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 June 30, 1996
[ ] 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
- - -------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (304) 277-1100
----------------
N/A
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months ( or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
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 August 5,
1996:
Common Stock, $5.00 Par Value, shares outstanding 775,268 shares
- - ---------------------------------------------------------------------
FIRST WEST VIRGINIA BANCORP, INC.
PART I
FINANCIAL INFORMATION
2
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30, December 31, June 30,
1996 1995 1995
-------------- -------------- --------------
ASSETS
Cash and Due From Banks $ 4,212,794 $ 4,179,849 $ 3,858,171
Due From Banks - interest bearing 3,078,987 82,015 37,959
Federal Funds Sold 3,643,000 2,278,000 1,008,000
-------------- -------------- --------------
Total cash and cash equivalents 10,934,781 6,539,864 4,904,130
Investment Securities
Held to Maturity - Market value of
$5,103,719 at June 30, 1996 ;
$ 5,058,118 at December 31, 1995;
and $ 25,835,805 at June 30, 1995 5,117,027 5,001,638 26,275,824
Available for Sale (at market value) 43,819,899 40,993,844 21,706,832
Loans 74,020,562 72,006,276 67,080,739
Less allowance for possible loan losses (1,182,088) (1,148,692) (1,177,035)
-------------- -------------- --------------
Net loans 72,838,474 70,857,584 65,903,704
Premises and equipment, net 3,390,800 3,103,214 2,862,694
Accrued Income Receivable 961,162 923,323 893,811
Other assets 614,747 496,341 653,019
Intangible assets 21,600 39,374 57,148
-------------- -------------- --------------
Total Assets $ 137,698,490 $ 127,955,182 $ 123,257,162
============== ============== ==============
LIABILITIES
Noninterest bearing deposits:
Demand deposits $ 12,661,814 $ 11,938,594 $ 11,270,399
Interest bearing deposits
Demand Deposits 22,358,580 22,849,052 20,579,224
Savings 39,695,873 41,659,007 41,698,786
Time deposits 45,620,217 38,448,501 36,988,679
-------------- -------------- --------------
Total Deposits 120,336,484 114,895,154 110,537,088
-------------- -------------- --------------
Repurchase agreements 4,885,612 749,224 1,119,954
Accrued Interest on Deposits 324,428 314,607 294,054
Other Liabilities 225,529 286,990 222,979
-------------- -------------- --------------
Total Liabilities 125,772,053 116,245,975 112,174,075
-------------- -------------- --------------
STOCKHOLDERS' EQUITY
Common Stock - 2,000,000 shares authorized at
$5 par value 775,268 shares issued at
June 30, 1996 and December 31, 1995 and
760,232 shares issued at June 30, 1995 3,876,340 3,876,340 3,801,160
Surplus 3,166,340 3,166,340 2,918,246
Retained Earnings 5,121,590 4,621,049 4,358,496
Net Unrealized Loss on securities available for sale (237,833) 45,478 5,185
-------------- -------------- --------------
Total stockholders' equity 11,926,437 11,709,207 11,083,087
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 137,698,490 $ 127,955,182 $ 123,257,162
============== ============== ==============
The accompanying notes are an integral part of the financial statements
3
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
INTEREST INCOME
Interest and fees on loans and lease financing:
Taxable $1,635,461 $1,450,646 $3,250,311 $2,813,100
Tax-exempt 25,046 16,262 51,047 32,109
Investment Securities:
Taxable 635,207 578,890 1,229,033 1,131,460
Tax-exempt 57,923 59,444 117,266 121,250
Dividends 4,746 4,818 9,932 9,430
Other interest income 38,129 578 48,238 1,053
Interest on Federal Funds Sold 76,943 83,710 140,005 150,115
--------- ---------- --------- ----------
Total interest income 2,473,455 2,194,348 4,845,832 4,258,517
INTEREST EXPENSE
Deposits 927,948 843,720 1,838,035 1,603,817
Interest on Fed Funds Purchased and
securities sold under agreements to
repurchase 30,805 5,247 36,730 5,793
Other borrowings -- -- -- --
--------- ---------- --------- ----------
Total interest expense 958,753 848,967 1,874,765 1,609,610
--------- ---------- --------- ----------
Net interest income 1,514,702 1,345,381 2,971,067 2,648,907
PROVISION FOR POSSIBLE LOAN LOSSES 14,400 13,400 28,800 42,800
--------- ---------- --------- ----------
Net interest income after provision
for possible loan losses 1,500,302 1,331,981 2,942,267 2,606,107
NONINTEREST INCOME
Service charges and other fees 92,116 97,644 173,422 179,396
Securities gains (losses) 339 65,475 (711) 65,475
Other operating income 46,121 24,055 97,436 101,175
--------- ---------- --------- ----------
Total noninterest income 138,576 187,174 270,147 346,046
NONINTEREST EXPENSES
Salary and employee benefits 523,427 488,193 1,046,808 976,177
Net occupancy expense of premises 79,516 68,103 162,067 139,031
Other operating expenses 432,448 426,124 839,413 865,502
--------- ---------- --------- ----------
Total noninterest expense 1,035,391 982,420 2,048,288 1,980,710
--------- ---------- --------- ----------
Income before income taxes 603,487 536,735 1,164,126 971,443
--------- ---------- --------- ----------
INCOME TAXES 198,210 178,233 384,488 318,618
--------- ---------- --------- ----------
Net income $ 405,277 $ 358,502 $ 779,638 $ 652,825
========= ========== ========= ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 775,268 775,268 775,268 775,268
========= ========== ========= ==========
EARNINGS PER COMMON SHARE $ 0.52 $ 0.46 $ 1.01 $ 0.84
========= ========== ========= ==========
The accompanying notes are an integral part of the financial statements
4
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Net Unrealized
Gain (Loss) on
Securities
Common Retained Available
Stock Surplus Earnings for Sale Total
------------ ------------ ------------ -------------- -----------------
Balance, December 31, 1995 $ 3,876,340 $ 3,166,340 $ 4,621,049 $ 45,478 $ 11,709,207
Net income for the six months
ended June 30, 1996 -- -- 779,638 -- 779,638
Cash dividend
($ .36 per share) (279,097) (279,097)
Change in fair value of securities
available for sale,
net of deferred tax -- -- -- (283,311) (283,311)
----------- ----------- ----------- ---------- ------------
Balance, June 30, 1996 (Unaudited) $ 3,876,340 $ 3,166,340 $ 5,121,590 $ (237,833) $ 11,926,437
=========== =========== =========== ========== ============
Balance, December 31, 1994 $ 3,801,160 $ 2,918,246 $ 3,888,127 $ (239,690) $ 10,367,843
Net income for the six months
ended June 30, 1995 -- -- 652,825 -- 652,825
Cash dividend
($ .24 per share) (182,456) (182,456)
Change in fair value of securities
available for sale,
net of deferred tax -- -- -- 244,875 244,875
------------ ------------ ----------- ----------- -------------
Balance, June 30, 1995 (Unaudited) $ 3,801,160 $ 2,918,246 $ 4,358,496 $ 5,185 $ 11,083,087
=========== =========== =========== =========== ==============
The accompanying notes are an integral part of the financial statements
5
First West Virginia Bancorp Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
1996 1995
----------------- ---------------
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Net Income $ 779,638 $ 652,825
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 28,800 42,800
Depreciation and amortization 192,214 148,168
Amortization of investment securities, net 3,479 9,938
Investment security losses (gains) 711 (65,475)
Decrease (increase) in interest receivable (37,839) (78,072)
Increase (decrease) in interest payable 9,821 61,911
Other, net (18,841) (52,666)
----------------- ---------------
Net cash provided by operating activities 957,983 719,429
----------------- ---------------
INVESTING ACTIVITIES
Net (increase) decrease in loans, net of charge offs (2,024,472) (5,431,475)
Proceeds from sales of securities available for sale 1,250,868 7,275
Proceeds from maturities of securities available for sale 7,700,000 3,602,400
Proceeds from maturities of securities held to maturity 225,000 1,875,000
Principal collected on mortgage-backed securities 160,340 178,285
Purchases of securities available for sale (12,381,278) (7,419,700)
Purchases of securities held to maturity (345,000) (300,000)
Recoveries on loans previously charged-off 14,881 205,495
Purchases of premises and equipment (462,026) (111,865)
----------------- ---------------
Net cash used by investing activities (5,861,687) (7,394,585)
----------------- ---------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 5,441,330 4,806,852
Principal payments on long-term borrowings -- --
Sale of treasury stock -- --
Dividends paid (279,097) (182,456)
Increase (decrease) in short term borrowings 4,136,388 1,014,760
----------------- ---------------
Net cash provided by financing activities $ 9,298,621 $ 5,639,156
----------------- ---------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,394,917 (1,036,000)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 6,539,864 5,940,130
----------------- ---------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 10,934,781 $ 4,904,130
================ ==============
The accompanying notes are an integral part of the financial statements
6
First West Virginia Bancorp, Inc. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 AND 1995
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, 1995, 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. Effective January 1, 1995, Statement of Financial Accounting Standards No.
114, "Accounting by creditors for Impairment of a Loan", as amended by Statement
No. 118, was adopted by the Corporation. This Statement requires recognition of
impairment of a loan when it is probable that principal and interest are not
collectible in accordance with the terms of the loan agreement. Measurement of
impairment is based upon the present value of expected cash flows discounted at
the loan's effective interest rate, or as a practical expedient, at the loan's
market price or the fair value of the collateral, if known. At June 30, 1996,
the corporation did not have any impaired loans which met the criteria of
Statement No. 114.
4. Effective December 15, 1995, Statement of Financial Accounting Standards No.
122, "Accounting for Mortgage Servicing Rights" was adopted by the Corporation.
This Statement requires institutions to allocate the total cost of originating
or purchasing mortgage loans between the mortgage servicing rights and the
related loans sold. The allocation will be made based on the relative fair
values of the mortgage servicing rights and the loans (without servicing
rights), if it is practicable to estimate those fair values. If, not practible,
the cost of acquiring the loans should be allocated to the mortgage loans only.
Presently, the Corporation does not sell or securitize mortgage loans while
retaining servicing rights, therefore adoption of this statement would have no
effect on the corporation.
5. Certain prior year amounts have been reclassified to conform to the 1996
presentation.
7
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
---------------------------------------------------------------
First West Virginia Bancorp, Inc., a West Virginia corporation
headquartered in Wheeling, West Virginia commenced operations in July, 1973 and
has three wholly-owned subsidiaries: Progressive Bank, N.A., which operates in
Wheeling, Wellsburg, and Moundsville, West Virginia; Progressive Bank, N.A.-
Buckhannon which operates in Buckhannon and Weston, West Virginia; and
Progressive Bank, N.A. - Bellaire in Bellaire, Ohio. 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 June 30, 1996 and 1995. 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 1995 financial statements, the notes thereto and the
related Management's Discussion and Analysis.
OVERVIEW
The Holding Company reported net income of $405,277 for the three
months ended June 30, 1996 as compared to $358,502 for the same period during
1995. The increase in earnings during the second quarter of 1996 over 1995 can
be primarily attributed to increased net interest income due to the growth in
the loan portfolio offset in part by the decrease in non-interest income and
increased non-interest expense. Operational earnings improved with net
interest income increasing $169,321 or 12.6%, to $1,514,702 for the three months
ended June 30, 1996 as compared to the same period in 1995.
Net income for the six months ended June 30, 1996 was $779,638
compared to $652,825 for the same period during 1995. The increase in earnings
for the six months ended June 30, 1996 as compared to the same period in 1995
was primarily due to increased net interest income offset in part by decreased
noninterest income and increased noninterest expenses. During the six month
period ended June 30, 1996, the increase in net interest income was primarily
due to the growth in the loan portfolio. The increase in noninterest expenses
can be primarily attributed to increased salary and employee benefits. The
decrease in noninterest income was primarily due to the decrease in securities
gains realized for the six months ended June 30, 1996 as compared to 1995.
Earnings per share were $.52 in the second quarter of 1996, an increase of 13.0%
over the $.46 earned during the second quarter of 1995. For the first six
months of 1996, earnings per share were $1.01, a increase of 20.2%, as compared
to $.84 earned during the same period during 1995.
Return on average assets (ROA) measures the effectiveness of asset
utilization to produce net income. ROA increased during the three month period
ended June 30, 1996 to 1.19%, up from 1.17% in 1995. For the six months ended
June 30, 1996 and 1995, the ROA was 1.18% and 1.08%, respectively. Return on
average equity (ROE) measures the return on the stockholders' investment. The
Holding Company's ROE was 13.82% for the three months ended June 30, 1996 and
12.94% at June 30, 1995. For the six months ended June 30, 1996 compared to
June 30, 1995, ROE was 13.27% and 12.21%, respectively.
Table One is a summary of Selected Financial Data of the Holding
Company. The sections that follow discuss in more detail the information
summarized in Table One.
8
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 Six months ended Years ended
June 30, June 30, December 31,
---------------------- --------------------- ----------------------------------
1996 1995 1996 1995 1995 1994 1992
--------- -------- --------- -------- --------- --------- --------
SUMMARY OF OPERATIONS
Total interest income $ 2,473 $ 2,194 $ 4,846 $ 4,259 $ 8,937 $ 7,783 $ 8,054
Total interest expense 959 849 1,875 1,610 3,421 2,868 3,319
Net interest income 1,514 1,345 2,971 2,649 5,516 4,915 4,735
Provision for loan losses 14 13 29 43 50 77 116
Total other income 138 187 270 346 720 725 666
Total other expenses 1,035 982 2,048 1,981 3,988 3,641 3,528
Income before income taxes 603 537 1,164 971 2,198 1,922 1,757
Net income 405 359 780 653 1,470 1,288 1,193
PER SHARE DATA (1)
Net income $ 0.52 $ 0.46 $ 1.01 $ 0.84 $ 1.90 $ 1.66 1.54
Cash dividends declared (2) 0.19 0.12 0.36 0.24 0.54 0.58 0.53
Book value per share 15.38 14.30 15.38 14.30 15.10 13.37 12.58
AVERAGE BALANCE SHEET SUMMARY
Total loans, net $ 72,389 $ 63,918 $ 71,977 $ 63,166 $ 66,058 $ 56,991 $ 56,264
Investment securities 47,782 46,428 46,742 46,164 46,020 50,282 47,755
Deposits - Interest Bearing 108,571 99,558 106,875 98,391 100,488 95,980 94,852
Long-term debt -- -- -- -- -- 44 754
Stockholders' equity 11,789 11,125 11,822 10,781 11,170 10,253 9,252
Total Assets 136,568 123,056 133,318 121,406 124,145 117,996 115,765
SELECTED RATIOS
Return on average assets 1.19% 1.17% 1.18% 1.08% 1.18% 1.09% 1.03%
Return on average equity 13.82% 12.94% 13.27% 12.21% 13.16% 12.56% 12.89%
Average equity to average assets 8.63% 9.04% 8.87% 8.88% 9.00% 8.69% 7.99%
Dividend payout ratio (1) (2) 36.54% 26.09% 35.64% 28.57% 28.42% 34.94% 34.42%
BALANCE SHEET June 30, December 31,
--------------------- ---------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- --------- ----------
Investments $ 48,937 $ 47,983 $ 45,996 $ 45,551 $ 50,099
Loans 74,021 67,081 72,006 61,667 55,838
Other Assets 14,740 8,193 9,953 9,445 10,303
---------- --------- ---------- --------- ----------
Total Assets $ 137,698 $ 123,257 $ 127,955 $ 116,663 $ 116,240
========= ========= ========= ========= =========
Deposits $ 120,336 $ 110,537 $ 114,895 $ 105,730 $ 105,791
Other Liabilities 5,436 1,637 1,351 565 694
Shareholders' Equity 11,926 11,083 11,709 10,368 9,755
---------- --------- ---------- --------- ----------
Total Liabilities and
Shareholders' Equity $ 137,698 $ 123,257 $ 127,955 $ 116,663 $ 116,240
========= ========= ========= ========= =========
(1) Adjusted for the 2% common stock dividend to stockholders of record as of
December 1, 1995 and the two-for-one stock split effective April 15, 1994.
(2) Cash dividends and the related payout ratio are based on historical
results of the Holding Company and do not include cash dividends of
acquired subsidiaries prior to the dates of consummation.
On January 4, 1993, the Holding Company acquired 100% of the Common Stock of the
Wellsburg Banking and Trust Company (Wellsburg) with a combination of cash and
securities. The acquisition was accounted for using the purchase method of
accounting. Accordingly, the results of operations of the former Wellsburg Bank
are included in the information presented above from the date of acquisition
forward, and prior year balance sheets have not been restated for such
transactions.
- - ------------------------------------------------------------------------------
9
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
- - -------------------
The primary source of earnings for the Holding Company is net interest
income, which is the difference between interest earned on loans and investments
and interest paid on deposits and other liabilities. Changes in the volume and
mix of earning assets and interest bearing liabilities combined with changes in
market rates of interest greatly affect net interest income. Tables Two and
Three analyze the changes in net interest income for the three months ended June
30, 1996 and 1995 and for the six months ended June 30, 1996 and 1995,
respectively.
The net interest margin for the second quarter of 1996 was 4.89%, an
increase over the 4.83% earned at June 30, 1995. Net interest income increased
$169,321 or 12.6%, during the three month period ended June 30, 1996 as compared
to 1995. The increase in net interest income resulted primarily from increased
loan growth. Interest and fees on loans increased $193,599 or 13.2% during the
three month period ended June 30, 1996 as compared to the same period in 1995
due to the increase in average loan volume. Interest expense increased
$109,786, or 12.9%, during the three month period ended June 30, 1996, as
compared to the same period in 1995 primarily due to the increase in the average
volume of interest bearing liabilities.
For the six months ended June 30, 1996, net interest income increased
$322,160 or 12.2%, as compared to the same period of the prior year. This
increase was largely due to the increase in the average loan volume. Comparing
the six month period ended June 30, 1996 to June 30, 1995, interest and fees on
loans increased $456,149, or 16.0% Cash flows from increased deposit growth
were used to fund increased loan demand.
Provision for Possible Loan Losses
- - ----------------------------------
The provision for possible loan losses is an amount added to the reserve
against which loan losses are charged. Management determines an appropriate
provision based upon its evaluation of the size and the risk characteristics of
the loan portfolio, current and anticipated economic conditions, specific
problem loans and delinquencies, loan loss experience and other related factors.
For the quarter ended June 30, 1996, the provision for possible loan losses
was $14,400, compared to $13,400 at June 30, 1995. Net charge offs were
approximately $3,000 and $(198,000) for the three months ended June 31, 1996 and
1995, respectively. For the six months ended June 30, 1996, the provision for
loan losses was $28,800 compared to $42,800 at June 30, 1995. Net charge offs
were approximately $(4,000) and $(187,000) for the six months ended June 30,
1996 and 1995, respectively. Total non-performing loans, comprised of past due
90 days or more, renegotiated loans, non-accrual loans, and other real estate
owned were $1,138,000 at June 30, 1996 and $526,000 at June 30, 1995.
Non-Interest Income
- - -------------------
Service charges represent the major component of non-interest income. These
charges are earned from assessments made on checking and savings accounts.
Service charges decreased $5,528 or 5.7%, during the three months ended June 30,
1996 as compared to the same period of the prior year. For the six months ended
June 30, 1996, service charges decreased $5,974 or 3.3% as compared to the same
period in 1995.
Sales of securities by the subsidiary banks are generally limited to the
needs established under the liquidity policies. Securities gains were $339 for
the three month period ended June 30, 1996, as compared to $65,475 during the
same period of the prior year. The gain on sale of securities during the three
months ended June 30, 1996 was accounted for by a subsidiary bank. Securities
gains during the three months ended June 30, 1995 were attributable to the
holding company's sale of marketable equity securities available for sale. For
the six months ended June 30, 1996, securities losses were $711 and were
attributable to the sales of securities available for sale by a subsidiary bank.
Securities gains were $65,475 for the six months ended June 30, 1995 and were
attributable to the holding company's sale of marketable equity securities
available for sale.
10
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 June 30,
1996 and June 30, 1995. Average balance sheet information as of June 30, 1996
and June 30, 1995 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
June 30, 1996 and 1995.
For the Three For the Three
Months ended Months ended
June 30, 1996 June 30, 1995
---------------------------------- -------------------------------
Average Average Average Average
Volume Interest Rate Volume Interest Rate
---------- -------- ------- ----------- ------- -------
ASSETS:
Investment securities:
U.S. Treasury and other U. S.
Government agencies $ 41,584 $ 612 5.92% $ 39,967 $ 551 5.53%
Obligations of states and
political subdivisions 4,536 58 5.14% 4,503 59 5.26%
Other securities 1,662 28 6.78% 1,958 32 6.58%
Interest bearing deposits 3,059 38 5.00% 36 1 11.14%
Federal funds sold 5,791 77 5.35% 5,466 84 6.16%
Loans, net of unearned income 72,389 1,660 9.22% 63,918 1,467 9.21%
---------- -------- ------- ----------- ------- -------
Total interest earning assets 129,021 2,473 7.71% 115,848 2,194 7.60%
Cash and due from banks 4,109 3,712
Bank premises and equipment 3,415 2,867
Other assets 1,198 1,686
Allowance for possible loan losses (1,175) (1,057)
---------- -----------
Total Assets $ 136,568 $ 123,056
========= ==========
LIABILITIES
Certificates of deposit $ 45,014 $ 554 4.95% $ 35,896 $ 429 4.79%
Savings deposits 39,956 247 2.49% 42,240 289 2.74%
Interest bearing demand deposits 23,601 127 2.16% 21,422 126 2.36%
Federal funds purchased and
Repurchase agreements 3,594 31 3.47% 567 5 3.54%
Long-term debt -- -- -- -- -- --
---------- -------- ------- ----------- ------- -------
Total interest bearing liabilities 112,165 959 3.44% 100,125 849 3.40%
Demand deposits 11,982 11,240
Other liabilities 632 566
---------- -----------
Total Liabilities 124,779 111,931
SHAREHOLDERS' EQUITY 11,789 11,125
---------- -----------
Total Liabilities
and Shareholders' Equity $ 136,568 $ 123,056
========= ==========
Net interest revenue as a percentage of
average earning assets $ 1,514 4.72% $ 1,345 4.66%
======= ====== ====== ======
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 June 30, 1996
and 1995, respectively. The effect of this adjustment is presented below (in
thousands).
Obligations of states and
political subdivisions:
Investment securities $ 4,536 $ 97 8.60% $ 4,503 $ 98 8.76%
Loans 72,389 1,677 9.32% 63,918 1,478 9.27%
======= ======= ====== ========== ====== ======
Total interest earning assets $ 129,021 $2,529 7.88% $ 115,848 $ 2,244 7.77%
======= ======= ====== ========== ====== ======
Net interest revenue as a percentage
of average earning assets $1,570 4.89% $ 1,395 4.83%
======= ====== ======= ======
11
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Three
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 six months ended June 30, 1996
and June 30, 1995 and the year ended December 31, 1995. Average balance sheet
information as of June 30, 1996 and June 30, 1995 and the year ended December
31, 1995 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 six month periods ended
June 30, 1996 and 1995.
For the Six For the Six
Months ended Months ended
June 30, 1996 December 31, 1995 June 30, 1995
----------------------------- ------------------------------ ----------------------------
Average Average Average Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
-------- -------- ------- ------- -------- -------- -------- -------- ------
(expressed in thousands)
ASSETS:
Investment securities:
U.S. Treasury and other U. S.
Government agencies $ 40,426 $ 1,180 5.87% $ 39,411 $ 2,206 5.60% $ 39,599 $1,075 5.47%
Obligations of states and
political subdivisions 4,597 118 5.16% 4,666 248 5.32% 4,544 120 5.33%
Other securities 1,719 59 6.90% 1,943 122 6.28% 2,021 68 6.79%
Interest bearing deposits 1,844 48 5.23% 88 5 5.68% 36 1 5.60%
Federal funds sold 5,302 140 5.31% 4,835 287 5.94% 5,021 150 6.02%
Loans, net of unearned income 71,977 3,301 9.22% 66,058 6,069 9.19% 63,166 2,845 9.08%
-------- ------- ------- -------- -------- ------- ------- ----- --------
Total interest earning assets 125,865 4,846 7.74% 117,001 8,937 7.64% 114,387 4,259 7.51%
Cash and due from banks 3,957 3,747 3,675
Bank premises and equipment 3,301 2,928 2,866
Other assets 1,364 1,552 1,424
Allowance for possible loan losses (1,169) (1,083) (1,006)
-------- -------- --------
Total Assets $133,318 $ 124,145 $121,346
======== ======== ========
LIABILITIES
Certificates of deposit $ 42,924 $ 1,070 5.01% $ 36,080 $ 1,734 4.81% $ 34,178 $ 772 4.55%
Savings deposits 40,592 514 2.55% 42,326 1,152 2.72% 43,174 586 2.74%
Interest bearing demand deposits 23,359 254 2.19% 22,082 518 2.35% 21,039 246 2.36%
Federal funds purchased and
Repurchase agreements 2,180 37 3.41% 462 17 3.68% 309 6 3.92%
Long-term debt 0 0 0.00% -- -- -- -- -- --
-------- ------- ----- ------- -------- ------- ------- -------- ------
Total interest bearing liabilities 109,055 1,875 3.46% 100,950 3,421 3.39% 98,700 1,610 3.29%
Demand deposits 11,792 11,387 11,352
Other liabilities 649 638 573
-------- ------- --------
Total Liabilities 121,496 112,975 110,625
SHAREHOLDERS' EQUITY 11,822 11,170 10,721
-------- ------- --------
Total Liabilities
and Shareholders' Equity $133,318 $ 124,145 $121,346
======== = == ======= ========
Net interest revenue as a percentage of
average earning assets $ 2,971 4.75% $ 5,516 4.71% $ 2,649 4.67%
======= ====== ======= ====== ======= =====
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 six months ended June 30, 1996
and 1995 and the year ended December 31, 1995. respectively. The effect of this
adjustment is presented below (in thousands).
Obligations of states and
political subdivisions:
Investment securities $ 4,597 $ 197 8.60% $ 4,666 $ 413 8.86% $ 4,544 $ 200 8.88%
Loans 71,977 3,335 9.32% 66,058 6,124 9.27% 63,166 2,867 9.15%
========= ======= ====== ========= ======== ====== ========== ======= =====
Total interest earning assets $ 125,865 $ 4,959 7.92% $ 117,001 $ 9,157 7.83% $ 114,387 $ 4,361 7.69%
========= ======= ====== ========= ======== ====== ========== ======= =====
Net interest revenue as a percentage
of average earning assets $ 3,084 4.93% $ 5,736 4.90% $ 2,751 4.85%
======= ====== ======== ====== ======= =====
- - --------------------------------------------------------------------------------
12
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Non-Interest Income - continued
- - -------------------------------
Other operating income is comprised of fees from safe deposit box rentals,
sales of cashier's checks and money orders, utility collections, ATM charges and
card fees, home equity credit line fees, credit life commissions, and credit
card fees and commissions and various other charges and fees related to normal
customer banking relationships. For the three month period ended June 30, 1996
other operating income was $46,121, an increase of $22,066 over the same period
in 1995. The increase was primarily attributable to a membership insurance
rebate from an insurance carrier received during the second quarter of 1996 and
increased fees and charges. For the six month period ended June 30, 1996, other
operating income was $97,436, a decrease of $3,739 or 3.7%, over the same period
in 1995. The decrease was primarily due to a non-recurring premium for lease
servicing due to the early sale of equipment which was received during 1995.
Non-Interest Expense
- - --------------------
Salary and employee benefits is the largest component of non-interest
expense. During the quarter ended June 30, 1996, salary and employee benefits
increased $35,234 or 7.2% as compared to the same period of the prior year. For
the six month period ended June 30, 1996, as compared to the same period in
1995, salary and employee benefits increased $70,631 or 7.2%. The increase in
salary and benefits was primarily due to the hiring of additional personnel by a
subsidiary bank for a branch office which opened in April, 1996 and normal
annual merit adjustments in salaries.
The major components of other operating expenses include: equipment expense,
stationery and supplies, directors fees, advertising, postage and
transportation, regulatory assessment and deposit insurance, and insurance.
Other operating expenses increased $6,324 or 1.5%, for the three month period
ended June 30, 1996 as compared to the same period in the prior year. The
increase was primarily due to increased operating costs with the opening of a
subsidiary bank branch office and the expanding asset base of the holding
company, offset in part by the reduction in the Federal Deposit Insurance
Corporation (FDIC) insurance assessment. For the six months ended June 30,
1996, other operating expenses decreased $26,089 or 3.0% as compared to the same
period in 1995. The decrease in other operating expenses is primarily due to
the reduction in the FDIC insurance assessment and the decrease in other
expenses offset in part by increased equipment expenses, advertising, and
stationery and supplies expenses. During 1995, the costs incurred in the
registration of First West Virginia Bancorp, Inc.'s common stock with the
Securities and Exchange Commission and the American Stock Exchange contributed
to the increase in other expenses.
Income Taxes
- - ------------
Income tax expense for the three month period ended June 30, 1996 was
$198,210, a increase of $19,977 over the same period in 1995. The increase was
primarily due to the increase in pre-taxable income of $66,752. For the six
month period ended June 30, 1996, income tax expense was $384,488, a increase of
$65,870 over the same period in 1995. The increase was primarily due to the
increase in pre-taxable income of $192,683.
For federal income tax purposes, tax-exempt income is based on qualified
state, county, and municipal bonds and loans. Tax-exempt income was $82,969 and
$75,706 for the three month period ended June 30, 1996 and 1995, respectively.
For the six month period ended June 30, 1996 and 1995, tax exempt income was
$168,313 and $153,359, respectively.
Federal income tax rates were consistent at 34% for the quarter ended June
30, 1996 and 1995. West Virginia corporate net income tax rates also were
consistent at 9.0% in 1996 and 1995.
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
- - -----------
Effective January 1, 1994, the Holding Company adopted the provisions of
Statement of Financial Accounting Standards (FAS) No. 115 "Accounting for
Certain Investments in Debt and Equity Securities". Under FAS No. 115,
investment securities in the portfolio are classified as either available for
sale or held to maturity. FAS 115 requires banks to classify debt and equity
securities into one of three categories: held to maturity, available for sale,
or trading. The corporation does not currently conduct short term purchase and
sale transactions of investment securities which would be classified as trading
securities. The initial determination of investments classified as available
for sale was based principally on the corporation's asset liability position and
potential liquidity needs.
Investment securities that are classified available for sale are available
for sale at any time based upon management's assessment of changes in economic
or financial market conditions. These securities are carried at market value
and the unrealized holding gains and losses, net of taxes, are reflected as a
separate component of stockholders' equity until realized. Investment
securities held to maturity are securities purchased with the intent and ability
to hold until their maturity. Securities classified as held to maturity are
carried at cost, adjusted for amortization of premiums and accretion of
discounts. In classifying debt securities as available for sale, management
generally selected securities with actual maturities of two years or less. All
other debt securities were classified as held to maturity. All equity
securities were classified as available for sale. Accordingly, the presentation
of investment securities on the Consolidated Balance Sheet shows securities
classified as available for sale and held to maturity as of June 30, 1996 and
June 30, 1995.
In November, 1995, the Financial Accounting Standards Board (FASB) issued
implementation guidance on accounting for investment securities on FAS No. 115.
Effective November 15, 1995 the FASB permitted a one time opportunity for
financial institutions to reassess the appropriateness of the classifications of
all its investment securities. Financial institutions were allowed to transfer
securities from their held to maturity portfolio to their available for sale
portfolio before calendar year end 1995, without calling into question their
intent to hold other securities to maturity. As a result, investment securities
with an amortized cost of $18,411,939 and unrealized loss of $112,961 were
transferred from the held to maturity category to the available for sale
category in December, 1995. As of June 30, 1996, the corporation had
approximately 90% of the investment portfolio classified as available for sale,
while 10% was classified as held to maturity.
In total, investment securities increased by $954,270 or 2.0% from
$47,982,656 at June 30, 1995, to $48,936,926 at June 30, 1996. The increase in
investment securities was attributed primarily to the increased deposit growth
from June 30, 1995 to June 30, 1996.
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. Market rates of interest have continued to decline and
the corporation has reduced the carrying value of securities available for sale
by $373,405 at June 30, 1996. As of June 30, 1995, the carrying value of
securities available for sale was increased by $8,192 as a result of a slight
increase in market rates. The market value of securities classified as held to
maturity were below book value by $13,308 and $440,019, at June 30, 1996 and
June 30, 1995, respectively.
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
Book values of investment securities at June 30, 1996 and 1995 and at
December 31, 1995 are as follows
(in thousands) (Unaudited):
June 30, December 31, June 30,
1996 1995 1995
--------- ----------- ---------
Securities held to maturity:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 800 $ 800 $ 20,135
Obligations of states
and political subdivisions 4,317 4,202 4,408
Corporate debt securities -- -- 424
Mortgage-backed securities -- -- 1,309
Equity Securities -- -- --
------- ------ ---------
Total held to maturity $ 5,117 $ 5,002 $ 26,276
------- ------ ---------
Securities available for sale :
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies 39,897 $36,563 $ 18,915
Obligations of states
and political subdivisions 499 511 359
Corporate debt securities 1,077 1,400 974
Mortgage-backed securities 1,841 2,039 899
Equity Securities 506 481 560
------- ------- ---------
Total available for sale 43,820 40,994 21,707
------- ------- ---------
Total $48,937 $45,996 $ 47,983
======= ======= ========
- - -------------------------------------------------------------------------------
15
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Five
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 June 30, 1996 and December 31, 1995 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.
June 30, 1996 December 31, 1995
--------------------------------------------- ----------------------------------------
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 $ -- -- % $ 11,185 5.07 % $ -- -- % $ 11,236 4.95 %
After One But
Within Five Years 800 5.02 24,831 6.14 800 5.02 20,505 5.93
After Five But
Within Ten Years -- -- 3,881 6.77 -- -- 4,822 6.54
After Ten Years -- -- -- -- -- -- -- --
------- ----- ------- ------ -------- ------ -------- -----
800 5.02 39,897 5.90 800 5.02 36,563 5.71
States & Political Subdivisions
Within One Year 200 7.57 -- -- 225 8.14 -- --
After One But
Within Five Years 2,226 7.65 -- -- 1,883 7.36 -- --
After Five But
Within Ten Years 1,891 7.79 424 7.66 2,094 7.70 262 7.49
After Ten Years -- -- 75 7.94 -- -- 249 7.57
------- ----- ------- ------ -------- ------ -------- -----
4,317 7.71 499 7.70 4,202 7.57 511 7.53
Corporate Debt Securities
Within One Year -- -- 562 8.01 -- -- 770 7.97
After One But
Within Five Years -- -- 515 7.86 -- -- 518 7.43
After Five But
Within Ten Years -- -- -- -- -- -- 112 7.62
After Ten Years -- -- -- -- -- -- -- --
------- ----- ------- ------ -------- ------ -------- -----
-- -- 1,077 7.94 -- -- 1,400 7.74
Mortgage-Backed Securities -- -- 1,841 8.14 -- -- 2,039 8.01
Equity Securities -- -- 506 5.95 -- -- 481 6.26
------- ----- ------- ------ -------- ------ -------- -----
Total $ 5,117 7.29 % $ 43,820 6.07 % $ 5,002 7.16 % $ 40,994 5.92 %
======= ===== ======= ===== ======= ====== ======== =====
- - ------------------------------------------------------------------------------
16
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Investments - continued
- - -----------------------
The investment portfolio is managed to attempt to achieve an optimum mix of
asset quality, liquidity and maximum yield on investment. The investment
portfolio is comprised of U.S. Treasury securities, U.S. Government corporations
and agencies securities, obligations of states and political subdivisions,
corporate debt securities, mortgage-backed securities and equity securities.
Taxable securities comprised 90.2% of total securities at June 30, 1996, as
compared to 90.1% at June 30, 1995. The corporation does not have any issues in
the investment portfolio which exceed 10% of stockholders' equity as of June 30,
1996. 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.
Loans
- - -----
Loans increased as of June 30, 1996 as compared to June 30, 1995 as loans
outstanding increased $6,939,823 or 10.3%, to $74,020,562. The loan growth can
be attributed primarily to increases in commercial loans, installment loans and
residential real estate loans which increased approximately $2,775,000,
$2,288,000, and $1,851,000, respectively. Expansion of local businesses in the
area contributed to the increase in commercial loans. Loan growth was funded
principally through the increase in deposits. The loan to deposit ratio at June
30, 1996 was 61.5% which was higher than the 60.7% reported at June 30, 1995.
Management recognizes that future earnings growth depends upon increasing the
loan to deposit ratio.
Real estate residential loans which include real estate construction, real
estate farmland, and real estate residential loans comprise thirty-nine percent
(39%) of the loan portfolio. Commercial loans which include real estate secured
by non-farm, non residential and commercial and industrial loans comprise
thirty-seven percent (37%) of the loan portfolio. Installment loans comprise
twenty-one percent (21%) of the loan portfolio. Other loans include nonrated
industrial development obligations, direct financing leases and other loans
comprise three percent (3%) of the loan portfolio. The changes in the
composition of the loan portfolio from June 30, 1995 to June 30, 1996 were a 1%
increase in commercial loans, a 1% increase in installment loans, a 1% decrease
in real estate loans, and a 1% decrease in other 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.
Non-performing assets consist of: non-accrual loans on which the
collectibility of the full amount of interest is uncertain; loans which have
been renegotiated to provide for a reduction or deferral of interest on
principal because of a deterioration in the financial position of the borrower;
loans past due ninety days or more as to principal or interest; and other real
estate owned. A summary of non-performing assets is presented in Table Eight.
Total non-performing loans increased $612,000, to $1,138,000 at June 30, 1996 as
compared to $526,000 at June 30, 1995. Loans classified as non-accrual and
renegotiated decreased $4,000 to $273,000 or .4% of total loans as of June 30,
1996, as compared to $277,000 or .4% of total loans at June 30, 1995. The loans
past due 90 days or more increased $662,000 to $816,000 at June 30, 1996 as
compared to $154,000 at June 30, 1995. The increase in loans past due 90 days or
more is primarily due to the addition of one commercial loan. This commercial
loan is 80% guaranteed by the Small Business Administration. Management
continues to monitor the non-performing assets to ensure against deterioration
in collateral values.
17
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Six
Loan Portfolio
(Unaudited)
Loans outstanding are as follows (in thousands) :
June 30, December 31,
----------------------- ----------
1996 1995 1995
Real Estate - Residential
Real estate-construction $ 265 $ -- $ 16
Real estate-farmland 14 16 15
Real estate-residential 28,753 27,165 28,697
---------- ---------- ----------
$ 29,032 $ 27,181 $ 28,728
---------- ---------- ----------
Commercial
Real estate-secured by
nonfarm, nonresidential $ 19,223 $ 17,763 $ 18,105
Commercial & industrial 7,925 6,610 8,192
---------- ---------- ----------
$ 27,148 $ 24,373 $ 26,297
---------- ---------- ----------
Installment
Installment and other
loans to individuals $ 15,441 $ 13,153 $ 14,467
---------- ---------- ----------
Others
Nonrated industrial
development obligations $ 1779 $ 1489 $ 1684
Direct Financing Leases 412 645 575
Other loans 295 298 334
---------- ---------- ----------
$ 2,486 $ 2,432 $ 2,593
---------- ---------- ----------
Total 74,107 67,139 72,085
Less unearned interest 86 58 79
---------- ---------- ----------
$ 74,021 $ 67,081 $ 72,006
========= ========= =========
- - ------------------------------------------------------------------------------
18
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Seven
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 June 30, 1996
and December 31, 1995 (in thousands) (Unaudited):
June 30, 1996
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
Commercial $ 863 $ 4,305 $ 2,757
Real Estate - construction -- 31 234
--------- --------- ---------
Total $ 863 $ 4,336 $ 2,991
======== ======== ========
December 31, 1995
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ ----------
Commercial $ 642 $ 4,075 $ 3,475
Real Estate - construction -- 0 16
--------- --------- ---------
Total $ 642 $ 4,075 $ 3,491
======== ======== ========
The following table presents an analysis of fixed and variable rate loans as of
June 30, 1996 and December 31, 1995 along with the contractual maturities of
loans other than installment loans and residential mortgages (in thousands)
(Unaudited):
June 30, 1996
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
------------ ------------ -----------
Fixed Rates $ 239 $ 3,508 $ 1,485
Variable Rates 624 828 1,506
--------- --------- ---------
Total $ 863 $ 4,336 $ 2,991
======== ======== ========
December 31, 1995
---------------------------------------
After one
In one Year Through After
Year or Less Five Years Five Years
---------------------------- ----------
Fixed Rates $ 299 $ 3,063 $ 1,458
Variable Rates 343 1,012 2,033
--------- --------- ---------
Total $ 642 $ 4,075 $ 3,491
======== ======== ========
- - ---------------------------------------------------------------------------
19
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Eight
Risk Elements
(UNAUDITED)
Loans which are in the process of collection, but are contractually past due 90
days or more as to interest or principal, renegotiated, non-accrual loans and
other real estate are as follows ( in thousands):
June 30, December 31,
----------------- ------------
1996 1995 1995
Past Due 90 Days or More:
Real Estate - residential $ 162 $ 133 $ 33
Commercial 621 1 -
Installment 33 20 60
------- ------- ------------
$ 816 $ 154 $ 93
------- ------- ------------
Renegotiated:
Real Estate - residential $ -- $ -- $ --
Commercial -- -- --
Installment -- -- --
------- ------- ------------
$ -- $ -- $ --
------- ------- ------------
Non-accrual:
Real Estate - residential $ 28 $ 29 $ 56
Commercial 191 209 256
Installment 54 39 39
------- ------- ------------
$ 273 $ 277 $ 351
------- ------- ------------
Other Real Estate $ 49 $ 95 $ 64
------- ------- ------------
Total non-performing assets $ 1,138 $ 526 $ 508
====== ====== ===========
Total non-performing assets
to total loans and
other real estate 1.54% 0.78% 0.70%
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 Comptoller 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 $9,000 and
$16,000 for the periods ended June 30, 1996 and 1995, respectively.
As of June 30, 1996, 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.
Most of the affiliate banks' loans and commitments have been granted to
customers in the banks' primary market areas of northern and central West
Virginia and eastern Ohio. In the normal course of business, however, the
banks have purchased and originated loans outside of their primary market
areas. The aggregate loan balances outstanding in any one geographic area,
other than the banks' primary lending areas, do not exceed 10% of total loans.
No specific industry concentrations exceed 10% of total loans.
- - ------------------------------------------------------------------------------
20
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Loans - continued
- - -----------------
Effective January 1, 1995, the Holding Company adopted the provisions of
Statement of Financial Accounting Standards (FAS) No. 114, "Accounting by
Creditors for Impairment of a Loan", which was subsequently amended by FAS No.
118, "Accounting by Creditors for Impairment of a Loan - Income and Recognition
of Disclosures." It is the corporation's policy not to recognize interest on
specific impaired loans unless the future loss is remote. Interest payments
received on such loans are applied as a reduction of the loan principal balance.
Since the adoption of FAS 114 and 118, the corporation had no loans which
management has determined to be impaired.
Allowance for Possible Loan Losses
- - ----------------------------------
The corporation maintains an allowance for possible loan losses to absorb
probable loan losses. Table Nine presents a summary of the Allowance for
Possible Loan Losses. Net loan charge offs were $(4,000) and $(187,000) at June
30, 1996 and 1995, respectively. The net charge offs during the six month
period ended June 30, 1996 were primarily consumer loans. During 1995, the net
charge offs were primarily due to a recovery received on one commercial loan in
bankruptcy. The provision for loan losses increased to $14,400 during the three
months ended June 30, 1996, from $13,400 during the same period of the prior
year. The allowance for possible loan losses represented 1.6% and 1.7% of loans
outstanding as of June 30, 1996 and June 30, 1995, respectively. The ratio of
loan losses to average outstanding loans at June 30, 1996 was (.01)% compared to
(.30)% for June 30, 1995. The ratio of non-accrual loans plus loans delinquent
more than 90 days to total loans was 1.5% and .6% at June 30, 1996 and June 30,
1995, respectively. Net loan charge-offs were (.3)% and (15.9)% of the
allowance for loan losses as of June 30, 1996 and June 30, 1995, respectively.
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.
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 Ten. The Corporation has
historically maintained the allowance for possible loan losses at a level
greater than actual charge-offs. In determining the allocation of the allowance
for possible loan losses, charge-offs for 1996 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.
21
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Nine
Analysis of Allowance for 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
-----------------------------------
June 30, December 31,
------------------- ----------
1996 1995 1995
Balance at Beginning of period
Allowance for Possible
Loan Losses $ 1,149 $ 947 $ 947
Loans Charged Off:
Real Estate - residential -- -- 1
Commercial -- 11 11
Installment 11 7 44
-------- -------- ----------
11 18 56
Recoveries:
Real Estate - residential -- -- --
Commercial 1 194 194
Installment 14 11 15
-------- -------- ----------
15 205 209
Net Charge-offs (4) (187) (153)
Purchased Reserves -- -- --
Additions Charged to Operations 29 43 49
-------- -------- ----------
Balance at end of period: $ 1,182 $ 1,177 $ 1,149
======= ======= =========
Average Loans Outstanding $ 71,977 $ 63,166 $ 66,058
======= ======= =========
Ratio of net charge-offs
to Average loans
outstanding for the period -0.01% -0.30% -0.23%
Ratio of the Allowance for Loan
Losses to Loans Outstanding for
the period 1.60% 1.75% 1.60%
The additions to the allowance for loan losses are based on management's
evaluation of characteristics of the loan portfolio, current and anticipated
economic conditions, past loan experiences, net loans charged-off, specific
problem loans and delinquencies, and other factors.
- - ------------------------------------------------------------------------------
22
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Ten
Loan Portfolio - Allocation of allowance for posssible 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, 1995 , and the six
month period ended June 30, 1996 ( 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.
June 30, December 31,
--------------- -----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------------- --------------- ---------------- -------------- ---------------- ------------------
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 $ 215 39.2% $ 215 39.9% $216 43.1% $216 43.1% $190 38.3% $196 36.8%
Commercial 619 36.6 618 36.5 420 34.7 382 35.9 353 38.8 310 41.0
Installment 297 20.8 265 20.0 260 19.3 248 17.6 157 18.9 72 20.3
Others 20 3.4 20 3.6 20 2.9 20 3.4 20 4.0 13 1.9
Unallocated 31 -- 31 -- 31 -- 30 -- 30 -- -- -
------ ----- ------ ----- ---- ----- ---- ----- ---- ------ ---- ------
Total $1,182 100.0% $1,149 100.0% $947 100.0% $896 100.0% $750 100.0% $591 100.0%
====== ===== ====== ===== ==== ===== ==== ===== ==== ====== ==== ======
23
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Table Eleven
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)
Three Months Ended June 30, 1996
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 $ 5,222 $ 400 $ 1,627 $ 2,353 $ 9,602
Year Ended December 31, 1995
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 $ 1,357 $ 331 $ 1,210 $ 1,595 $ 4,493
- - ------------------------------------------------------------------------------
Table Twelve
Return on Equity and Assets
The following financial ratios are presented: (Unaudited)
Three months ended Six months ended Year Ended
June 30, June 30, December 31,
------------------------ ----------------- -----------
1996 1995 1996 1995 1995
----------- ------- ------- ------- -----------
Return on Assets :
(Net income / Average Total Assets) 1.19% 1.17% 1.18% 1.08% 1.18%
Return on Equity :
(Net income /
Average Shareholders Equity) 13.82% 12.94% 13.27% 12.21% 13.16%
Dividend Payout Ratio :
(Dividend Declared Per Share /
Net Income Per Share) 36.54% 26.09% 35.64% 28.57% 28.42%
Equity to Asset Ratio :
(Average Equity / Average Total Assets) 8.63% 9.04% 8.87% 8.88% 9.00%
- - ------------------------------------------------------------------------------
24
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Deposits
- - --------
A stable core deposit base is the major source of funds for Holding Company
subsidiaries. The deposit mix depends upon many factors including competition
from other financial institutions, depositor interest in certain types of
deposits, changes in the interest rate and the corporation's need for certain
types of deposit growth. Total deposits were $120.3 million at June 30, 1996 as
compared to $110.5 million at June 30, 1995, an increase of 8.9%. Deposit
growth increased primarily in time deposits. Time deposits grew by $8.6 million
or 23.3% at June 30, 1996 as compared to June 30, 1995. As of June 30, 1996,
time deposits included a $3 million certificate of deposit with a 30 day term
which contributed to the deposit growth. Special promotions offered by the
subsidiary banks throughout 1995 and during the first six months of 1996 also
contributed to the growth in time deposits. With interest rates increasing,
depositors primarily selected deposit products with longer maturities in order
to take advantage of current interest rates. As reflected in Table 3, average
rates paid on interest bearing deposit accounts increased to 3.5% during the six
month period of 1996 as compared to 3.0% during the same period of the prior
year. At June 30, 1996, non-interest bearing demand deposits comprised 10.5% of
total deposits and interest bearing deposits which include NOW, money market,
savings and time deposits comprised 89.5% of total deposits. The changes in the
deposit mix from June 30, 1995 to June 30, 1996, were a .3% increase in
noninterest bearing demand deposits and a .3% decrease in interest bearing
deposits.
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 9.8% in 1996 entirely from current
earnings after quarterly dividends, and a decrease of 2.2% resulting from the
effect of the change in the net unrealized gain (loss) on securities available
for sale. Stockholders equity amounted to 8.7% of total assets as of June 30,
1996 as compared to 9.0% at June 30, 1995.
As a bank holding company, the Holding Company is subject to regulation by
the Federal Reserve Board under the Bank Holding Company Act of 1956. The
Federal Reserve Board's minimum ratio of qualified total capital to risk-
weighted assets is 8 percent, at least half of the total capital is required to
be comprised of Tier 1 capital, or the company's common stockholders' equity
less intangibles. The remainder (Tier 2 Capital) may consist of certain other
prescribed instruments and a limited amount of loan loss reserves.
In addition, the Federal Reserve Board has established minimum leverage ratio
(Tier 1 capital to quarterly average tangible assets) guidelines for bank
holding companies. These guidelines provide for minimum ratio of 3 percent for
bank holding companies that meet certain specified criteria. All other bank
holding companies are required to maintain a leverage ratio of 3 percent plus an
additional cushion of at least 100 to 200 basis points. The guidelines also
provide that banking organizations experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant reliance on intangible
assets.
25
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Capital Resources - continued
- - -----------------------------
The following chart shows the regulatory capital levels for the company at
June 30, 1996, June 30, 1995, and December 31, 1995:
June 30 Dec. 31
-------------- -------
Ratio Minimum 1996 1995 1995
- - ---------------------- -------- ------- ----- -----
Leverage Ratio 3% 8.92 8.90 9.20
Risk Based Capital
Tier 1 (core) 4% 15.14 14.99 15.12
Tier 2 (total) 8% 16.35 16.22 16.37
Earnings from subsidiary bank operations are expected to remain adequate to
fund payment of stockholders' dividends and internal growth. In management's
opinion, subsidiary banks have the capability to upstream sufficient dividends
to meet the cash requirements of the Holding Company.
Interest Rate Risk
- - ------------------
Changes in interest rates can affect the level of income of a financial
institution depending on the repricing characteristics of its assets and
liabilities. This is termed interest rate risk. If a financial institution is
asset sensitive, more of its assets will reprice in a given time frame than
liabilities. This is a favorable position in a rising rate environment and
would enhance income. If an institution is liability sensitive, more of its
liabilities will reprice in a given time frame than assets. This is a favorable
position in a falling rate environment. Financial institutions allocate
significant time and resources to managing interest rate risk because of the
impact that changes in interest rates can have to earnings.
The initial step in the process of maintaining a corporation's interest rate
sensitivity involves the preparation of a basic "gap" analysis of earning assets
and interest bearing liabilities as reflected in the following table. The
analysis measures the difference or the "gap" between the amount of assets and
liabilities repricing within a given time period. This information is used to
manage a corporation's asset and liability positions. Management uses this
information as a factor in decisions made about maturities of investment of cash
flows, classification of investment securities purchases as available-for-sale
or held-to-maturity, emphasis of variable rate or fixed rate loans and short or
longer term deposit products in marketing campaigns, and deposit account pricing
to alter asset and liability repricing characteristics. The overall objective
is to minimize the impact to the margin of any significant change in interest
rates.
The information presented in the following Interest Rate Risk table contains
assumptions and estimates used by management in determining repricing
characteristics and maturity distributions. As noted in the following table,
the cumulative gap at one year is approximately $(3,298,000), which indicates
the corporation's interest bearing liabilities are more than earning assets at
June 30, 1996. As the table presented is as of a point in time and conditions
change on a daily basis, any conclusions made may not be indicative of future
results.
26
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
Interest Rate Risk - continued
- - ------------------------------
Interest Rate Risk Table - June 30, 1996
(less (greater Non-
than) 3 3 - 12 1 - 3 than) 3 Interest
Months Months Years Years Bearing Total
------- ------- ------ ------- ------- -------
ASSETS:
Fed Funds Sold $ 3,643 $ $ $ $ $ 3,643
Investments 2,689 12,115 15,328 18,805 48,937
Loans 15,613 14,876 17,869 25,368 295 74,021
Other Assets 3,079 9,200 12,279
Allowance for Loan
and Lease Losses (1,182) (1,182)
-------- -------- ------- ------- ------- --------
TOTAL ASSETS: $ 25,024 $ 26,991 $33,197 $44,173 $ 8,313 $137,698
======== ======== ======= ======= ======= ========
NOW $ 1,573 $ 4,715 $ 4,225 $11,846 $ $22,359
MMDA 5,083 5,083
SAVINGS 2,441 7,316 6,554 18,376 34,687
CD's (less than) 100,000 8,002 14,048 7,086 6,808 35,944
CD's (greater than) 100,000 5,222 2,027 1,705 648 9,602
Demand Deposits 12,661 12,661
Other Liabilities 550 550
Repurchase Agreements 4,886 4,886
Stockholders' Equity 11,926 11,926
-------- -------- ------- ------- ------- --------
TOTAL LIABILITIES
AND CAPITAL: $27,207 $28,106 $19,570 $37,678 $25,137 $137,698
======= ======= ======= ======== ======= ========
GAP (2,183) (1,115) 13,627 6,495 (16,824)
GAP/ Total Assets (1.59%) (.81%) 9.90% 4.72% (12.22%)
Cumulative GAP (2,183) (3,298) 10,329 16,824 0
Cum. GAP/Total Assets (1.59%) (2.40%) 7.50% 12.22% 0.00%
The above analysis contains repricing and maturity assumptions and estimates
used by management.
27
First West Virginia Bancorp, Inc.
Management's Discussion and Analysis of the Financial Condition and
Results of Holding Company Operations
- - ------------------------------------------------------------------------------
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 $43,819,899
classified as available for sale at June 30, 1996. 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. At June 30, 1996, Progressive
Bank, N.A. and Progressive Bank, N.A.- Buckhannon, had a maximum borrowing
capacity (MBC) amounting to approximately $18,125,000 and $5,443,000,
respectively, from the FHLB at prevailing interest rates, subject to satisfying
the additional capital stock provisions, as defined, in their respective
agreements with the FHLB. As of June 30, 1996, Progressive Bank, N.A. and
Progressive Bank, N.A. - Buckhannon had an available line of approximately
$1,800,000 and $500,000, respectively, without purchasing any additional capital
stock from the FHLB. As of June 30, 1996, there were no borrowings outstanding
pursuant to these agreements.
At June 30, 1996 and June 30, 1995, the Holding Company had outstanding loan
commitments and unused lines of credit totaling $6,408,000 and $6,767,000,
respectively. As of June 30, 1996, management placed a high probability for
required funding within one year of approximately $4,427,000. Approximately
$1,547,000 is principally unused home equity and credit card lines on which
management places a low probability for required funding.
28
FIRST WEST VIRGINIA BANCORP, INC.
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. However, there are no proceedings now pending or threatened before
any court or administrative agency to which the Holding Company or its
subsidiaries are a party or to which 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
- - -------------------------------------------------------------------
a. Inapplicable
b. Inapplicable
c. Inapplicable
d. Inapplicable
Item 5 Other Information
- - -----------------------------------
Inapplicable
29
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 June 30, 1996, are incorporated
by reference in Part I:
------
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the quarter ended June 30, 1996.
(c) Exhibits
--------
The exhibits listed in the Exhibit Index on page 32 of this FORM 10-Q are
incorporated by reference and/or filed herewith.
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
First West Virginia Bancorp, Inc
--------------------------------
(Registrant)
By: /s/ Ronald L. Solomon
---------------------------------------------------------------
Ronald L. Solomon
President and Chief Executive Officer/Director
By: /s/ Francie P. Reppy
---------------------------------------------------------------
Francie P. Reppy
Controller
Dated: August 5, 1996
31
EXHIBIT INDEX
The following exhibits are filed herewith and/or are incorporated herein by
reference.
Exhibit
Number Description
- - ------- -----------
10.1 Employment Contract dated January 2, 1996 between
First West Virginia Bancorp, Inc. and Ronald L. Solomon.
Incorporated herein by reference.
10.2 Employment Contract dated January 2, 1996 between
First West Virginia Bancorp, Inc. and Charles K. Graham.
Incorporated herein by reference.
10.3 Lease dated July 20, 1993 between Progressive Bank, N.A., formerly
known as "First West Virginia Bank, N.A.", and Angela I. Stauver.
Incorporated herein by reference.
10.4 Lease dated March 26, 1992 between First West Virginia Bancorp, Inc.
and the estate of Thomas L. Stockert, Jr., and the Tom Stockert
Corporation. Incorporated herein by reference.
10.5 Lease dated February 1, 1989 between First West Virginia Bancorp,
Inc. and Progressive Bank, N.A. -Bellaire, formerly known as "Farmers
and Merchants National Bank in Bellaire." Incorporated herein by
reference.
10.6 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.
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
19 Report furnished to security holders Filed herewith and incorporated
herein by reference.
22 Proxy statement for the Annual Shareholders meeting held April 9, 1996
Incorporated herein by reference.