income for average rate calculation
purposes. Non-accrual loans were included in the average balance computations;
however, no interest was included in income subsequent to the non-accrual status
classification. Average rates were annualized for the three month periods ended
March 31, 2001 and 2000.
For the three For the three
months ended months ended
March 31, 2001 December 31, 2000 March 31, 2000
----------------------------- ------------------------------ ----------------------------
Average Average Average Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
-------- -------- ------- ------- -------- -------- -------- -------- ------
ASSETS:
Investment securities:
U.S. Treasury and other U. S.
Government agencies $ 38,605 $ 600 6.30% $ 42,503 $ 2,675 6.29% $ 42,949 $ 647 6.06%
Mortgage-backed securities 16,233 276 6.90% 12,123 778 6.42% 7,299 133 7.33%
Obligations of states and
political subdivisions 12,821 153 4.84% 12,431 576 4.63% 11,576 129 4.48%
Other securities 3,453 54 6.34% 2,491 162 6.50% 2,503 41 6.59%
-------- ------ ------- -------- -------- ------ ------- ----- -------
Total Investment securities: 71,112 1,083 6.18% 69,548 4,191 6.03% 64,327 950 5.94%
Interest bearing deposits 8,441 112 5.38% 6,375 398 6.24% 6,538 92 5.66%
Federal funds sold 6,124 83 5.50% 6,041 380 6.29% 3,785 53 5.63%
Loans, net of unearned income 114,303 2,491 8.84% 112,579 9,853 8.75% 110,764 2,391 8.68%
Other earning assets 703 12 6.92% 702 47 6.70% 701 11 6.31%
-------- ------ ------- -------- -------- ------ ------- ----- -------
Total earning assets 200,683 3,781 7.64% 195,245 14,869 7.62% 186,115 3,497 7.56%
Cash and due from banks 4,740 4,602 4,674
Bank premises and equipment 3,374 2,777 2,814
Other assets 2,549 2,148 2,135
Allowance for possible loan losses (1,369) (1,243) (1,182)
-------- --------- --------
Total Assets $209,977 $ 203,529 $194,556
======== ========= ========
LIABILITIES
Certificates of deposit $ 73,543 $1,070 5.90% $ 73,128 $ 4,065 5.56% $ 70,487 $ 933 5.32%
Savings deposits 61,494 511 3.37% 56,940 2,080 3.65% 54,156 451 3.35%
Interest bearing demand deposits 24,598 74 1.22% 25,104 374 1.49% 24,705 93 1.51%
Federal funds purchased and
Repurchase agreements 14,678 138 3.81% 14,067 637 4.53% 11,812 116 3.95%
-------- ------ ----- --------- ------- ------ -------- ------ ------
Total interest bearing liabilities 174,313 1,793 4.17% 169,239 7,156 4.23% 161,160 1,593 3.98%
Demand deposits 15,836 15,301 14,958
Other liabilities 1,536 1,541 1,407
-------- --------- --------
Total Liabilities 191,685 186,081 177,525
STOCKHOLDERS' EQUITY 18,292 17,448 17,031
-------- --------- --------
Total Liabilities
and Stockholders' Equity $209,977 $ 203,529 $194,556
======== ========= ========
Net yield on earning assets $1,988 4.02% $ 7,713 3.95% $1,904 4.11%
====== ====== ======= ===== ====== ======
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, 2001
and 2000, and the year ended December 31, 2000, respectively. The effect of this
adjustment is presented below (in thousands).
Obligations of states and
political subdivisions:
Investment securities $ 12,821 $ 217 6.85% $ 12,431 $ 925 7.44% $ 11,576 $ 215 7.47%
Loans 114,303 2,538 9.00% 112,579 10,012 8.89% 110,764 2,425 8.81%
========= ======= ===== ========= ======= ===== ======= ====== =====
Total earning assets $ 200,683 $ 3,892 7.86% $ 195,245 $15,377 7.88% $186,115 $3,617 7.82%
========= ======= ===== ========= ======= ===== ======= ====== =====
Taxable equivalent net yield on
earning assets $ 2,099 4.24% $ 8,221 4.21% $2,024 4.37%
======= ===== ======= ===== ====== =====
13
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Balance Sheet Analysis
Investments
- -----------
Investment securities increased $7,440,013 or 10.3% from $72,242,181 at
December 31, 2000, to $79,682,194 at March 31, 2001. Taxable securities
comprised 84.8% of total securities at March 31, 2001, as compared to 84.3% at
December 31, 2000. Other than the normal risks inherent in purchasing U.S.
Treasury securities, U.S. Government corporation and agencies 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 corporation does not have any high risk hybrid/derivative
instruments.
Available for sale securities, at market value increased $8,137,902 or
13.3% from December 31, 2000, and represented 87% of the investment portfolio at
March 31, 2001. The increase was primarily due to the purchase of
mortgage-backed and corporate debt securities. The held to maturity securities
decreased $697,889 or 6.4% from December 31, 2000 and represented 13% of the
investment portfolio as of March 31, 2001. The decrease was primarily the result
of maturities of taxable municipal securities. 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 increased by $560,864 at March 31, 2001 and decreased by $60,128 at
December 31, 2000. The market value of securities classified as held to maturity
was above book value by $208,661 and $42,633 at March 31, 2001 and December 31,
2000, respectively.
Table Three
Investment Portfolio
The following table presents the book values of investment securities:
(in thousands) (Unaudited):
March 31, December 31, March 31,
2001 2000 2000
----------- ----------- ------------
Securities held to maturity:
Obligations of states
and political subdivisions $ 10,180 $ 10,878 $ 11,218
------- -------- --------
Total held to maturity $ 10,180 $ 10,878 $ 11,218
------- -------- --------
Securities available for sale :
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies 38,443 $ 43,047 $ 45,547
Obligations of states
and political subdivisions 3,270 2,051 506
Corporate debt securities 6,053 592 598
Mortgage-backed securities 21,282 15,286 7,301
Equity Securities 454 388 402
-------- -------- --------
Total available for sale 69,502 61,364 54,354
-------- -------- --------
Total $ 79,682 $ 72,242 $ 65,572
======== ======== ========
- -------------------------------------------------------------------------------
14
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Table Four
Investment Portfolio (Continued)
(in thousands)
The maturity distribution using book value including accretion of discounts and
amortization of premiums (expressed in thousands) and approximate yield of
investment securities at March 31, 2001 and December 31, 2000 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.
March 31, 2001 December 31, 2000
--------------------------------------------- ----------------------------------------
Securities Securities Securities Securities
Held to Maturity Available for Sale Held to Maturity Available for Sale
-------------------- -------------------- -------------------- ---------------------
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ------ -------- ------ -------- ------ -------- ------
(Unaudited)
U.S. Treasury and other U.S.
Government Agencies
Within One Year $ -- -- % $ 13,390 5.17 % $ -- -- % $ 8,843 6.13 %
After One But
Within Five Years -- -- 16,191 5.73 -- -- 24,422 6.20
After Five But
Within Ten Years -- -- 7,399 6.50 -- -- 9,782 6.57
After Ten Years -- -- 1,463 6.46 -- -- -- --
-------- ----- ------- ------ --------- ------ --------- -----
-- -- 38,443 5.70 -- -- 43,047 6.27
States & Political Subdivisions
Within One Year 1,315 5.87 -- -- 2,008 6.74 -- --
After One But
Within Five Years 3,774 6.28 1,744 6.45 3,745 6.28 985 7.39
After Five But
Within Ten Years 4,995 6.52 1,526 6.52 5,029 6.52 1,066 6.93
After Ten Years 96 7.82 -- -- 96 7.82 -- --
--------- ----- ------- ------ --------- ------ --------- -----
10,180 6.36 3,270 6.48 10,878 6.49 2,051 7.15
Corporate Debt Securities
Within One Year -- -- 1,008 6.20 -- -- 100 8.44
After One But
Within Five Years -- -- 4,114 6.18 -- -- 492 7.36
After Five But
Within Ten Years -- -- 931 7.26 -- -- -- --
--------- ----- ------- ------ --------- ------ --------- -----
-- -- 6,053 6.35 -- -- 592 7.54
Mortgage-Backed Securities -- -- 21,282 6.56 -- -- 15,286 7.01
Equity Securities -- -- 454 2.71 -- -- 388 2.94
--------- ----- ------- ------ --------- ------ --------- -----
Total $ 10,180 6.36 % $ 69,502 6.04 % $ 10,878 6.49 % $ 61,364 6.47 %
========= ===== ======= ===== ========= ====== ========= =====
- ------------------------------------------------------------------------------
15
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Loans
- -----
Loans net of unearned income increased $708,408 or .6% from December 31,
2000. The loan growth during the first quarter of 2001 can be attributed
primarily to the increases in commercial loans and other loans, offset in part
by the decrease in installment loans and residential real estate loans.
Real estate residential loans which include real estate construction, real
estate farmland, and real estate residential loans comprise thirty-seven percent
(37%) of the loan portfolio. Commercial loans which include real estate secured
by non-farm, non residential and commercial and industrial loans comprise
thirty-eight percent (38%) of the loan portfolio. Installment loans comprise
twenty percent (20%) of the loan portfolio. Other loans include nonrated
industrial development obligations, direct financing leases and other loans
comprise five percent (5%) of the loan portfolio. The changes in the composition
of the loan portfolio from December 31, 2000 to March 31, 2001 were a 1%
increase in commercial loans, a 1% increase in other loans, a 1% decrease in
installment loans and a 1% decrease in residential real estate loans.
The loan portfolio is not dominated by concentrations of credit within any
one industry; therefore, the impact of a weakening economy on any particular
industry should be minimal. Management believes that the loan portfolio does not
contain any excessive or abnormal elements of risk.
Table Five
Loan Portfolio
(Unaudited)
Loans outstanding are as follows (in thousands):
March 31, December 31,
--------------------------- ----------
2001 2000 2000
Real Estate - Residential
Real estate-construction $ 183 $ 136 $ 119
Real estate-farmland 128 78 106
Real estate-residential 42,596 40,467 42,960
-------- -------- --------
$ 42,907 $ 40,681 $ 43,185
-------- -------- --------
Commercial
Real estate-secured by
nonfarm, nonresidential $ 29,732 $ 29,701 $ 28,391
Commercial & industrial 14,093 13,622 13,845
-------- -------- --------
$ 43,825 $ 43,323 $ 42,236
-------- -------- --------
Installment
Installment and other
loans to individuals $ 23,047 $ 23,885 $ 23,896
-------- -------- --------
Others
Nonrated industrial
development obligations $ 4,880 $ 3,804 $ 4,610
Other loans 191 317 216
-------- -------- --------
$ 5,071 $ 4,121 $ 4,826
-------- -------- --------
Total 114,850 112,010 114,143
Less unearned interest 89 91 90
-------- -------- --------
$114,761 $111,919 $114,053
======== ======== ========
16
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Table Six
Loan Portfolio - 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 for all banks as of March 31, 2001
and December 31, 2000 (in thousands) (Unaudited):
March 31, 2001
------------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
Commercial $1,172 $6,111 $6,810
Real Estate - construction 139 3 41
------ ------ ------
Total $1,311 $6,114 $6,851
====== ====== ======
December 31, 2000
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
Commercial $746 $5,815 $7,284
Real Estate - construction 119 -- --
---- ------ ------
Total $865 $5,815 $7,284
==== ====== ======
The following table presents an analysis of fixed and variable rate loans as of
March 31, 2001 and December 31, 2000 along with the contractual maturities of
loans other than installment loans and residential mortgages (in thousands)
(Unaudited):
March 31, 2001
------------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ -----------
Fixed Rates $1,187 $4,219 $1,918
Variable Rates 124 1,895 4,933
------ ------ ------
Total $1,311 $6,114 $6,851
====== ====== ======
December 31, 2000
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
---------------------------- ----------
Fixed Rates $802 $4,380 $ 638
Variable Rates 63 1,435 6,646
---- ------ ------
Total $865 $5,815 $7,284
==== ====== ======
- ---------------------------------------------------------------------------
17
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Total non-performing loans were $2,693,000 at March 31, 2001 and $2,283,000
at December 31, 2000. Loans classified as non-accrual were $942,000 or .8% of
total loans as of March 31, 2001, as compared to $1,248,000 or 1.1% of total
loans at December 31, 2000. There were no loans classified as renegotiated as of
March 31, 2001 and December 31, 2000. The loans past due 90 days or more
increased $767,000 to $1,671,000 at March 31, 2001. Other real estate owned was
$80,000 at March 31, 2001 as compared to $131,000 at December 31, 2000.
Management continues to monitor the non-performing assets to ensure against
deterioration in collateral values.
Table Seven
Risk Elements
(UNAUDITED)
The following table presents loans which are in the process of collection, but
are contractually past due 90 days or more as to interest or principal,
non-accrual loans and other real estate ( in thousands):
March 31, December 31,
--------------------- ------------
2001 2000 2000
Past Due 90 Days or More:
Real Estate - residential $ 7 $ 74 $ 48
Commercial 1,520 6 711
Installment 144 80 145
------ ------ ------
$1,671 $ 160 $ 904
------ ------ ------
Non-accrual:
Real Estate - residential $ 20 $ 412 $ 14
Commercial 880 72 1,202
Installment 42 30 32
------ ------ ------
$ 942 $ 514 $1,248
------ ------ ------
Other Real Estate $ 80 $ -- $ 131
------ ------ ------
Total non-performing assets $2,693 $ 674 $2,283
====== ====== ======
Total non-performing assets
to total loans and
other real estate 2.35% 0.60% 2.00%
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 $27,000 and
$15,400 for the periods ended March 31, 2001 and 2000, respectively.
As of March 31, 2001, there are no loans known to management other than those
previously disclosed about which management has any information about possible
credit problems of borrowers which causes management to have serious doubts as
to the borrower's ability to comply with present loan repayment terms.
- ------------------------------------------------------------------------------
18
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Allowance for Possible Loan Losses
- ----------------------------------
The corporation maintains an allowance for possible loan losses to absorb
probable loan losses. The provision for loan losses was $141,000 during the
three months ended March 31, 2001, as compared to $97,500 during the same period
of the prior year. The allowance for possible loan losses represented 1.2% and
1.1% of total loans outstanding at March 31, 2001 and December 31, 2000,
respectively. Net loan charge-offs for the three months ended March 31, 2001
were primarily commercial and consumer loans. The reserve for possible loan
losses is considered to be adequate to provide for future losses in the
portfolio. The amount charged to earnings is based upon management's evaluations
of the loan portfolio, as well as current and anticipated economic conditions,
net loans charged off, past loan experiences, changes in character of the loan
portfolio, specific problem loans and delinquencies and other factors.
Table Eight
Analysis of Allowance for Possible Loan Losses
(UNAUDITED)
The following table presents a summary of loans charged off and recoveries of
loans previously charged off by type of loan (in thousands).
Summary of Loan Loss Experience
----------------------------------------
March 31, December 31,
------------------- ------------
2001 2000 2000
Balance at Beginning of period
Allowance for Possible
Loan Losses $ 1,302 $ 1,148 $ 1,148
Loans Charged Off:
Real Estate - residential -- -- 20
Commercial 30 -- 107
Installment 21 89 189
-------- -------- --------
51 89 316
Recoveries:
Real Estate - residential 1 -- --
Commercial 1 -- 5
Installment 6 19 29
-------- -------- --------
8 19 34
Net Charge-offs 43 70 282
Additions Charged to Operations 141 98 436
-------- -------- --------
Balance at end of period: $ 1,400 $ 1,176 $ 1,302
======== ======== ========
Average Loans Outstanding $114,303 $110,764 $112,579
======== ======== ========
Ratio of net charge-offs
to Average loans
outstanding for the period .04% .06% .25%
Ratio of the Allowance for Loan
Losses to Loans Outstanding for
the period 1.22% 1.05% 1.14%
- ------------------------------------------------------------------------------
19
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Allowance for Possible Loan Losses - continued
- -----------------------------------------------
The corporation has allocated the allowance for possible loan losses to specific
portfolio segments based upon historical net charge-off experience, changes in
the level of non-performing assets, local economic conditions and management
experience as presented in Table Nine. The Corporation has historically
maintained the allowance for loan losses at a level greater than actual
charge-offs. In determining the allocation of the allowance for possible loan
losses, charge-offs for 2001 are anticipated to be within the historical ranges.
Although a subjective evaluation is determined by management, the corporation
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 corporation's market area could result in new estimates which could affect
the corporation's earnings. Management monitors loan quality 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 amount of 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.
Table Nine
Loan Portfolio - Allocation of allowance for possible loan losses
The following table presents an allocation of the allowance for possible loan
losses at each of the five year periods ended December 31, 2000, and the three
month period ended March 31, 2001 ( expressed in thousands). 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.
March 31, December 31,
--------------- -----------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------------- --------------- ---------------- -------------- ---------------- ------------------
Percent Percent Percent Percent Percent Percent
of loans of loans of loans of loans of loans of loans
in each in each in each in each in each in each
category category category category category category
to total to total to total to total to total to total
Amount loans Amount loans Amount loans Amount loans Amount loans Amount loans
------- ------- ------- ------- ------- -------- ------ -------- ------- -------- ------ --------
Real estate -
residential $ 242 37.3% $ 241 37.9% $ 238 36.2% $ 208 34.2% $ 202 34.6% $ 192 36.5%
Commercial 646 38.2 549 37.0 490 38.7 490 37.8 622 38.0 619 39.1
Installment 492 20.1 492 20.9 400 22.2 374 23.8 343 23.6 298 21.6
Others 20 4.4 20 4.2 20 2.9 20 4.2 20 3.8 20 2.8
Unallocated -- -- -- -- -- -- 31 -- 31 -- 31 --
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ ------
Total $1,400 100.0% $1,302 100.0% $1,148 100.0% $1,123 100.0% $1,218 100.0% $1,160 100.0%
====== ===== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
20
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Deposits
- --------
Total deposits were $184,827,423 at March 31, 2001 as compared to
$173,668,578 at December 31, 2000, an increase of 6.4%. Approximately $9.6
million or 5.5% of the increase in deposits during the first quarter of 2001
primarily was due to the acquisition of the deposits of United National Bank's
New Martinsville branch office. Deposit growth increased primarily in savings
and time deposits. At March 31, 2001, noninterest bearing deposits comprised 9%
of total deposits and interest bearing deposits which include NOW, money market,
savings and time deposits comprised 91% of total deposits. The change in the
deposit mix from December 31, 2000 to March 31, 2001 was a 1% increase in
interest bearing deposits and a 1% decrease in noninterest bearing deposits.
Table Ten
Deposits
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. (Unaudited)
March 31, 2001
Maturities of Time Deposits in Excess of $100,000
--------------------------------------------------
In Three Over Three Over Six Over
Months And Less Than And Less Than Twelve
Or Less Six Months Twelve Months Months TOTAL
-------- ------------- ------------- ------ -----
(Expressed in Thousands)
Time Certificates
of Deposit $3,157 $2,329 $4,841 $6,436 $16,763
December 31, 2000
Maturities of Time Deposits in Excess of $100,000
--------------------------------------------------
In Three Over Three Over Six Over
Months And Less Than And Less Than Twelve
Or Less Six Months Twelve Months Months TOTAL
-------- -------------- ------------- ------ -----
(Expressed in Thousands)
Time Certificates
of Deposit $4,614 $2,808 $3,863 $6,171 $17,456
Federal funds purchased and repurchase agreements
- --------------------------------------------------
Federal funds purchased and repurchase agreements are short-term
borrowings, of which repurchase agreements represent the largest component.
Repurchase agreements were $16,509,818 at March 31, 2001, an increase of
$1,983,490, as compared to December 31, 2000. The increase of repurchase
agreements was primarily due to the addition of one commercial customer and an
increase in the balances maintained by existing commercial customers.
- ------------------------------------------------------------------------------
21
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
------------------------------------------------------------------------------
Capital Resources
- -----------------
A strong capital base is vital to continued profitability because it
promotes depositor and investor confidence and provides a solid foundation for
future growth. Stockholders' equity increased 1.8% during the first three months
of 2001 entirely from current earnings after quarterly dividends, and an
increase of 2.1% resulting from the effect of the change in the net unrealized
gain (loss) on securities available for sale. Stockholders' equity amounted to
8.5% of total assets at March 31, 2001 as compared to 8.8% at December 31, 2000.
The Holding Company's primary source of funds for payment of dividends to
shareholders is from the dividends from its subsidiary banks. Earnings from
subsidiary bank operations are expected to remain adequate to fund payment of
stockholders' dividends and internal growth. In management's opinion, the
subsidiary banks have the capability to upstream sufficient dividends to meet
the cash requirements of the Holding Company.
The Holding Company is subject to regulatory risk-based capital guidelines
administered by the Federal Reserve Board. These risk-based capital guidelines
establish minimum capital ratios of Total capital, Tier 1 Capital, and Leverage
to assess the capital adequacy of bank holding companies.
The following chart shows the regulatory capital levels for the
company at March 31, 2001, March 31, 2000, and December 31, 2000:
March 31, Dec. 31
-------------- -------
Ratio Minimum 2001 2000 2000
- ---------------------- -------- ------- ----- -----
Leverage Ratio 3% 8.3 8.4 8.3
Risk Based Capital
Tier 1 (core) 4% 13.3 13.6 14.3
Tier 2 (total) 8% 14.4 14.5 15.4
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 corporation
had investment securities with an estimated market value of $69,501,917
classified as available for sale at March 31, 2001. These securities are
available for sale at any time based upon management's assessment in order to
provide necessary liquidity should the need arise. In addition, the Holding
Company's subsidiary banks, Progressive Bank, N.A., and Progressive Bank, N.A.-
Buckhannon, are members of the Federal Home Loan Bank of Pittsburgh (FHLB).
Membership in the FHLB provides an additional source of short-term and long-term
funding, in the form of collateralized advances. The subsidiary banks had an
available line with the FHLB in the aggregate amount of $10,296,000 at March 31,
2001. As of March 31, 2001 there were no borrowings outstanding pursuant to
these agreements.
At March 31, 2001 and December 31, 2000, the Holding Company had
outstanding loan commitments and unused lines of credit totaling $13,532,000 and
$14,307,000, respectively. As of March 31, 2001, management placed a high
probability for required funding within one year of approximately $9,659,000.
Approximately $3,215,000 is principally unused home equity and credit card lines
on which management places a low probability for required funding.
22
FIRST WEST VIRGINIA BANCORP, INC.
PART I
Item 3 Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
The quantitative and qualitative disclosures about market risk at March
31, 2001 have not materially changed from the information presented in Item 7A
of Form 10-K for the year ended December 31, 2000.
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
- ----------------------------
The nature of the business of the Holding Company's subsidiaries
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 any of its subsidiaries is a party or of which any of their property is
subject.
Item 2 Changes in Securities
- --------------------------------
Inapplicable
Item 3 Defaults Upon Senior Securities
- ------------------------------------------
Inapplicable
Item 4 Submission of Matters to Vote of Security Holders
- ------------------------------------------------------------
Inapplicable
Item 5 Other Information
- ----------------------------
Inapplicable
Item 6 Exhibits and Reports on Form 8-K
- -------------------------------------------
(a) Financial
----------
The consolidated financial statements of First West Virginia Bancorp,
Inc. and subsidiaries, for the three month period ended March 31, 2001, are
incorporated by reference in Part I:
(b) Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the quarter ended March 31,
2001.
(c) Exhibits
--------
The exhibits listed in the Exhibit Index on page 24 of this FORM 10-Q
are incorporated by reference and/or filed herewith.
23
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/ Charles K. Graham
------------------------------------------------------
Charles K. Graham
President and Chief Executive Officer/Director
By: /s/ Francie P. Reppy
------------------------------------------------------
Francie P. Reppy
Senior Vice President and Chief Financial Officer
Dated: May 10, 2001
24
EXHIBIT INDEX
The following exhibits are filed herewith and/or are incorporated herein by
reference.
Exhibit
Number Description
- ------- -----------
10.1 Employment Contract dated December 31, 2000 between
First West Virginia Bancorp, Inc. and Charles K. Graham.
Filed herewith and incorporated herein by reference.
10.2 Employment Contract dated December 31, 2000 between
First West Virginia Bancorp, Inc. and Beverly A. Barker.
Filed herewith and incorporated herein by reference.
10.4 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 Banking Services License Agreement dated October 26, 1994 between
Progressive Bank, N.A., formerly known as "First West Virginia Bank,
N.A.", and The Kroger Co. Incorporated herein by reference.
10.6 Lease dated November 14, 1995 between Progressive Bank, N.A.
- Buckhannon and First West Virginia Bancorp, Inc. and O. V. Smith
& Sons of Big Chimney, Inc. Incorporated herein by reference.
10.7 Lease dated May 20, 1998 between Progressive Bank, N.A.
and Robert Scott Lumber Company. 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
99.1 Independent Accountant's Report. Filed herewith and incorporated
herein by reference.