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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10 - QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1999
------------------
Commission File Number 0-16587
---------
South Branch Valley Bancorp, Inc.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
West Virginia 55-0672148
------------------------------- -----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
310 North Main Street
Moorefield, West Virginia 26836
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(304) 538-1000
--------------
(Issuer's telephone number, including area code)
Check whether the issuer: (1) has filed all reports required by Section 13 or
15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
591,292 common shares were outstanding as of November 8, 1999
Transitional Small Business Disclosure Format (Check one):
Yes No X
---- ----
This report contains 25 pages.
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Table of Contents
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets
September 30, 1999 (unaudited) and December 31, 1998......3
Consolidated statements of income
for the three months and nine months ended
September 30, 1999 and 1998 (unaudited)...................4
Consolidated statements of cash flows
for the nine months ended
September 30, 1999 and 1998 (unaudited).................5-6
Consolidated statements of shareholders' equity
for the nine months ended
September 30, 1999 and 1998 (unaudited)...................7
Notes to consolidated financial
statements (unaudited).................................8-15
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.........................................16-23
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................24
SIGNATURES.................................................................25
2
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Consolidated Balance Sheets
September 30, December 31,
1999 1998
(unaudited) (*)
-------------- --------------
ASSETS
Cash and due from banks $ 7,706,167 $ 4,239,721
Interest bearing deposits
with other banks 848,458 770,000
Federal funds sold 4,140,958 4,842,745
Securities available for sale 77,000,278 31,409,924
Loans, net 178,525,980 142,770,127
Bank premises and equipment, net 6,995,032 5,170,858
Accrued interest receivable 1,909,842 1,059,990
Other assets 7,066,600 2,735,672
-------------- --------------
Total assets $ 284,193,315 $ 192,999,037
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Non interest bearing $ 19,010,050 $ 11,455,674
Interest bearing 203,615,960 134,917,518
-------------- --------------
Total deposits 222,626,010 146,373,192
-------------- --------------
Short-term borrowings 14,811,880 4,644,143
Long-term borrowings 20,718,483 16,468,875
Other liabilities 1,751,808 1,367,698
-------------- --------------
Total liabilities 259,908,181 168,853,908
-------------- --------------
Commitments and Contingencies
Shareholders' Equity
Common stock, $2.50 par value,
authorized 2,000,000 shares,
issued 600,407 shares 1,501,018 1,501,018
Capital surplus 9,611,774 9,611,774
Retained earnings 14,287,503 13,103,264
Less cost of 9,115 shares acquired
for the treasury (384,724) (384,724)
Accumulated other comprehensive income (730,437) 313,797
-------------- --------------
Total shareholders' equity 24,285,134 24,145,129
-------------- --------------
Total liabilities and
shareholders' equity 284,193,315 192,999,037
============== ==============
(*) - December 31, 1998 financial information has been extracted from audited
consolidated financial statements
See Notes to Consolidated Financial Statements
3
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Consolidated Statements of Income (unaudited)
Three Months Ended Nine Months Ended
--------------------- ---------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
---------- ---------- ----------- ----------
Interest income
Interest and fees on loan $3,840,033 $3,093,108 $10,497,751 $8,228,698
Interest on securities
Taxable 1,086,975 485,392 2,317,408 1,372,541
Tax-exempt 75,226 80,224 233,858 239,823
Interest on Federal funds sold
and interest bearing
deposits other banks 108,239 66,707 325,096 240,180
---------- ---------- ----------- ----------
Total interest income 5,110,473 3,725,431 13,374,113 10,081,242
---------- ---------- ----------- ----------
Interest expense
Interest on deposits 2,174,834 1,646,856 5,693,047 4,438,711
Interest on short-term
borrowings 203,704 60,305 375,556 182,443
Interest on long-term
borrowings 256,308 167,946 771,456 504,611
---------- ---------- ----------- ----------
Total interest expense 2,634,846 1,875,107 6,840,059 5,125,765
---------- ---------- ----------- ----------
Net interest income 2,475,627 1,850,324 6,534,054 4,955,477
---------- ---------- ----------- ----------
Provision for loan losses 97,500 75,000 257,500 195,000
---------- ---------- ----------- ----------
Net interest income after
provision for loan losses 2,378,127 1,775,324 6,276,554 4,760,477
---------- ---------- ----------- ----------
Other income
Insurance commissions 20,185 17,817 53,061 67,260
Service fees on deposit 185,935 111,533 444,079 311,906
Securities gains (losses) - - - 4,131
Other 29,226 28,460 102,595 61,323
---------- ---------- ----------- ----------
Total other income 235,346 157,810 599,735 444,620
---------- ---------- ----------- ----------
Other expense
Salaries and employee benefits 804,730 585,053 2,194,503 1,606,044
Net occupancy expense 116,293 67,883 309,067 220,835
Equipment expense 137,050 106,184 388,717 286,985
Supplies 70,899 33,286 212,454 88,644
Amortization of intangibles 79,955 44,737 189,144 96,089
Other 477,120 367,156 1,301,858 973,466
---------- ---------- ----------- ----------
Total other expense 1,686,047 1,204,299 4,595,743 3,272,063
---------- ---------- ----------- ----------
Income before income tax expense 927,426 728,835 2,280,546 1,933,034
Income tax expense 327,415 224,115 818,400 630,262
---------- ---------- ----------- ----------
Net income $ 600,011 $ 504,720 $ 1,462,146 $1,302,772
========== ========== =========== ==========
Basic earnings per common share $ 1.01 $ 0.85 $ 2.47 $ 2.44
========== ========== =========== ==========
Diluted earnings per common share $ 1.01 $ 0.85 $ 2.47 $ 2.44
========== ========== =========== ==========
Dividends per common share $ 0.47 $ 0.44 $ 0.47 $ 0.44
========== ========== =========== ==========
See Notes to Consolidated Financial Statements
4
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended
--------------------------------
Sept. 30, Sept. 30,
1999 1998
--------------- ---------------
Cash Flows from Operating Activities
Net income $ 1,462,146 $ 1,302,772
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 310,814 240,909
Provision for loan losses 257,500 195,000
Deferred income tax expense (benefit) 1,215 (23,823)
Security gains (losses) - (4,131)
Loss (gain) on disposal of Bank
premises and equipmen - (9,709)
Loss (gain) on disposal of other
assets 10,967 (8,043)
Amortization of securities premiums
(accretion of discounts) net 15,784 (17,979)
Amortization of goodwill and
purchase accounting adjustments, net 87,005 72,399
(Increase) decrease in accrued
interest receivable (798,873) (233,121)
(Increase) decrease in other assets (439,982) 175,977
Increase (decrease) in other
liabilities 493,343 109,243
--------------- ---------------
Net cash provided by operating activities 1,399,919 1,799,494
--------------- ---------------
Cash Flows from Investing Activities
Proceeds from maturities of interest
bearing deposits with other banks (78,458) 297,100
Proceeds from maturities and calls of
securities available for sale 7,693,296 5,825,000
Proceeds from sales of securities
available for sale - 409,050
Principal payments received on
securities available for sale 2,338,012 2,262,327
Purchases of securities available
for sale (57,294,729) (6,077,235)
Purchase of common stock of affiliate - (90,465)
Net (increase) decrease in Federal
funds sold 701,787 7,476,819
Net loans made to customers (27,354,184) (19,190,412)
Purchases of Bank premises and
equipment (888,949) (784,287)
Proceeds from sales of Bank premises
and equipment - 10,693
Proceeds from sales of other assets - 50,801
Purchase of life insurance contracts (1,246,000) -
Net cash and cash equivalents received
in acquisitions 35,071,460 976,517
--------------- ---------------
Net cash (used in) investing activities (41,057,765) (8,834,092)
--------------- ---------------
Cash Flows from Financing Activities
Net increase (decrease) in demand
deposit, NOW and savings accounts 20,868,747 6,494,806
Net increase (decrease) in time
deposits 8,116,107 892,474
Net increase (decrease) in short-term
borrowings 10,167,737 (2,267,364)
Proceeds from long-term borrowings 4,500,000 6,136,337
Repayment of long-term borrowings (250,392) (3,482,247)
Purchase of treasury stock - (217,754)
Dividends paid (277,907) (262,367)
--------------- ---------------
Net cash provided by financing activities 43,124,292 7,293,885
--------------- ---------------
Increase (decrease) in cash and due
from banks 3,466,446 259,287
Cash and due from banks:
Beginning 4,239,721 3,945,099
--------------- ---------------
Ending $ 7,706,167 $ 4,204,386
=============== ===============
See Notes to Consolidated Financial Statements
5
South Branch Valley Bancorp, Inc. and Subsidiaries
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Consolidated Statements of Cash Flows - continued (unaudited)
Nine Months Ended
--------------------------------
Sept. 30, Sept. 30,
1999 1998
--------------- ---------------
Supplement Disclosures of Cash Flow Information
Cash payments for:
Interest $ 6,840,201 $ 5,049,168
=============== ===============
Income taxes $ 792,692 $ 660,807
=============== ===============
Supplemental Schedule of Noncash Investing
and Financing Activities
Other assets acquired in settlement
of loans $ 154,565 $ -
=============== ===============
Acquisition of Greenbrier County branches
Net cash and cash equivalents received
in acquisition of Greenbrier
County branches $ (35,071,460) $ -
=============== ===============
Fair value of assets acquired
(principally loans and Bank
premises) $ 12,382,196 $ -
Deposits and other liabilities assumed (47,453,656) -
--------------- ---------------
$(35,071,460) $ -
=============== ===============
Acquisition of Capital State Bank, Inc.
Prior acquisition of 40% of the
outstanding common shares
purchased for cash $ - $ 5,363,946
Acquisition of 60% of the outstanding
common shares in exchange for 183,465
shares of Company common stock - 7,980,728
--------------- ---------------
$ - $ 13,344,674
=============== ===============
Fair value of assets acquired
(principally loans and securities) $ - $ 46,720,306
Deposits and other liabilities assumed - (33,375,632)
--------------- ---------------
$ - $ 13,344,674
=============== ===============
See Notes to Consolidated Financial Statements
6
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Consolidated Statements of Shareholders' Equity (unaudited) .
Accumulated
Other Total
Compre- Share-
Common Capital Retained Treasury hensive holders'
Stock Surplus Earnings Stock Income Equity
---------- ---------- ------------ ----------- ------------ -------------
Balance, December 31, 1998 $1,501,018 $9,611,774 $13,103,264 $(384,724) $313,797 $24,145,129
Nine Months Ended September 30, 1999
Comprehensive income:
Net income - - 1,462,146 - - 1,462,146
Other comprehensive income,
net of tax:
Net unrealized (loss) on
securities of ($1,044,234), net
of reclassification adjustment
for gains(losses) included in net
income of $ - - - - - (1,044,234) (1,044,234)
-------------
Total comprehensive income - - - - - 417,912
-------------
Cash dividend declared on
common stock ($.47 per share) - - (277,105) - - (277,105)
---------- ---------- ------------ ----------- ------------ -------------
Balance, September 30, 1999 $1,501,018 $9,611,774 $14,287,503 $(384,724) $ (730,437) $ 24,285,134
========== ========== ============ =========== ============ =============
Balance, December 31, 1997 $1,042,355 $2,089,709 $11,898,420 $(166,970) $ 197,038 $ 15,060,552
Nine Months Ended September 30, 1998
Comprehensive income:
Net income - - 1,302,772 - - 1,302,772
Other comprehensive income,
net of tax:
Net unrealized gain on
securities of $120,147, net
of reclassification adjustment
for gains included in net
income of $2,541 - - - - 117,606 117,606
-------------
Total comprehensive income - - - - - 1,420,378
-------------
Issuance of 183,465 shares of
common stock at $43.50 per share
as consideration for the acquisition
of Capital State Bank, Inc. 458,668 7,522,065 - - - 7,980,728
Cost of 5,000 shares of common stock
acquired for the treasury - - - (217,754) - (217,754)
Cash dividends declared on
common stock ($.44 per share) - - (262,367) - - (262,367)
---------- ---------- ------------ ----------- ------------ -------------
Balance, September 30, 1998 $1,501,018 $9,611,774 $12,938,825 $(384,724) $ 314,644 $ 23,981,537
========== ========== ============ =========== ============ =============
See Notes to Consolidated Financial Statements
7
South Branch Valley Bancorp, Inc. and Subsidiaries
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Notes to Consolidated Financial Statements (unaudited)
Note 1. Basis of Presentation
These consolidated financial statements of South Branch Valley Bancorp, Inc. and
Subsidiaries ("South Branch" or "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for annual year end financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included and are of a normal recurring nature.
The presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ materially from these estimates.
The results of operations for the three month and nine month periods ended
September 30, 1999 are not necessarily indicative of the results to be expected
for the full year. The consolidated financial statements and notes included
herein should be read in conjunction with the audited consolidated financial
statements and notes related thereto included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998.
The Private Securities Litigation Act of 1995 indicates that the disclosure of
forward-looking information is desirable for investors and encourages such
disclosure by providing a safe harbor for forward-looking statements by
management. This Quarterly Report on Form 10-QSB contains forward- looking
statements that involve risk and uncertainty. In order to comply with the terms
of the safe harbor, the Company notes that a variety of factors could cause
South Branch's actual results and experience to differ materially from the
anticipated results or other expectations expressed in those forward-looking
statements.
Note 2. Earnings Per Share
Basic earnings per common share are computed based upon the weighted average
shares outstanding. The weighted average shares outstanding for the nine month
periods ended September 30, 1999 and 1998 were 591,292 and 534,241 respectively.
The weighted average shares outstanding for the three month periods ended
September 30, 1999 and 1998 were 591,292 and 592,292 respectively.
In accordance Financial Accounting Standards Board Statement No. 128, Earning
per Share, diluted earnings per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
reduce the loss or increase the income per common share from continuing
operations. At September 30, 1999, options totaling 7,500 shares of South
Branch's common stock had been granted under the Company's 1998 Officer Stock
Option Plan, which had the effect of increasing average shares outstanding for
purposes of computing diluted earnings per share by 43 and 0 shares for the nine
months ended September 30, 1999 and 1998, respectively. These options had no
effect on the average shares outstanding for purposes of computing diluted
earnings per share for the quarters ended September 30, 1999 and 1998.
8
Note 3. Acquisitions and New Subsidiary
On December 23, 1998, Capital State Bank, Inc., a subsidiary of the Company,
entered into an agreement to purchase three branch banking facilities located in
Greenbrier County, West Virginia. The transaction was completed on April 22,
1999, and includes the branches' facilities and associated loan and deposit
accounts. Total deposits assumed approximated $47.4 million and total loans
acquired approximated $8.9 million as of the transaction's closing. This
transaction was accounted for using the purchase method of accounting. The
excess purchase price over the fair value of the net assets acquired as of the
consummation date approximated $2,267,000, which is included in other assets in
the accompanying consolidated balance sheet as of September 30, 1999. This
goodwill is being amortized over a period of 15 years using the straight line
method.
On March 24, 1998 and March 25, 1998, the shareholders of Capital State Bank,
Inc. and South Branch Valley Bancorp, Inc. respectively, approved the merger of
Capital State into Capital Interim Bank, Inc., a wholly owned subsidiary of
South Branch. The merger was consummated at the close of business on March 31,
1998. This acquisition was accounted for using the purchase method of
accounting., and accordingly, the assets and liabilities and results of
operations of Capital State are reflected in the Company's consolidated
financial statements beginning April 1, 1998. The excess purchase price over the
fair value of the net assets acquired as of the consummation date approximated
$1,966,000, and is being amortized over a period of 15 years using the straight
line method.
The following presents certain pro forma condensed consolidated financial
information of South Branch, using the purchase method of accounting, after
giving effect to the acquisitions of Capital State Bank, Inc. and Greenbrier
County branches as if each transaction had been consummated at the beginning of
the periods presented.
(In thousands, except per share data)
----------------------------------------------
Nine Month Period Nine Month Period
Ended Ended
September 30, 1999 September 30, 1998
----------------------------------------------
As Reported Pro Forma As Reported Pro Forma
----------- ---------- ----------- ----------
Total interest income $ 13,374 $ 14,256 $ 10,081 $ 12,971
Total interest expense $ 6,840 $ 7,316 $ 5,126 $ 6,677
Net interest income $ 6,534 $ 6,940 $ 4,955 $ 6,294
Net income $ 1,462 $ 1,534 $ 1,303 $ 1,492
Basic earnings per
common share $ 2.47 $ 2.59 $ 2.44 $ 2.57
Diluted earnings per
common share $ 2.47 $ 2.59 $ 2.44 $ 2.57
This pro forma information has been included for comparative purposes only and
may not be indicative of the combined results of operations that actually would
have occurred had the transactions been consummated at the beginning of the
periods presented, or which will be attained in the future.
During 1998, South Branch applied for and on January 25, 1999 received
preliminary approval from the Office of the Comptroller of the Currency to begin
organizing a new subsidiary bank, Shenandoah Valley National Bank, to be located
in Winchester, Virginia. Shenandoah Valley National Bank was granted its charter
on May 14, 1999 and was initially capitalized with $4 million, funded by a
special dividend in the amount of $3 million from the Company's subsidiary bank,
South Branch Valley National Bank, and from a $1 million term loan from Potomac
Valley Bank. Shenandoah Valley National Bank opened for business on May 17,
1999. Start-up costs totaling $89,998 related to the organization of this
Institution were expensed during 1999.
9
Note 4. Securities
The amortized cost, unrealized gains, unrealized losses and estimated fair
values of securities at September 30, 1999 and December 31, 1998 are summarized
as follows:
September 30, 1999
-----------------------------------------------
Unrealized Estimated
Amortized -------------------- Fair
Cost Gains Losses Value
------------ --------- ---------- -----------
Available for Sale
Taxable:
U. S. Treasury securities $ 1,493,860 $ 17,078 $ - $ 1,510,938
U. S. Government agencies
and corporations 43,852,131 27,444 725,534 43,154,041
Small Business
Administration
guaranteed loan
participation
certificates 722,634 9,874 - 732,508
Mortgage-backed
securities -
U. S. Government
agencies and
corporations 21,080,868 18,144 520,531 20,578,481
Corporate debt
securities 2,525,278 13,075 2,148 2,536,205
Federal Reserve Bank stock 207,200 - - 207,200
Federal Home Loan
Bank stock 2,126,600 - - 2,126,600
Other equity
securities 306,625 - - 306,625
----------- --------- ---------- -----------
Total taxable 72,315,196 85,615 1,248,213 71,152,598
----------- --------- ---------- -----------
Tax-exempt:
State and political
subdivision 5,833,779 64,654 54,853 5,843,580
Federal Reserve Bank stock 4,100 - - 4,100
----------- --------- ---------- -----------
Total tax-exempt 5,837,879 64,654 54,853 5,847,680
----------- --------- ---------- -----------
Total $78,153,075 $ 150,269 $1,303,066 $77,000,278
=========== ========= ========== ===========
December 31, 1998
-----------------------------------------------
Unrealized Estimated
Amortized ------------------- Fair
Cost Gains Losses Value
------------ --------- ---------- -----------
Available for Sale
Taxable:
U. S. Treasury securities $ 2,990,294 $ 68,354 $ - $ 3,058,648
U. S. Government agencies
and corporations 12,698,092 82,796 11,404 12,769,484
Small Business
Administration
guaranteed loan
participation
certificates 973,127 21,119 - 994,246
Mortgage-backed
securities -
U. S. Government
agencies and
corporations 6,334,380 86,483 - 6,420,863
Corporate debt
securities 249,724 1,214 - 250,938
Federal Reserve
Bank stock 44,300 - - 44,300
Federal Home Loan
Bank stock 1,052,300 - - 1,052,300
Other equity
securities 306,625 - - 306,625
------------ --------- ---------- -----------
Total taxable 24,648,842 259,966 11,404 24,897,404
------------ --------- ---------- -----------
Tax-exempt:
State and political
subdivisions 6,246,745 268,525 6,850 6,508,420
Federal Reserve
Bank stock 4,100 - - 4,100
------------ --------- ---------- -----------
Total tax-exempt 6,250,845 268,525 6,850 6,512,520
------------ --------- ---------- -----------
Total $30,899,687 $528,491 $18,254 $31,409,924
=========== ========= ========== ===========
10
The maturites, amortized cost and estimated fair values of securities at
September 30, 1999 are summarized as follows:
Available for Sale
-------------------------
Amortized Estimated
Cost Fair Value
----------- -----------
Due in one year or less $ 6,253,366 $ 6,183,607
Due from one to five years 34,967,188 34,640,827
Due from five to ten years 31,288,329 30,591,416
Due after ten years 2,999,667 2,939,903
Equity securities 2,644,525 2,644,525
----------- -----------
$78,153,075 $77,000,278
=========== ===========
Note 5. Loans
Loans are summarized as follows:
September 30, December 31,
1999 1998
------------- ------------
Commercial, financial and
agricultural $ 61,942,168 $ 41,956,586
Real estate - construction 1,287,729 1,801,317
Real estate - mortgage 87,666,088 73,885,892
Installment 28,977,970 26,579,782
Other 641,644 409,382
------------- ------------
Total loans 180,515,599 144,632,959
Less unearned income 478,398 490,946
------------- ------------
Total loans net of
unearned income 180,037,201 144,142,013
Less allowance for loan losses 1,511,221 1,371,886
------------- ------------
Loans, net $178,525,980 $142,770,127
============= ============
The following presents loan maturities at September 30, 1999:
After 1 but
Within within 5 After
1 Year Years 5 Years
----------- ----------- ------------
Commercial, financial and
agricultural $10,082,445 $13,403,817 $ 38,455,906
Real estate - construction 1,211,526 - 76,203
Real estate - mortgage 2,223,862 8,347,967 77,094,259
Installment 3,327,432 21,477,873 4,172,665
Other 552,226 89,418 -
----------- ----------- ------------
Total $17,397,491 $43,319,075 $119,799,033
=========== =========== ============
Loans due after one year with:
Variable rates $ 49,293,847
Fixed rates 113,824,261
------------
$163,118,108
============
11
The Company grants commercial, residential and consumer loans to customers
primarily located in the Potomac Highlands, South Central, and South Eastern
counties of West Virginia, and in Winchester-Frederick County, Virginia.
Although the Company strives to maintain a diverse loan portfolio, exposure to
credit losses can be adversely impacted by downturns in local economic and
employment conditions. Major employment within the Company's market area is
diverse, but primarily includes the poultry, government, health care, education,
coal production and various professional, financial and related service
industries.
Note 6. Allowance for Loan Losses
An analysis of the allowance for loan losses for the nine month periods ended
September 30, 1999 and 1998, is as follows:
Year
Nine Months Ended Ended
September 30, December 31,
---------------------- ------------
1999 1998 1998
----------- ---------- ------------
Balance, beginning of period $ 1,371,886 $ 895,281 $ 895,281
Losses:
Commercial, financial &
agricultural 14,783 546 4,063
Real estate - mortgage 30,488 - -
Installment 92,952 113,613 124,103
Other 10,845 2,196 24,638
----------- ---------- ------------
Total 149,068 116,355 152,804
----------- ---------- ------------
Recoveries:
Commercial, financial &
agricultural 432 2,830 2,830
Real estate - mortgage 1,320 21,191 21,969
Installment 27,161 47,380 60,797
Other 1,990 300 2,011
----------- ---------- ------------
Total 30,903 71,701 87,607
----------- ---------- ------------
Net losses
118,165 44,654 65,197
Allowance of purchased
subsidiary - 271,802 271,802
Provision for loan losses 257,500 195,000 270,000
----------- ---------- ------------
Balance, end of period $ 1,511,221 $1,317,429 $ 1,371,886
=========== ========== ============
Note 7. Bank Premises and Equipment
The major categories of Bank premises and equipment and accumulated depreciation
at September 30, 1999 and December 31, 1998 are summarized as follows:
September 30, December 31,
1999 1998
------------- ------------
Land $ 1,739,783 $ 1,174,679
Buildings and improvements 5,065,242 3,928,162
Furniture and equipment 2,712,446 2,327,419
------------- ------------
9,517,471 7,430,260
Less accumulated depreciation 2,522,439 2,259,402
------------- ------------
Bank premises and equipment,net $ 6,995,032 $ 5,170,858
============= ============
12
Note 8. Deposits
The following is a summary of interest bearing deposits by type as of September
30, 1999 and December 31, 1998:
September 30, December 31,
1999 1998
------------- ------------
Demand deposits, interest bearing $ 49,825,600 $ 27,510,717
Savings deposits 33,964,412 14,748,928
Individual retirement accounts 9,462,254 9,338,626
Certificates of deposit 110,363,694 83,319,247
------------- ------------
Total $ 203,615,960 $134,917,518
============= ============
The following is a summary of the maturity distribution of certificates of
deposit and Individual Retirement Accounts in denominations of $100,000 or more
as of September 30, 1999:
Amount Percent
----------- -------
Three months or less $ 6,155,253 21.2%
Three through six months 4,332,375 14.9%
Six through twelve months 11,533,553 39.8%
Over twelve months 6,989,772 24.1%
----------- ------
Total $29,010,953 100.0%
=========== ======
A summary of the scheduled maturities for all time deposits as of September 30,
1999 is as follows:
1999 $ 26,148,348
2000 65,486,564
2001 15,962,363
2002 4,724,153
2003 3,743,924
Thereafter 3,760,596
------------
$119,825,948
============
Note 9. Restrictions on Capital
South Branch and its subsidiaries are subject to various regulatory capital
requirements administered by the banking regulatory agencies. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
South Branch and each of its subsidiaries must meet specific capital guidelines
that involve quantitative measures of South Branch's and its subsidiaries'
assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. South Branch and each of its subsidiaries'
capital amounts and classifications are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require South Branch and each of its subsidiaries to maintain minimum amounts
and ratios of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, at September 30, 1999, that South
Branch and each of its subsidiaries met all capital adequacy requirements to
which they were subject.
13
The most recent notifications from the banking regulatory agencies categorized
South Branch and each of its subsidiaries as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, South Branch and each of its subsidiaries must maintain minimum
total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in
the table below.
South Branch's and its subsidiaries', South Branch Valley National Bank's
("SBVNB"), Capital State Bank, Inc.'s ("CSB"), and Shenandoah Valley National
Bank's ("SVNB") actual capital amounts and ratios are also presented in the
following table (dollar amounts in thousands).
To be Well
Capitalized
under Prompt
Minimum Required Corrective
Regulatory Action
Actual Capital Provisions
----------------- ----------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
-------- -------- --------- ------- --------- -------
As of September 30, 1999
Total Capital (to risk
weighted assets)
South Branch $22,494 13.3% $13,505 8.0% $16,881 10.0%
SBVNB 11,762 11.1% 8,479 8.0% 10,598 10.0%
CSB 7,150 13.6% 4,210 8.0% 5,262 10.0%
SVNB 3,890 34.7% 898 8.0% 1,123 10.0%
Tier I Capital (to risk
weighted assets)
South Branch 20,982 12.4% 6,753 4.0% 10,129 6.0%
SBVNB 10,644 10.0% 4,239 4.0% 6,359 6.0%
CSB 6,772 12.9% 2,105 4.0% 3,157 6.0%
SVNB 3,875 16.2% 449 4.0% 674 6.0%
Tier I Capital (to
average assets)
South Branch 20,982 7.1% 8,914 3.0% 14,857 5.0%
SBVNB 10,644 7.0% 4,531 3.0% 7,551 5.0%
CSB 6,772 7.0% 2,918 3.0% 4,863 5.0%
SVNB 3,875 16.3% 719 3.0% 1,199 5.0
As of December 31, 1998
Total Capital (to risk
weighted assets)
South Branch $23,309 18.4% $10,126 8.0% $12,658 10.0%
SBVNB 13,510 14.0% 7,721 8.0% 9,652 10.0%
CSB 8,976 30.5% 2,356 8.0% 2,945 10.0%
SVNB * * * * * *
Tier I Capital (to risk
weighted assets)
South Branch 21,937 17.3% 5,063 4.0% 7,595 6.0%
SBVNB 12,468 12.9% 3,861 4.0% 5,791 6.0%
CSB 8,646 29.4% 1,178 4.0% 1,767 6.0%
SVNB * * * * * *
Tier I Capital (to
average assets)
South Branch 21,937 11.5% 5,702 3.0% 9,504 5.0%
SBVNB 12,468 8.7% 4,289 3.0% 7,148 5.0%
CSB 8,646 17.7% 1,464 3.0% 2,441 5.0%
SVNB * * * * * *
* - No data presented relative to SVNB as of December 31, 1998,
as this subsidiary was capitalized by South Branch in April 1999.
14
Note 10. Pending Merger
On July 16, 1999, the Company entered into an Agreement and Plan of Merger
("Agreement") to affiliate with Potomac Valley Bank ("Potomac") in Petersburg,
West Virginia. Under the terms of the Agreement South Branch and Potomac propose
a merger whereby the shareholders of Potomac would exchange all of their
outstanding shares of common stock for shares of South Branch common stock at a
book-for-book exchange based on the respective book values of South Branch and
Potomac as of the closing date. At September 30, 1999, the exchange ratio would
have been 3.31 shares of South Branch common stock for each share of Potomac's
90,000 outstanding shares of common stock. The terms of the Agreement also
include, among others, that the merger is subject to South Branch changing its
name to Summit Financial Group, Inc. and approval of the transaction by all
applicable regulatory authorities and the shareholders of South Branch and
Potomac. It is expected that the transaction will be accounted for using the
pooling of interests method of accounting. As of September 30, 1999, Potomac's
assets, loans, deposits and shareholders' equity totaled $92,343,000,
$52,368,000, $79,660,000 and $12,233,000, respectively.
15
South Branch Valley Bancorp, Inc. and Subsidiaries
- ------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
The following is a discussion and analysis focused on significant changes in the
financial condition and results of operations of South Branch Valley Bancorp,
Inc. ("Company" or "South Branch") and its wholly owned subsidiaries, South
Branch Valley National Bank ("SBVNB"), Capital State Bank, Inc. ("Capital
State"), and Shenandoah Valley National Bank ("SVNB") for the periods indicated.
This discussion and analysis should be read in conjunction with the Company's
1998 audited consolidated financial statements and Annual Report on Form 10-KSB.
This discussion may also contain forward-looking statements based on
management's expectations, and actual results may differ materially.
ACQUISITIONS AND NEW SUBSIDIARY
On May 14, 1999, SVNB, a newly organized bank subsidiary of South Branch, was
granted its charter by the Office of the Comptroller of the Currency. This
entity was initially capitalized with $4 million, funded by a special dividend
in the amount of $3 million from the Company's subsidiary bank, SBVNB, and from
a $1 million term loan from Potomac Valley Bank. SVNB opened for business on May
17, 1999.
On December 23, 1998, Capital State entered into an agreement to purchase three
branch banking facilities located in Greenbrier County, West Virginia. The
transaction was completed on April 22, 1999, and includes the branches'
facilities and associated loan and deposit accounts. Total deposits assumed
approximated $47.4 million and total loans acquired approximated $8.9 million as
of the transaction's closing. This transaction was accounted for using the
purchase method of accounting and accordingly, the balances and results of
operations of the branches are included in the consolidated financial statements
of South Branch only from the date of purchase.
At the close of business March 31, 1998, South Branch acquired 60% of the
outstanding common stock of Capital State, a Charleston, West Virginia state
chartered bank with total assets approximating $44 million at the time of
acquisition, in exchange for 183,465 shares of South Branch's common stock.
South Branch had previously acquired 40% of Capital State's outstanding common
stock during 1997. This acquisition was accounted for using the purchase method
of accounting, and accordingly, the assets and liabilities and results of
operations of Capital State are reflected in the Company's consolidated
financial statements beginning April 1, 1998.
Refer to Note 3 of the accompanying consolidated financial statements for
additional information regarding these acquisitions.
RESULTS OF OPERATIONS
Earnings Summary
South Branch reported net income of $600,000 for the three months ended
September 30, 1999 compared to $505,000 for the third quarter of 1998,
representing an 18.8% increase. For the nine month period ended September 30,
1999, South Branch's net income of $1,462,000, increased 12.2% from the
$1,303,000 reported for the same period of 1998. The increase in earnings for
both the quarterly and nine month periods resulted primarily from growth in
interest earning assets and improved service fee revenues.
16
Basic and diluted earnings per common share were $1.01 for the quarter ended
September 30, 1999, compared to the $0.85 reported for the third quarter of
1998. For the nine month period ended September 30, 1999, basic and diluted
earnings per common share totaled $2.47, compared to $2.44 for the same period
of 1998.
Net Interest Income
The Company's net interest income on a fully tax-equivalent basis totaled
$6,655,000 for the nine month period ended September 30, 1999 compared to
$5,078,000 for the same period of 1998, representing an increase of $1,577,000
or 31.1%. This increase resulted from growth in the volume of earning assets as
result of the acquisitions of Capital State and the Greenbrier County branches
and as a result of solid Company-wide loan growth. South Branch's net yield on
interest earning assets however decreased to 3.9% for the nine month period
ended September 30, 1999, compared to 4.3% for the same period in 1998. Growth
in net interest income is expected to continue due to anticipated continued
growth in volumes of interest earning assets, principally loans, over the near
term. Conversely, the Company's net yield on earning assets is anticipated to
continue to contract over the balance of 1999, primarily due to the declining
yields on loans as result of generally lower interest rates and an increasingly
competitive market for quality new credits.
Further analysis of the Company's yields on interest earning assets and interest
bearing liabilities are presented in Table I below.
17
Table I - Average Balance Sheet and Net Interest Income Analysis
September 30, 1999 September 30, 1998
--------------------------- --------------------------
Average Earnings/ Yield/ Average Earnings/ Yield/
Balance Expense Rate Balance Expense Rate
--------- -------- -------- --------- -------- --------
Interest earning assets
Loans, net of
unearned income $162,619 $ 10,498 8.6% $117,225 $ 8,229 9.4%
Securities
Taxable 47,776 2,317 6.5% 28,674 1,372 6.4%
Tax-exempt (1) 6,069 355 7.8% 6,187 363 7.8%
Federal funds sold
and interest
bearing deposits
other banks 8,812 325 4.9% 5,128 240 6.2%
-------- -------- -------- --------- -------- --------
Total interest
earning assets 225,276 13,495 8.0% 157,214 10,204 8.7%
-------- -------- -------- --------
Noninterest earning
assets
Cash & due from banks 4,714 3,565
Bank premises and
equipment 6,707 4,081
Other assets 4,649 6,066
Allowance for loan
losses (1,438) (1,144)
-------- --------
Total assets $239,908 $169,782
======== ========
Interest bearing liabilities
Interest bearing
demand deposits $ 37,170 $ 926 3.3% $ 23,340 $ 588 3.4%
Savings deposits 24,854 513 2.8% 15,881 383 3.2%
Time deposits 107,057 4,254 5.3% 79,918 3,467 5.8%
Short-term borrowings 10,853 375 4.6% 5,228 183 4.7%
Long-term borrowings 19,127 772 5.4% 12,395 505 5.4%
-------- -------- -------- --------- -------- --------
Total interest
bearing liabilities 199,061 6,840 4.6% 136,762 5,126 5.0%
-------- -------- -------- --------
Noninterest bearing
liabilities and
shareholders' equity
Demand deposits 16,003 10,759
Other liabilities 1,319 1,418
Shareholders' equity 23,525 20,843
-------- --------
Total liabilities and
shareholders' equity $239,908 $169,782
======== ========
Net interest earnings $ 6,655 $ 5,078
======== =======
Net yield on interest
earning assets 3.9% 4.3%
======== ========
(1) Interest income on tax-exempt securities has been adjusted assuming an
effective tax rate of 34% for both periods presented. The tax equivalent
adjustment resulted in an increase in interest income of $121,000 and $123,000
for the periods ended September 30, 1999 and 1998, respectively.
18
Credit Experience
The provision for loan losses represents charges to earnings necessary to
maintain an adequate allowance for potential future loan losses. Management's
determination of the appropriate level of the allowance is based on an ongoing
analysis of credit quality and loss potential in the loan portfolio, change in
the composition and risk characteristics of the loan portfolio, and the
anticipated influence of national and local economic conditions. The adequacy of
the allowance for loan losses is reviewed quarterly and adjustments are made as
considered necessary.
The Company recorded a $258,000 provision for loan losses for the first nine
months of 1999, compared to $195,000 for the same period in 1998. This increase
reflects the acquisition of Capital State and continued growth of the loan
portfolio. Net loan charge-offs for the first nine months of 1999 were $118,000
as compared to $45,000 over the same period of 1998. At September 30, 1999, the
allowance for loan losses totaled $1,511,000 or 0.8% of loans, net of unearned
income, compared to $1,372,000 or 1.0% of loans, net of unearned income at
December 31, 1998. See Note 6 of the notes to the accompanying consolidated
financial statements for an analysis of the activity in the Company's allowance
for loan losses for the nine month periods ended September 30, 1999 and 1998 and
for the year ended December 31, 1998.
As illustrated in Table II below, the Company's non-performing assets and loans
past due 90 days or more and still accruing interest has decreased from $749,000
at December 31, 1998 to $670,000 at September 30, 1999.
Table II -
Summary of Past Due Loans and Non-Performing Assets
(in thousands of dollars)
September 30, December 31,
------------------------ -------------
1999 1998 1998
----------- ----------- -------------
Loans contractually past due
90 days or more still
accruing interest $256 $327 $355
Non-performing assets:
Non-accruing loans 296 140 297
Repossessed assets 33 - 12
Foreclosed properties 85 19 85
----------- ----------- -------------
$670 $486 $749
=========== =========== =============
Percentage of total loans 0.4% 0.4% 0.5%
=========== =========== =============
19
Noninterest Income and Expense
Total other income increased approximately $155,000 or 34.8% to $600,000
during the first nine months of 1999, as compared to the first nine months of
1998. The most significant item contributing to this increase was service fees
on deposits, which increased $132,000 from approximately $312,000 to $444,000,
or 42.3%. This resulted primarily from a change in SBVNB's deposit fee structure
and improved realization of fee income at Capital State during the first three
quarters of 1999. Management expects the Company will achieve similar levels of
service fee income throughout the remainder of 1999.
Total noninterest expense increased approximately $1,324,000 or 40.5% to
$4,596,000 during the first nine months of 1999 as compared to $3,272,000 for
the first nine months of 1998. This increase resulted due to only two quarters
of Capital State's noninterest expenses being included in consolidated
noninterest expense for the first nine months of 1998 due to its acquisition on
April 1, 1998, one time acquisition costs as well as operating costs associated
with the Greenbrier County branches acquired April 22, 1999, and one time start
up costs related to the organization and opening of SVNB.
FINANCIAL CONDITION
Total assets of the Company were $284,193,000 at September 30, 1999, compared to
$192,999,000 at December 31, 1998, representing a 47.3% increase. Table III
below serves to illustrate significant changes in the Company's financial
position between December 31, 1998 and September 30, 1999.
Table III -
Summary of Significant Changes in
Company's Financial Position
(in thousands of dollars)
Increase
Balance (Decrease) Balance
December 31,----------------- September 30,
1998 Amount Percent 1999
----------- -------- -------- -------------
Assets
Securities available
for sale $ 31,410 $45,590 145.1% $ 77,000
Loans, net of
unearned income 144,142 35,895 24.9% 180,037
Liabilities
Noninterest bearing
deposits $ 11,455 7,555 66.0% $ 19,010
Interest bearing
deposits 134,918 68,698 50.9% 203,616
Short-term borrowings 4,644 10,168 218.9% 14,812
Long-term borrowings 16,469 4,249 25.8% 20,718
The increase in securities available for sale resulted primarily from the
purchase of U.S. government agency securities and mortgage backed securities
during the first nine months of 1999. Purchases of these securities were made
primarily to invest a significant portion of the $35.1 million in net funds the
Company realized in conjunction with the acquisition of three branch banks in
Greenbrier County, West Virginia in April 1999, and as part of South Branch's
ongoing asset/liability management strategy, which strives to minimize interest
rate risk while enhancing the financial position of the Company.
Growth in both noninterest bearing and interest bearing deposits reflects the
approximate $47.2 million in deposits acquired with the Greenbrier County
branches and SVNB's deposit growth to $25.8 million at September 30, 1999
following the new Bank's opening in May 1999.
20
Growth in loans during the first nine months of 1999, occurring primarily in the
commercial and real estate portfolios, was funded principally by short-and
long-term borrowings from the Federal Home Loan Bank and by deposits acquired
with the Greenbrier County branches.
Refer to Notes 4, 5 and 8 of the notes to the accompanying consolidated
financial statements for additional information with regard to changes in the
composition of the South Branch's securities, loans and deposits between
September 30, 1999 and December 31, 1998.
LIQUIDITY
Liquidity reflects the Company's ability to ensure the availability of adequate
funds to meet loan commitments and deposit withdrawals, as well as provide for
other transactional requirements. Liquidity is provided primarily by funds
invested in cash and due from banks, Federal funds sold, securities and interest
bearing deposits with other banks maturing within one year, and lines of credit
with the Federal Home Loan Bank which totaled approximately $52.5 million at
September 30, 1999 versus $45.1 million at December 31, 1998. Further enhancing
the Company's liquidity is the availability as of September 30, 1999 of
additional securities totaling $77 million classified as available for sale in
response to an unforeseen need for liquidity.
The Company's liquidity position is monitored continuously to ensure that
day-to-day as well as anticipated funding needs are met. Management is not aware
of any trends, commitments, events or uncertainties that have resulted in or are
reasonably likely to result in a material change to the South Branch's
liquidity.
CAPITAL RESOURCES
Maintenance of a strong capital position is a continuing goal of Company
management. Through management of its capital resources, the Company seeks to
provide an attractive financial return to its shareholders while retaining
sufficient capital to support future growth. Shareholders' equity at September
30, 1999 totaled $24,285,000 compared to $24,145,000 at December 31, 1998.
See Note 9 of the notes to the accompanying consolidated financial statements
for information regarding regulatory restrictions on the Company's and its
subsidiaries' capital.
YEAR 2000
The Year 2000 Issue is the result of many existing computer programs and other
date dependent electronic devices using only the last two digits, as opposed to
four digits, to indicate the year. Such computer systems and devices may be
unable to recognize a year that begins with 20XX instead of 19XX. If not
corrected, the computer programs and devices could cause systems to fail or
other computer errors, leading to possible disruptions in operations or creation
of erroneous results. South Branch recognizes the significant potential risk
associated with the Year 2000 Issue and, in a Company-wide effort, is taking
steps to ensure that its internal systems are secure from such failure.
21
The Company's Year 2000 Plan ("Plan") addresses all its systems, software,
hardware, and infrastructure components. The Plan identifies and addresses
"Mission Critical" and "Non-mission Critical" components for Information
Technology ("IT") systems and Non-information Technology ("Non-IT") systems. IT
includes, for example, systems that service loan and deposit customers. Non-IT
systems include security systems, elevators, utilities and voice/data
communications. An application, system, or process is deemed "Mission Critical"
if it is vital to the successful continuance of a core business activity.
South Branch's Plan follows a five phase approach recommended by bank regulatory
authorities. These phases are: Awareness, Assessment, Renovation,
Testing/Validation, and Implementation. During the Awareness Phase, management
gathered information and appointed a project steering committee to coordinate
the Company's Year 2000 efforts. In the Assessment Phase, South Branch
identified its Mission Critical IT and Non-IT systems and performed an inventory
of all systems, software, hardware, equipment and components that potentially
could be affected by the Year 2000 issue. The Renovation Phase involves
implementing program changes and new components, where applicable, to
accommodate identified Year 2000 issues. In the Testing/Validation Phase, the
Company is testing renovated applications and components to ensure they are Year
2000 compliant. During the Implementation Phase, applications, systems and other
components are fine-tuned and final programs and components are placed into
operation.
South Branch's estimated progress as of September 30, 1999 towards meeting the
Plan's goals for both IT and Non-IT systems by phase are as follows:
Percent Completion
Phase Complete Date
------------------- -------- ----------
Mission Critical
Awareness 100% 06/30/1998
Assessment 100% 09/30/1998
Renovation 100% 06/30/1999
Testing/Validation 100% 06/30/1999
Implementation 100% 06/30/1999
Non-mission Critical
Awareness 100% 06/30/1998
Assessment 100% 09/30/1998
Renovation 100% 06/30/1999
Testing/Validation 100% 06/30/1999
Implementation 100% 06/30/1999
South Branch depends on various third-party vendors, suppliers, and service
providers, and will be dependent on their continued service in order to avoid
business interruptions. Any interruption in a third party's ability to provide
goods and services, such as issues with telecommunication links and providers of
electricity, could interrupt South Branch's ability to meet its customer's
needs. South Branch has identified several third-party relationships considered
Mission Critical, and is presently working with each to test transactions and/or
interfaces between its processors, obtain appropriate information from each
party, or assess each party's readiness with regard to the Year 2000 Issue.
Identifiable costs for the Company's Year 2000 project during 1999 approximated
$20,000, substantially all of which were capital expenditures for the
replacement of computers and other date dependent electronic devices. The cost
to complete the Plan is not expected to exceed $20,000.
22
Major business risks associated with the Year 2000 problem include, but are not
limited to, infrastructure failures, disruptions to the economy in general,
excessive cash withdrawal activity, closure of government offices and clearing
houses, and increased problem loans and credit losses in the event that
borrowers fail to properly respond to the problem. These risks, along with the
unlikely risk of South Branch failing to adequately complete the remaining
phases of its Plan and the resulting possible inability to properly process
business transactions expose the Company to loss of revenues, litigation, and
asset quality deterioration.
The Year 2000 problem is unique in that it has never previously occurred; thus,
it is not possible to completely foresee or quantify the overall or any specific
financial or operational impacts to the Company or to third parties which
provide Mission Critical services to the Company. South Branch has developed
comprehensive Year 2000 contingency plans in the event that Mission Critical
third party vendors or other third parties fail to adequately address Year 2000
issues. Such plans principally involve internal remediation or utilization of
alternative vendors.
23
PART II. OTHER INFORMATION
Item 6(a). Exhibits required by Item 601 of Regulation S-B
Exhibit 11. Statement re: Computation of Earnings per Share
Exhibit 27. Financial Data Schedule - electronic filing only
Item 6(b). Reports on Form 8-K
On July 16, 1999, South Branch announced that it had entered into an
Agreement and Plan of Merger with Potomac Valley Bank in Petersburg, West
Virginia.
24
SIGNATURES
Pursuant to the requirements 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.
SOUTH BRANCH VALLEY BANCORP, INC.
(Registrant)
By: /s/ H. Charles Maddy, III
---------------------------
H. Charles Maddy, III,
President and
Chief Executive Officer
By: /s/ Robert S. Tissue
-------------------------
Robert S. Tissue,
Vice President and
Chief Financial Officer
Date: November 12, 1999
-------------------
25
EXHIBIT 11.
Statement re: Computation of Earnings per Share
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Numerator:
Net income $ 600,011 $ 504,720 $1,462,146 $1,302,772
========== ========== ========== ==========
Denominator:
Denominator for basic
earnings per share --
weighted average
common shares
outstanding 591,292 592,292 591,292 534,241
Effect of dilutive
securities:
Officers' stock
option plan - - 43 -
---------- ---------- ---------- ----------
Denominator for
diluted earnings
per share -
weighted average
common shares
outstanding and
assumed conversions 591,292 592,292 591,335 534,241
========== ========== ========== ==========
Basic earnings per share $ 1.01 $ 0.85 $ 2.47 $ 2.44
========== ========== ========== ==========
Diluted earnings per share $ 1.01 $ 0.85 $ 2.47 $ 2.44
========== ========== ========== ==========
9 0000811808 South Branch Valley Bancorp, Inc. 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 7,706,167 848,458 4,140,958 0 77,000,270 0 0 180,037,207 (1,511,221) 284,193,315 222,626,010 14,811,880 1,751,808 20,718,483 0 0 1,501,018 22,784,116 284,193,315 10,497,751 2,551,266 325,096 13,374,113 5,693,047 6,840,059 6,534,054 257,500 0 4,595,743 2,280,546 2,280,546 0 0 1,462,146 2.47 2.47 3.9 296,000 256,000 0 2,251,000 1,371,886 149,068 30,903 1,511,221 1,511,221 0 54,000