SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
of 1934
For Quarterly Period Ended June 30, 2004
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission File No. 000-50151
Allegheny Bancshares, Inc.
(Exact name of registrant as specified in its charter)
West Virginia 22-3888163
- ----------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 North Main Street
P. O. Box 487
Franklin, West Virginia 26807
(Address of principal executive offices, including zip code)
(304) 358-2311
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes No X
---- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Stock, par value - $1.00
897,129 shares outstanding as of July 23, 2004
1
ALLEGHENY BANCSHARES, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements 2
Unaudited Consolidated Statements of Income - Six
Months Ended June 30, 2004 and 2003 2
Unaudited Consolidated Statements of Income - Three
Months Ended June 30, 2004 and 2003 3
Consolidated Balance Sheets - June 30, 2004
(Unaudited) and December 31, 2003 (Audited) 4
Unaudited Consolidated Statements of Changes in
Stockholders' Equity - Six Months Ended June 30, 2004
and 2003 5
Unaudited Consolidated Statements of Cash Flows - Six
Months Ended June 30, 2004 and 2003 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 14
Item 4. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8K 15
SIGNATURES 16
2
Part I. Financial Information
Item 1. Consolidated Financial Statements
Allegheny Bancshares, Inc.
Consolidated Statements of Income
(In thousands, except for per share information)
(Unaudited)
Six Months Ended
June 30, June 30,
2004 2003
Interest and Dividend Income:
Loans and fees $ 3,860 $ 3,784
Investment securities - taxable 323 322
Investment securities - nontaxable 361 399
Deposits and federal funds sold 8 20
-------- -------
Total Interest and Dividend Income 4,552 4,525
-------- -------
Interest Expense:
Deposits 954 1,302
Borrowings 83 21
-------- -------
Total Interest Expense 1,037 1,323
-------- -------
Net Interest Income 3,515 3,202
Provision for loan losses 90 60
-------- -------
Net interest income after provision
for loan losses 3,425 3,142
-------- -------
Noninterest Income:
Service charges on deposit accounts 108 120
Other income 97 89
Gain on security transactions 46 4
-------- -------
Total Noninterest Income 251 213
-------- -------
Noninterest Expense:
Salaries and benefits 1,084 1,000
Occupancy expenses 121 111
Equipment expenses 237 210
Other expenses 621 572
-------- -------
Total Noninterest Expenses 2,063 1,893
-------- -------
Income before Income Taxes 1,613 1,462
Income Tax Expense 486 430
-------- -------
Net Income $ 1,127 $ 1,032
======== =======
Earnings Per Share
Net income $ 1.25 $ 1.15
======== =======
Weighted Average Shares Outstanding 898,497 899,327
======== =======
The accompanying notes are an integral part of these statements.
3
Part I. Financial Information
Item 1. Consolidated Financial Statements
Allegheny Bancshares, Inc.
Consolidated Statements of Income
(In thousands, except for per share information)
(Unaudited)
Three Months Ended
June 30, June 30,
2004 2003
Interest and Dividend Income:
Loans and fees $ 1,938 $ 1,930
Investment securities - taxable 151 162
Investment securities - nontaxable 177 197
Deposits and federal funds sold 5 14
-------- -------
Total Interest and Dividend Income 2,271 2,303
-------- -------
Interest Expense:
Deposits 472 643
Borrowings 41 16
-------- -------
Total Interest Expense 513 659
-------- -------
Net Interest Income 1,758 1,644
Provision for loan losses 45 30
-------- -------
Net interest income after provision
For loan losses 1,713 1,614
-------- -------
Noninterest Income:
Service charges on deposit accounts 60 63
Other income 47 56
Gain on security transactions 36 2
-------- -------
Total Noninterest Income 143 121
-------- -------
Noninterest Expense:
Salaries and benefits 538 506
Occupancy expenses 60 56
Equipment expenses 121 109
Other expenses 319 295
-------- -------
Total Noninterest Expenses 1,038 966
-------- -------
Income before Income Taxes 818 769
Income Tax Expense 248 232
-------- -------
Net Income $ 570 $ 537
======== =======
Earnings Per Share
Net income $ .63 $ .60
======== =======
Weighted Average Shares Outstanding 898,006 899,323
======== =======
The accompanying notes are an integral part of these statements.
4
Allegheny Bancshares, Inc.
Consolidated Balance Sheets
(In thousands)
June 30, 2004 December 31, 2003
Unaudited Audited
ASSETS
Cash and due from banks $ 2,571 $ 2,975
Federal funds sold 1 684
Interest bearing deposits in banks 219 240
Investment securities available for sale 31,606 36,858
Investment securities held to maturity 500 500
Loans receivable, net of allowance for loan
losses of $1,038 and $1,052 respectively 116,712 110,516
Bank premises and equipment, net 4,181 4,213
Other assets 1,803 1,771
-------- --------
Total Assets $ 157,593 $ 157,757
======== ========
LIABILITIES
Deposits
Noninterest bearing demand $ 14,593 $ 15,106
Interest bearing
Demand 18,215 18,446
Savings 26,462 26,632
Time deposits over $100,000 19,026 18,689
Other time deposits 48,990 49,680
-------- --------
Total Deposits 127,286 128,553
Accrued expenses and other liabilities 259 806
Short-term borrowings 2,915 1,507
Long-term debt 3,667 3,838
-------- --------
Total Liabilities 134,127 134,704
-------- --------
STOCKHOLDERS' EQUITY
Common stock; $1 par value, 2,000,000 shares
authorized, 900,000 issued 900 900
Additional paid in capital 900 900
Retained earnings 21,746 20,619
Accumulated other comprehensive income 14 649
Treasury stock (at cost, 2,369 shares
in 2004 and 417 shares in 2003) (94) (15)
-------- ---------
Total Stockholders' Equity 23,466 23,053
-------- --------
Total Liabilities and
Stockholders' Equity $ 157,593 $ 157,757
======== ========
The accompanying notes are an integral part of these statements.
5
Allegheny Bancshares, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
Additional Other
Common Paid In Retained Comprehensive Treasury
Total Stock Capital Earnings Income Stock
Balance, December 31,
2003 $23,053 $ 900 $ 900 $ 20,619 $ 649 $ (15)
Comprehensive Income
Net income 1,127 1,127
Change in
unrealized
gain on
available for
sale securities,
net of income
tax effect
of $(384) (635) (635)
-------
Total Comprehensive
Income 492
Purchase of
treasury stock (79) (79)
------ ------ ------ ------- -------- -------
Balance, June 30,
2004 $23,466 $ 900 $ 900 $ 21,746 $ 14 $ (94)
====== ====== ====== ======= ======== =======
Balance, December 31,
2002 $21,927 $ 900 $ 900 $ 19,238 $ 889 $ 0
Comprehensive Income
Net income 1,032 1,032
Change in
unrealized
gain on
available for
sale securities,
net of income
tax effect
of $121 190 190
------
Total Comprehensive
Income 1,222
Purchase of
treasury stock (24) (24)
------ ------ ------ ------- -------- -------
Balance, June 30,
2003 $ 23,125 $ 900 $ 900 $ 20,270 $ 1,079 $ (24)
======= ====== ===== ======= ======== =======
The accompanying notes are an integral part of these statements.
6
Allegheny Bancshares, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2004 2003
Cash Flows from Operating Activities:
Net income $ 1,127 $ 1,032
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 90 60
Depreciation and amortization 177 157
Net amortization of securities 51 49
Gain on sale of securities (46) (4)
Gain on sale of equipment (6) (3)
Net change in:
Accrued income 23 29
Other assets (56) (307)
Accrued expense and other liabilities (163) 35
-------- ------
Net Cash Provided by Operating Activities 1,197 1,048
------- ------
Cash Flows from Investing Activities:
Net change in federal funds sold 683 (4,350)
Net change in interest bearing deposits in banks 21 3
Proceeds from sales, calls and maturities
of securities available for sale 8,021 5,157
Purchase of securities available for sale (3,792) (6,383)
Net increase in loans (6,286) (4,142)
Proceeds from sale of bank premises and equipment 6 3
Purchase of bank premises and equipment (145) (367)
------- -------
Net Cash Used in Investing Activities (1,492) 10,079)
------- ------
Cash Flows from Financing Activities:
Net change in:
Demand and savings deposits (914) 2,560
Time deposits (353) 3,321
Proceeds from borrowings 1,408 3,824
Curtailments of borrowings (171) (361)
Purchase of treasury stock (79) (24)
------- ------
Net Cash Provided by (Used in) Financing Activities (109) 9,320
------- ------
Cash and Cash Equivalents
Net increase (decrease) in cash and cash equivalents (404) 289
Cash and Cash Equivalents, beginning of period 2,975 3,094
------- ------
Cash and Cash Equivalents, end of period $ 2,571 $ 3,383
======= ======
Supplemental Disclosure of Cash Paid During the
Period for:
Interest $ 1,049 $ 1,347
Income taxes 474 $ 334
The accompanying notes are an integral part of these statements.
7
ALLEGHENY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ACCOUNTING PRINCIPLES:
The financial statements conform to accounting principles generally
accepted in the United States of America and to general industry practices. In
the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position as of June 30, 2004, and the results of
operations for the periods ended June 30, 2004 and 2003. The notes included
herein should be read in conjunction with the notes to the financial statements
included in the 2003 annual report to stockholders of Allegheny Bancshares, Inc.
NOTE 2 INVESTMENT SECURITIES:
The amortized costs of investment securities and their approximate fair
values at June 30, 2004 and December 31, 2003 follows (in thousands):
June 30, 2004 December 31, 2003
Amortized Fair Amortized Fair
Cost Value Cost Value
Securities available for sale:
U.S. Treasury and agency
obligations $ 5,986 $ 6,096 $ 7,030 $ 7,331
State and municipal 17,132 17,277 17,892 18,693
Mortgage-backed securities 8,468 8,233 10,897 10,834
------- ------- ------ -------
Total $ 31,586 $ 31,606 $35,819 $ 36,858
======= ======= ====== =======
Securities held to maturity:
U.S. Treasury and agency
Obligations $ 500 $ 503 $ 500 $ 513
======= ======= ====== =======
8
ALLEGHENY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 LOANS:
Loans outstanding are summarized as follows (in thousands):
June 30, December 31,
2004 2003
Real estate loans $ 55,952 $54,144
Commercial and industrial loans 47,316 42,857
Loans to individuals, primarily
collateralized by autos 11,108 11,683
All other loans 3,374 2,884
------- ------
Total Loans 117,750 111,568
Less allowance for loan losses 1,038 1,052
------- ------
Net Loans Receivable $116,712 $110,516
======= =======
NOTE 4 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses for the six
months ended June 30, 2004 and 2003 follows (in thousands):
Six Months Ended
June 30,
2004 2003
Balance, beginning of period $ 1,052 $ 1,028
Provision charged to operating expenses 90 60
Recoveries of loans charged off 13 18
Loans charged off (117) (65)
------- -------
Balance, end of period $ 1,038 $ 1,041
======= =======
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
The following discussion contains statements that refer to future
expectations, contain projections of the results of operations or of financial
condition or state other information that is "forward-looking."
"Forward-looking" statements are easily identified by the use of words such as
"could," "could anticipate," "estimate," "believe," and similar words that refer
to the future outlook. There is always a degree of uncertainty associated with
"forward-looking" statements. The Company's management believes that the
expectations reflected in such statements are based upon reasonable assumptions
and on the facts and circumstances existing at the time of these disclosures.
Actual results could differ significantly from those anticipated.
Many factors could cause the Company's actual results to differ materially
from the results contemplated by the forward-looking statements. Some factors,
which could negatively affect the results, include:
o General economic conditions, either nationally or within the Company's
markets, could be less favorable than expected;
o Changes in market interest rates could affect interest margins and
profitability;
o Competitive pressures could be greater than anticipated; and
o Legal or accounting changes could affect the Company's results.
Overview
Net income increased from $1,032,000 for the six months ended June 30,
2003 to $1,127,000 for the six months ended June 30, 2004 and earnings per share
increased from $1.15 to $1.25. The increase in earnings was a result of the
increase in net interest income offset somewhat by increased operating expenses.
Net Interest Income
The Company's taxable equivalent net interest income increased from
$3,408,000 for the six months ended June 30, 2003 to $3,700,000 for the six
months ended June 30, 2004, due to the combination of net growth of earning
assets and decreased cost of funds, offset by lower asset yields. The Company's
net yield on earnings assets for 2004 was 4.93% compared to 4.75% for 2003 as
the yield on earning assets declined less than the cost of funds. The yield on
earning assets declined during the period analyzed due to the repricing of
maturing funds at lower current rates. Table I shows the average balances for
interest bearing assets and liabilities, the rates earned on earning assets and
the rates paid on deposits and borrowed funds.
Allowance for Loan Losses and Provision for Loan Losses
The provision for loan losses were $90,000 and $60,000 for the six months
ended June 30, 2004 and 2003, respectively. The allowance for loan losses
("ALL") was $1,038,000 (.88% of loans) at the end of the first half of 2004
compared with $1,052,000 (.94% of loans) at December 31, 2003. The ALL is
evaluated on a regular basis by management and is based upon management's
periodic review of the collectibility of the loans, industry historical
experience, the nature and volume of the loan portfolio, adverse situations that
may affect the borrower's ability to repay, estimated value of any underlying
collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision
as more information becomes available. The calculation of the ALL is considered
to be a critical accounting policy.
10
Noninterest Income
Noninterest income was $251,000 and $213,000 for the six months ended June
30, 2004 and 2003, respectively. Noninterest income (excluding security gains
and losses) as a percentage of average assets decreased from .28% to .26%
(annualized). Service charges decreased from $120,000 for the six months ended
June 30, 2003 to $108,000 for the six months ended June 30, 2004, as a result of
decreased service activity. A portion of the increase in other noninterest
income was attributable to ATM fees and commissions earned on insurance
premiums.
Noninterest Expenses
Noninterest expenses were $2,063,000 and $1,893,000 for the six months
ended June 30, 2004 and 2003, respectively. Noninterest expenses as a percentage
of average assets was 2.63% (annualized) for the six months ended June 30, 2004,
up from 2.52% for the same period of 2003. Salaries and benefits increased due
to an increase in the number of employees, as well as normal salary increases.
Equipment expenses, including software maintenance contract expense and
depreciation expense, increased as a result of the final stages of a computer
system upgrade. Directors' fees, which are included in other expenses, increased
due to an increase in the number of meetings and the formation of new
committees.
Income Tax Expense
Income tax expense equaled 30.13% of income before income taxes for the
six months ended June 30, 2004 compared with 29.41% for the six months ended
June 30, 2003.
Federal Funds Sold
Federal funds sold were $1,000 and $684,000 as of June 30, 2004 and
December 31, 2003, respectively. This decrease was primarily due to an increase
in loan volume.
Investments
Investments decreased from $37,383,000 at December 31, 2003 to $32,106,000
at June 30, 2004 as a result of funding the increase in the loan portfolio.
Loans
Total loans increased from $111,568,000 at December 31, 2003 to
$117,750,000 at June 30, 2004. A schedule of loans by type is shown in Note 3 to
the financial statements. Approximately 81% of the loan portfolio is secured by
real estate.
Loan Portfolio Risk Factors
Loans accounted for on a nonaccrual basis were $22,000 at June 30, 2004
(.02% of total loans). Accruing loans which are contractually past due 90 days
or more as to principal or interest totaled $863,000 (.73% of total loans).
Loans are placed in a nonaccrual status when management has information that
indicates that principal or interest may not be collectable. Management has not
identified any additional loans as "troubled debt restructurings" or "potential
problem loans."
Deposits
The Company's deposits decreased $1,267,000 during the first half of 2004
to $127,286,000 at June 30, 2004. Anticipating a higher interest rate
environment, competition for deposits increased. Consequently, a small portion
of interest sensitive deposits matured and were not renewed. A schedule of
deposits by type is shown in the balance sheets. Time deposits of $100,000 or
more were 14.95% and 14.54% of total deposits at June 30, 2004 and December 31,
2003, respectively.
11
Short-Term Borrowings
Short-term borrowings were $2,915,000 and $1,507,000 as of June 30, 2004
and December 31, 2003, respectively. This increase was primarily due to the
purchase of $1,200,000 of Fed Funds on June 30, 2004 for temporary funding
needs.
Capital
Capital as a percentage of total assets was 14.85% at June 30, 2004 and
significantly exceeded regulatory requirements. The Company is considered to be
well capitalized under the regulatory framework for prompt corrective actions.
Uncertainties and Trends
Management is not aware of any known trends, events or uncertainties that
will have or that are reasonably likely to have a material effect on liquidity,
capital resources or operations. Additionally, management is not aware of any
current recommendations by the regulatory authorities which, if they were to be
implemented, would have such an effect.
Liquidity and Interest Sensitivity
At June 30, 2004, the Company had liquid assets of approximately $2.6
million in the form of cash and due from banks and federal funds sold.
Management believes that the Company's liquid assets are adequate at June 30,
2004. Additional liquidity may be provided by the growth in deposit accounts and
loan repayments. In the event the Company would need additional funds, it has
the ability to purchase federal funds and borrow under established lines of
credit of $17.1 million.
At June 30, 2004, the Company had a negative cumulative Gap Rate
Sensitivity Ratio of -39.79% for the one year repricing period. This ratio does
not reflect the historical movement of funds during varying interest rate
environments. Adjusted for historical repricing trends in response to interest
rate changes, the adjusted Gap Ratio is -1.33%. This generally indicates that
net interest income would remain stable in both a declining and increasing
interest rate environment. Management constantly monitors the Company's interest
rate risk and has decided that the current position is an acceptable risk for a
growing community bank operating in a rural environment. Table II shows the
Company's interest sensitivity.
12
TABLE I
Allegheny Bancshares, Inc.
Net Interest Margin Analysis
(On a fully taxable equivalent basis)(Dollar amounts in thousands)
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
------------- -------------
Average Income/ Average Income/
Balance Expense Rates Balance Expense Rates
Interest Income
Loans 1 $ 113,899 $ 3,860 6.78% $ 106,182 $ 3,784 7.13%
Federal funds sold 1,277 5 .78% 3,067 18 1.11%
Interest bearing
deposits 230 2 1.74% 114 2 3.50%
Investments
Taxable 17,274 324 3.75% 14,856 322 4.27%
Nontaxable 2 17,308 546 6.31% 19,152 605 6.32%
-------- ------ ----- -------- ------ ----
Total Earning Assets 149,988 4,737 6.32% 143,371 4,731 6.60%
------- ------- ----- -------- ------ -----
Interest Expense
Demand deposits 18,127 74 .82% 16,264 87 1.07%
Savings 26,586 99 .74% 27,671 157 1.13%
Time deposits 67,961 781 2.30% 69,084 1,055 3.05%
Short-term
borrowings 1,905 15 1.57% 1,222 12 1.96%
Long-term debt 3,758 68 3.62% 642 12 3.74%
-------- ------- ----- ------- ------ -----
Total Interest Bearing
Liabilities $ 118,337 $ 1,037 1.75% $ 114,883 $ 1,323 2.30%
-------- ------- ----- -------- ------ -----
Net Interest Margin 1 3,700 3,408
======= ======
Net Yield on Interest
Earning Assets 4.93% 4.75%
===== =====
1 Interest on loans includes loan fees
2 An incremental tax rate of 34% was used to calculate the tax equivalent
income
13
TABLE II
Allegheny Bancshares, Inc.
Interest Sensitivity Analysis
June 30, 2004
(In Thousands of Dollars)
0-3 4-12 1-5 Over 5 Total
Months Months Years Years
Uses of Funds:
Loans:
Commercial $ 9,278 $ 9,645 $ 18,800 $12,640 $ 50,363
Consumer 631 838 8,598 1,078 11,145
Real estate 6,427 4,276 10,034 35,215 55,952
Credit card 290 290
Federal funds sold 1 1
Interest bearing deposits 219 219
Investment securities 647 1,446 11,462 18,551 32,106
------- ------- ------ ------- ------
Total 17,493 16,205 48,894 67,484 150,076
------ ------- ------ ------- -------
Sources of Funds:
Deposits:
Interest bearing demand 18,215 18,215
Savings 26,462 26,462
Time deposits over
$100,000 3,926 7,968 7,132 19,026
Other time deposits 16,363 17,215 14,798 614 48,990
Short-term borrowings 1,451 1,464 2,915
Long-term debt 86 264 1,535 1,782 3,667
------- ------- ------ ------- ------
Total 66,503 26,911 23,465 2,396 119,275
------- ------- ------ ------- -------
Discrete Gap (49,010) (10,706) 25,429 65,088 30,801
Cumulative Gap (49,010) (59,716) (34,287) 30,801
Ratio of Cumulative Gap
To Total Earning Assets -32.66% -39.79% -22.84% 20.52%
Table II reflects the earlier of the maturity or repricing dates for various
assets and liabilities at June 30, 2004. In preparing the above table, no
assumptions are made with respect to loan prepayments or deposit run offs. Loan
principal payments are included in the earliest period in which the loan matures
or can be repriced. Principal payments on installment loans scheduled prior to
maturity are included in the period of maturity or repricing.
14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As a result of the enactment of the Sarbanes-Oxley Act of 2002, issuers
that file periodic reports under the Securities Exchange Act of 1934 (the "Act")
are now required to include in those reports certain information concerning the
issuer's controls and procedures for complying with the disclosure requirements
of the federal securities laws. Under rules adopted by the Securities and
Exchange Commission effective August 29, 2002, these disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports it
files or submits under the Act, is communicated to the issuer's management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding disclosure.
We have established disclosure controls and procedures to ensure that
material information related to Allegheny Bancshares, Inc. and its subsidiary is
made known to our principal executive officer and principal financial officer on
a regular basis, in particular during the periods in which our quarterly and
annual reports are being prepared. These disclosure controls and procedures
consist principally of communications between and among the Chief Executive
Officer and the Chief Financial Officer to identify any new transactions,
events, trends, contingencies or other matters that may be material to the
Company's operations. As required, we have evaluated the effectiveness of these
disclosure controls and procedures as of the end of the period covered by this
quarterly report. Based on this evaluation, the Company's management, including
the Chief Financial Officer, concluded that such disclosure controls and
procedures were operating effectively as designed as of the date of such
evaluation.
Changes in Internal Controls
During the period reported upon, there were no significant changes in the
Company's internal controls pertaining to its financial reporting and control of
its assets or in other factors that could significantly affect these controls.
Part II. Other Information
Item 1. Legal Proceedings -
Not Applicable
Item 2. Changes in Securities -
Not Applicable
Item 3. Defaults Upon Senior Securities -
Not Applicable
15
Item 4. Submission of Matters to a Vote of Security Holders -
At the Annual Shareholders Meeting held on April 12, 2004, the officers
and directors were introduced and the following directors whose terms had
expired, Richard W. Homan, William McCoy, Jr., Jerry D. Moore, and Dolan Irvine
were considered for election. The directors above were duly elected for
three-year terms commencing in 2004 with voting results as follows: 665,983 of
667,363 shares represented voted "for", 10 of 667,363 shares represented voted
"against". The following board members were retained for their respective
terms: Thomas J. Bowman, Roger D. Champ, John E. Glover, Carole H. Hartman,
John D. Heavner, William A. Loving, Jr. and Richard C. Phares. An amendment to
the articles of incorporation to include the provisions for staggered terms of
directors, which are currently in the bylaws of Allegheny, was approved with
the voting results as follows: 660,313 of 667,363 shares represented voted
"for", 1,300 of 667,363 shares represented voted "against". An amendment to
Allegheny's articles of incorporation to provide for a waiver of liability of
directors under certain circumstances, as permitted by the West Virginia
Business Corporation Act, was approved with the voting results as follows:
648,928 of 667,363 shares represented voted "for", 3,300 of 667,363 shares
represented voted "against". S.B. Hoover & Company LLP was selected as
Independent External Auditors for 2004 with the voting results as follows:
664,953 of 667,363 shares represented voted "for", 10 of 667,363 shares
represented voted "against".
Item 5. Other Information -
Not Applicable
Item 6. Exhibits and Reports on 8-K -
a. Exhibits
The following Exhibits are filed as part of this Form 10-Q
No. Description
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (filed
herewith).
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (filed
herewith).
32 Certifications of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (filed herewith).
The following exhibit is incorporated by reference to the Exhibits to
Allegheny Bancshares, Inc. Form 10-QSB filed May 14, 2003.
No. Description Exhibit Number
3.1 Articles of Incorporation - Allegheny Bancshares, Inc. E2
The following exhibit is incorporated by reference to the Exhibits to
Allegheny Bancshares, Inc. Form 10-KSB filed March 26, 2004.
No. Description Exhibit Number
3.2 Bylaws of Allegheny Bancshares, Inc. 3.3
b. Reports on 8K
No reports were filed for the quarter ended June 30, 2004.
16
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant causes this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLEGHENY BANCSHARES, INC.
By: /s/ WILLIAM A. LOVING
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William A. Loving, Jr.
Executive Vice President and
Chief Executive Officer
By: /s/ CLAUDIA L. ACORD
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Claudia L Acord
Chief Financial Officer
Date: August 13, 2004