U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10 - QSB/A
(Amendment No. 1)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1998
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Commission File Number 0-16587
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South Branch Valley Bancorp, Inc.
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(Exact name of small business issuer as
specified in its charter)
West Virginia 55-0672148
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
310 North Main Street
Moorefield, West Virginia 26836
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(Address of principal executive offices) (Zip Code)
(304) 538-1000
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(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
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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 4, 1999
Transitional Small Business Disclosure Format (Check one):
Yes No X
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This report contains 4 pages.
PART I, ITEM 2. - Management's Discussion and Analysis of Financial Condition
and Results of Operations is amended by the addition of a section entitled "Year
2000".
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.
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, 1998 towards meeting the
Plan's goals for both IT and Non-IT systems by phase are as follows:
Estimated Estimated
Percent Completion
Phase Complete Date
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Mission Critical
Awareness 100% 06/30/1998
Assessment 100% 09/30/1998
Renovation 50% 06/30/1999
Testing/Validation 50% 06/30/1999
Implementation 50% 06/30/1999
Non-mission Critical
Awareness 100% 06/30/1998
Assessment 100% 09/30/1998
Renovation 50% 06/30/1999
Testing/Validation 50% 06/30/1999
Implementation 50% 06/30/1999
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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 1998 approximated
$50,000, 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 $150,000.
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 will develop 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 will involve internal remediation or identifying alternative
vendors.
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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
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H. Charles Maddy, III,
President and
Chief Executive Officer
By: /s/ Robert S. Tissue
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Robert S. Tissue,
Vice President and
Chief Financial Officer
Date: November 15, 1999
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