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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT of 1934
For the Fiscal Year Ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to ____________.
Commission File No. 1-13652
First West Virginia Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
West Virginia 55-6051901
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1701 Warwood Avenue
Wheeling, West Virginia 26003
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(Address of principal executive offices)
Registrant's telephone number, including area code: (304) 277-1100
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock $5.00 Par Value American Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act: None
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 than the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days. [x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant, calculated by reference to the closing sale price of First West
Virginia Bancorp's common stock on the AMEX on March 22, 2002, was $22,106,480.
(Registrant has assumed that all of its executive officers and directors are
affiliates. Such assumption shall not be deemed to be conclusive for any other
purpose):
The number of shares outstanding of the issuer's common stock as of March 22,
2002:
Common Stock, $5.00 Par Value 1,538,443 shares
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The total number of pages are 106 ; Exhibit Index is located on page 19
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
into which Document
Documents is incorporated
- --------- -------------------
Portions of the Annual
Report to Shareholders Part II, Items 5, 6, 7, and 8;
of First West Virginia Part III, Item 13;
Bancorp, Inc. for the Part IV, Item 14
year ended December 31, 2001. -----------------------------
Portions of First West Part III, Items 10,
Virginia Bancorp, Inc.'s 11, 12, and 13
Proxy statement for the
2002 Annual Meeting
of Shareholders. -----------------------------
FORM 10-K INDEX
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PART I
Item 1 Business 4 - 11
Item 2 Properties 12
Item 3 Legal Proceedings 13
Item 4 Submission of Matters to a Vote of
Security Holders 13
PART II
Item 5 Market for the Registrant's Common Stock and
Related Stockholder Matters 13-14
Item 6 Selected Financial Data 14
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 14
Item 7A Quantitative and Qualitative Disclosures About
Market Risk 14
Item 8 Financial Statements and Supplementary Data 15
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 15
PART III
Item 10 Directors and Executive Officers of
Registrant 15 -16
Item 11 Executive Compensation 17
Item 12 Security Ownership of Certain Beneficial
Owners and Management 17
Item 13 Certain Relationships and Related
Transactions 17
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 17
Signatures 18
Exhibit Index 19
PART 1
Item 1 BUSINESS
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General
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First West Virginia Bancorp, Inc. ("Holding Company"), was organized as a
West Virginia business corporation on July 1, 1973 at the request of the Boards
of Directors of the Bank of Warwood, N.A. and Community Savings Bank, N.A. for
the purpose of becoming a bank holding company, under the Bank Holding Company
Act of 1956, as amended. On December 30, 1974 the shareholders of those banks
voted to become constituent banks of the Holding Company, which reorganization
was subsequently accomplished in accordance with regulatory procedure, and the
Holding Company thus became the first bank holding company in the state of West
Virginia. Those banks later merged on June 30, 1984 under the name "First West
Virginia Bank, N.A." In November, 1995, the subsidiary banks of the Holding
Company adopted the Common Name of "Progressive Bank, N.A."
At December 31, 2001, First West Virginia Bancorp, Inc. had two
wholly-owned banking subsidiaries: Progressive Bank, N.A. in Wheeling, West
Virginia and Progressive Bank, N.A. - Buckhannon, in Buckhannon, West Virginia.
Progressive Bank, N. A. is a community bank serving all of Ohio, Brooke,
Marshall, and Wetzel counties in the state of West Virginia, and a portion of
the west bank of the Ohio River, located in the State of Ohio. Progressive
Bank, N.A. operates two full-service offices in Ohio county, Wheeling, West
Virginia, one full-service office in Brooke county, Wellsburg, West Virginia,
two full-service offices in Marshall county, Moundsville, West Virginia, one
full-service office in Wetzel county, New Martinsville, West Virginia and one
full-service office in Bellaire, Ohio. Progressive Bank, N.A. also has two
full-service Automated Teller Machines (ATM) located at West Liberty State
College, Ohio county, West Liberty, West Virginia and at 8th and Commerce
Street, Brooke County, Wellsburg, West Virginia. On January 4, 1993,
Progressive Bank, N.A. acquired the Wellsburg Banking and Trust Company,
Wellsburg, West Virginia which was converted to a branch office. On August 22,
1997, the merger and plan of reorganization between First West Virginia
Bancorp, Inc. and two of its subsidiary banks, Progressive Bank, N.A. and
Progressive Bank, N.A. - Bellaire was completed. The former Progressive Bank,
N.A. - Bellaire now operates as a branch of Progressive Bank, N.A. Progressive
Bank, N.A. had total assets of $194,877,560 as of December 31, 2001.
Progressive Bank, N.A. - Buckhannon operates as a community bank serving parts
of Upshur and Lewis counties in the state of West Virginia. Progressive Bank,
N.A. - Buckhannon operates a full service office in Buckhannon, West Virginia
and has one full-service office located in Weston, West Virginia. As of
December 31, 2001, Progressive Bank, N.A. - Buckhannon had total assets of
$36,469,348.
On October 2, 2000, the Corporation's subsidiary, Progressive Bank, N.A.,
entered into a Purchase and Assumption Agreement with United National Bank to
purchase the building and deposits of United's New Martinsville, West Virginia
branch office. Progressive Bank also entered into a Real Estate Purchase
Agreement to purchase the building and land of United's Moundsville, West
Virginia office located on Lafayette Avenue. The acquisition of the Moundsville
Real estate closed in January 2001, while the New Martinsville acquisition
closed on March 8, 2001. The deposits acquired in New Martinsville were
approximately $9.6 million.
On May 12, 2001, Progressive Bank, N.A. entered into a lease agreement to
rent property for use as a banking premises to be known as the "Bethlehem
branch office." The Bethlehem branch office is to be located at 1090 East
Bethlehem Boulevard, Wheeling, West Virginia and is scheduled to open during the
first quarter of 2002. The office is a one story building with approximately
3400 square feet of area and has four drive-in lanes. The lease is for a five
year term commencing February 1, 2002, with eight successive five year options
to renew.
On June 8, 2001, the Corporation's subsidiary, Progressive Bank, N.A.,
entered into a Purchase and Assumption Agreement with Wheeling National Bank to
purchase the loans and other certain assets and to assume the deposits and
other liabilities of the Wheeling National Bank's New Martinsville office
located at 631 Third Street. Upon completion of the transaction, the Wheeling
National Bank's branch office will be closed as a branch office and
consolidated with Progressive's existing facility located 425 Third Street New
Martinsville, West Virginia. The transaction is expected to be completed during
the first quarter of 2002.
Total Holding Company assets as of December 31, 2001, which include the
assets of its operating subsidiary banks, were $232,030,125. The authorized
capital of the Holding Company consists of 2,000,000 shares of capital stock,
par value of $5.00 per share, of which 1,538,443 shares were issued and
outstanding as of December 31, 2001 to 380 shareholders. Shareholders' equity
at that date was $20,248,968.
General Description of Business
- -------------------------------
First West Virginia Bancorp, Inc. operates a multi-bank holding company
and is dependent upon subsidiaries for cash necessary to pay expenses, and
dividends to its stockholders. The Holding Company functions primarily as the
holder of the capital stock of its wholly-owned subsidiary banks.
The subsidiary banks of the Holding company are engaged in the business
of banking and provide a broad range of consumer and commercial banking
products and services to individuals, businesses, professionals and
governments. The services and products have been designed in such a manner as
to appeal to area consumers and business principals. The loan portfolio of the
banks consists primarily of loans secured by real estate to consumers and
businesses. The bank also engages in commercial loans and general consumer
loans to individuals. The subsidiary banks offer a wide range of both personal
and commercial types of deposit accounts and services as a means of gathering
funds. Types of deposit accounts and services available include non-interest
bearing demand checking, interest bearing checking (NOW accounts), savings,
money market, certificates of deposit, individual retirement accounts, and
Christmas Club accounts. The customer base for deposits is primarily retail in
nature. The majority of the bank's lending is concentrated in the upper Ohio
Valley of northern West Virginia and adjacent areas of Ohio and Pennsylvania.
First West Virginia Bancorp, Inc.'s business is not seasonal. As of
December 31, 2001, none of the subsidiary banks were engaged in any operation
in foreign countries and none has had transactions with customers in foreign
countries.
Competition
- ------------
Competition involving the Holding Company is generally felt at the
subsidiary level. All phases of the banks' business are highly competitive. The
subsidiary banks encounter competition from other financial institutions and
commercial banks. These entities, along with insurance companies, small loan
companies, credit unions and the like compete with respect to their lending
activities and also in attracting a variety of deposit related instruments.
Supervision and Regulation
- ------------------------------
The Holding Company is subject to the provisions of the Federal Bank
Holding Company Act of 1956, as amended, and to the supervision of the Board of
Governors of the Federal Reserve System. The Bank Holding Company Act requires
the Holding Company to secure the prior approval of the Federal Reserve Board
before it can acquire all or substantially all of the assets of any bank, or
acquire ownership or control of any voting shares of any bank, if, after such
acquisition, it would own or control 5% or more of the voting shares of such
bank. Similarly, a bank holding company is prohibited under the Act from
engaging in, or acquiring direct or indirect control of 5% or more of the
voting shares of any company engaged in non-banking activities unless the
Federal Reserve Board, by order or regulation, has found such activities to be
so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In making determinations as to permitted non-banking
activities, the Federal Reserve Board considers whether the performance of
these activities by a bank holding company would offer benefits to the public
which outweigh possible adverse effects.
As a bank holding company, the Holding Company is required to file with
the Federal Reserve Board reports and any additional information that the
Federal Reserve Board may require pursuant to the Bank Holding Company Act. The
Federal Reserve Board also makes examinations of the Holding Company. The
Holding Company is also required to register with the Office of the
Commissioner of Banking of West Virginia and file reports as requested. The
Commissioner has the power to examine the Holding Company and its subsidiaries.
The Holding Company is also deemed an "affiliate" of its subsidiary banks
under the Federal Reserve Act which imposes certain restrictions on loans
between the Holding Company and its subsidiary banks, investments by the
subsidiaries in the stock of the Holding Company, or the taking of stock of the
Holding Company by the subsidiaries as collateral for loans to any borrower, or
purchases by the subsidiaries of certain assets from the Holding Company, and
the payment of dividends by the subsidiaries to the Holding Company.
Federal Reserve Board approval is required before the Holding Company may
begin to engage in any permitted non-banking activity. The Federal Reserve
Board is empowered to differentiate between activities which are initiated by a
bank holding company or a subsidiary and activities commenced by acquisition of
a going concern.
Supervision and Regulation - Continued
- --------------------------------------
The operations of the Holding Company's subsidiary banks, being national
banks, are subject to the regulations of a number of regulatory agencies
including the regulations of a number of regulatory authorities including the
Office of the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System and the applicable state Departments of Banking.
Representatives of the Comptroller of the Currency regulate and conduct
examinations of the subsidiary banks. The subsidiary banks are required to
furnish regular reports to the Comptroller of the Currency and the Federal
Deposit Insurance Corporation. The Comptroller of the Currency has the
authority to prevent national banks from engaging in an unsafe or unsound bank
practice and may remove officers or directors. It may be noted that the
subsidiary banks of a bank holding company are subject to certain restrictions
imposed by the banking laws on extensions of credit to the bank holding company
or other subsidiaries.
Being a West Virginia corporation, the Holding Company is also subject to
the corporate laws of the State of West Virginia as set forth in the West
Virginia Corporation Act.
The Financial Institutions Reform, Recovery, and Enforcement Act
("FIRREA") was enacted in August, 1989. This legislation created a new
liability as a depository institution insured by the Federal Deposit Insurance
corporation, ("the FDIC"), can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989 in
connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to a
commonly controlled FDIC-insured depository institution in danger of default.
Default is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that default is likely to occur in the absence of
regulatory assistance.
Capital Requirements
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The Federal Reserve Board and the Office of the Comptroller of the
Currency require a minimum "tier 1" capital to be at least 3% of total assets
("Leverage Ratio"). For all but the most highly rated banks, the minimum
Leverage Ratio requirement will be 4% to 5% of total assets. Tier 1 capital
consists of: (i) common stockholders' equity, noncumulative perpetual preferred
stock and minority interests in consolidated subsidiaries; (ii) minus
intangible assets (other than certain purchased mortgage and credit card
servicing rights); and (iii) minus certain losses, and minus investments in
certain securities of subsidiaries.
In addition, each national bank also must maintain a "tier 1 risk-based
capital ratio" of 4%. The "tier 1 risk-based capital ratio" is defined in OCC
regulations as the ratio to tier 1 capital to "risk-weighted assets". A bank's
total risk-weighted assets are determined by: (i) converting each of its
off-balance sheet items to an on-balance sheet credit equivalent amount; (ii)
assigning each on-balance sheet asset and the credit equivalent amount of each
off-balance sheet item to one of the five risk categories established in the
OCC regulations; and (iii) multiplying the amounts in each category by the risk
factor assigned to that category. The sum of the resulting amounts constitutes
total risk-weighted assets.
Each national bank is also required to maintain a "total risk-based
capital ratio" of at least 8%. The "total risk-based capital ratio" is defined
in the OCC regulations as the ratio of total qualifying capital to
risk-weighted assets (as defined before). Total capital, for purposes of the
risk-based capital requirement, consists of the sum of tier 1 capital (as
defined for purposes of the Leverage Ratio) and supplementary capital.
Supplementary capital includes such items as cumulative perpetual preferred
stock, long-term and intermediate-term preferred stock, term subordinated debt
and general valuation loan and lease loss allowances (but only in an amount of
up to 1.25% of total risk-weighted assets). The maximum amount of supplementary
capital that may be counted towards satisfaction of the total capital
requirement is limited to 100% of core capital. Additionally, term subordinated
debt and intermediate-term preferred stock may only be included in
supplementary capital up to 50% of tier 1 capital.
Capital requirements higher than the generally applicable minimum
requirements may be established for a particular national bank if the OCC
determines that the bank's capital is or may become inadequate in view of its
particular circumstances. Individual minimum capital requirements may be
imposed where a bank is receiving special supervisory attention, has a high
degree of exposure to interest rate risk, or poses other safety or soundness
concerns. Deficient capital may result in the suspension of an institution's
deposit insurance.
As of December 31, 2001, the subsidiaries of First West Virginia Bancorp,
Inc. had capital in excess of the applicable minimum requirements.
Federal Deposit Insurance Corporation Improvement Act of 1991
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The Holding Company may also be subject to certain provisions of the
Federal Deposit Insurance Corporation Improvements Act of 1991 ("FDICIA").
FDICIA requires the Federal Reserve Board of Governors to adopt certain
regulations establishing safety and soundness standards for bank holding
companies. Many of the provisions of the regulation became effective in
December, 1993. Additional provisions will be implemented through the adoption
of regulation by various federal banking agencies.
Under OCC regulations, any national bank that receives notice that it is
undercapitalized, significantly undercapitalized or critically undercapitalized
must file a capital restoration plan with the OCC addressing, among other
things, the manner in which the association will increase its capital to comply
with all applicable capital standards. Under the prompt corrective action
regulations adopted by the OCC, an institution will be considered: (i) "well
capitalized" if the institution has a total risk-based capital ratio of 10% or
greater, a tier 1 risk- based capital ratio of 6% or greater, and Leverage
Ratio of 5% or greater (provided the institution is not subject to an order,
written agreement, capital directive or prompt corrective action to meet and
maintain a specified capital level for any capital measure); (ii) "adequately
capitalized" if the institution has a total risk- based capital ratio of 8% or
greater, a tier 1 risk-based capital ratio of 4% or greater, and a Leverage
Ratio of 4% or greater (3% or greater if the institution is rated composite 1
in its most recent report of examination); (iii) "undercapitalized" if the
institution has a total risk-based capital ratio of less than 8%, or a tier 1
risk-based capital ratio of less than 4%, or a Leverage Ratio of less than 4%
(3% if the institution is rated composite 1 in its most recent report of
examination); (iv) "significantly undercapitalized" if the institution has a
total risk-based capital ratio of less than 6%, or a tier 1 risk-based capital
ratio of less than 3%, or a Leverage Ratio that is less than 3%; and (v)
"critically undercapitalized" if the institution has a ratio of tangible equity
to total assets that is less than 2%. The regulations also permit the OCC to
determine that an institution should be placed in a lower category based on the
existence of an unsafe and unsound condition or on other information, such as
the institution's examination report, after written notice.
The degree of regulatory intervention mandated by FDICIA and the prompt
corrective action regulations are tied to a national bank's capital category,
with increasing scrutiny and more stringent restrictions being imposed as a
bank's capital declines. The prompt corrective actions specified by FDICIA for
undercapitalized banks include increased monitoring and periodic review of
capital compliance efforts, a requirement to submit a capital restoration plan,
restrictions on dividends and total asset growth, and limitations on certain
new activities (such as opening new branches and engaging in acquisitions and
new lines of business) without OCC approval. Banks that are significantly
undercapitalized or critically undercapitalized may be required to raise
additional capital so that the bank will be adequately capitalized or be
acquired by, or combined with, another bank if grounds exist for appointing a
receiver. Further, the OCC may restrict such banks from (i) entering into any
material transaction without prior approval of the OCC; (ii) making payments on
subordinated debt; (iii) extending credit for any highly leveraged transaction;
(iv) making any material change in accounting methods; (v) engaging in certain
affiliate transactions; (vi) paying interest on deposits in excess of the
prevailing rates of interest in the region where the institution is located;
(vii) paying excess compensation or bonuses; and (viii) accepting deposits from
correspondent depository institutions. In addition, the OCC may require that
such banks; (a) hold a new election for directors, dismiss any director or
senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, or employ qualified senior
executive officers; and (b) divest or liquidate any subsidiary which the OCC
determines poses a significant risk to the institution.
Federal Deposit Insurance Corporation Improvement Act of 1991 - continued
- --------------------------------------------------------------------------
Any company which controls a significantly undercapitalized national bank
may be required to (i) divest or liquidate any affiliate other than an insured
depository institution; or (ii) divest the bank if the OCC determines that
divestiture would improve the bank's financial condition and future prospects.
Generally a conservator or receiver must be appointed for a critically
undercapitalized bank no later than 90 days after the bank becomes critically
undercapitalized, subject to a limited exception for banks which are in
compliance with an approved capital restoration plan and which the OCC
certifies as not likely to fail. Additionally, the OCC may impose such other
restrictions on a capital-deficient bank as the OCC deems necessary or
appropriate for the safety and soundness of the bank, its depositors and
investors, including limitations on investments and lending activities. The
failure by a bank to materially comply with an approved capital plan
constitutes an unsafe or unsound practice.
FDICIA and the regulations promulgated by the OCC pursuant thereto also
require any company that has control of an "undercapitalized" national bank, in
conjunction with the submission of a capital restoration plan by the bank, to
guarantee that the bank will comply with the plan and provide appropriate
assurances of performance. The aggregate liability of any such controlling
company under such guaranty is limited to the lesser of: (i) 5% of the bank's
assets at the time it became undercapitalized; or (ii) the amount necessary to
bring the bank into capital compliance at the time the bank fails to comply
with the terms of its capital plan.
Insurance of Deposits
- ----------------------
The subsidiary bank's deposits are insured by the FDIC through the Bank
Insurance Fund ("BIF") up to a maximum of $100,000 for each insured depositor.
The insurance premium payable by each BIF member is based on the institution's
assessment base (generally total deposit accounts subject to certain
adjustments). The premiums are paid quarterly based on semiannual assessments.
The FDIC promulgated regulations establishing a risk-based assessment system
for each semiannual period commencing with the first semiannual payment yearly.
Under the risk-based assessment system, each institution is assigned to
one of three capital groups and to one of three supervisory subgroups for
purposes of determining an assessment rate. The capital group is determined by
the institution's regulatory capital position. The supervisory subgroup
assignments are based on a determination by the FDIC's Director of the Division
of Supervision. Institutions may request a review of the supervisory subgroup
assignment. Under this formula, well-capitalized institutions classified as
Subgroup "A" (financially sound institutions with only a few minor weaknesses)
will pay the most favorable assessment rate while undercapitalized institutions
classified as Subgroup "C" (institutions which pose a substantial probability
of loss to the Bank Insurance Fund (BIF) unless corrective action is taken)
will pay the least favorable assessment rate.
Effective August 8, 1995, the FDIC Board established a process for
increasing and lowering all rates for BIF institutions semiannually, if
conditions warrant a change. Under this system, the FDIC Board will have the
flexibility to adjust the entire BIF assessment rate schedule twice a year, but
only within a range of 5% above or below the premium schedule adopted, without
first having to seek public comment. Any adjustments above or below the 5%
range requires public comment, prior to adjusting the assessment rate schedule.
On November 26, 1996, the FDIC Board of Directors voted to retain the BIF
assessment schedule of 0% to 27% for the first semi annual period of 1997. The
Board also eliminated the $2,000 minimum annual assessment. In addition, the
FDIC Board of Directors voted to collect an additional assessment (termed the
FICO assessment) against BIF-assessable deposits as a result of the enactment
of the Deposit Insurance Funds Act of 1996. The Deposit Insurance Funds Act of
1996 authorized the Financing Corporation (FICO)to impose periodic assessments
on depository institutions that are BIF members in order to spread the cost of
interest payments on outstanding FICO bonds over a larger number of
institutions. The FICO assessment annual rate was approximately 1.82, 2.07 and
1.19 basis points on BIF-assessable deposits during 2001, 2000 and 1999,
respectively. There were no BIF assessments paid during 2001, 2000 and 1999.
Monetary Policies
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The earnings of the Holding Company are dependent upon the earnings of its
wholly-owned subsidiary banks. The earnings of these subsidiary banks are
affected by the policies of regulatory authorities, including the Comptroller
of the Currency, the Board of Governors of the Federal Reserve System and the
Federal Deposit Insurance Corporation. The policies and regulations of the
regulatory agencies have had and will continue to have a significant effect on
deposits, loans and investment growth, as well as the rate of interest earned
and paid, and therefore will affect the earnings of the subsidiary banks and
the Holding Company in the future, although the degree of such impact cannot
accurately be predicted.
Employees
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As of December 31, 2001, the Holding Company had 6 part-time employees.
As of December 31, 2001, the subsidiary banks of the Holding Company had a
total of 85 full-time employees and 14 part-time employees. No employees are
union participants or subject to a collective bargaining agreement.
Interstate Banking
- ---------------------
The Bank Holding Company Act prohibits acquisition by the Holding Company
of 5% or more of the voting shares of, or interest in, all or substantially all
of the assets of any bank without prior approval of the Federal Reserve Board.
Regulations in the state of West Virginia have permitted the reciprocal
interstate branching or acquisition of banks and bank holding companies since
July 1, 1997. Similarly, regulations in the state of Ohio have permitted
interstate acquisitions of banks and bank holding companies since October 17,
1985. Many other states have adopted legislation which would permit interstate
acquisitions by their banks and bank holding companies and which would also
permit entry by West Virginia bank holding companies. Such legislation,
however, contains various restrictions and conditions. In 1997, the state of
Ohio passed regulations which permit interstate branching.
Securities Laws and Compliance
- ---------------------------------
As of February 13, 1995, the Holding Company's common stock was
registered with the Securities and Exchange commission ("SEC") under the
Securities Exchange Act of 1934, as amended ("1934 Act"). This registration
requires ongoing compliance with the 1934 Act and its periodic filing
requirements as well as a wide range of Federal and State securities laws.
These requirements include, but are not limited to, the filing of annual,
quarterly and other reports with the SEC, certain requirements as to the
solicitation of proxies from shareholders as well as other proxy rules, and
compliance with the reporting requirements and "short-swing" profit rules
imposed by section 16 of the 1934 Act.
Acquisitions of or Affiliations With Other Banks or Bank Holding Companies
- ---------------------------------------------------------------------------
The Board of Directors of the Company from time to time has had
exploratory discussions with other banks and bank holding companies with which
an affiliation might be desirable. While all such discussions have been quite
amicable, there are presently no understandings, agreements, or letters of
intent to affiliate. Undoubtedly, exploratory discussions with other banks and
bank holding companies will continue from time to time. The Board of Directors
of the Company remains committed to obtaining a high return on the
shareholders' investment, consistent with sound and prudent banking practices,
and believes that the acquisition of or affiliation with selected banks, bank
holding companies and permitted non-banking activities is a desirable means to
accomplish that objective. The Company has authorized but unissued shares of
stock which might be issued from time to time to raise additional capital or
for other bank affiliations or other corporate purposes.
Statistical Information
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The statistical information noted below is provided pursuant to Guide 3,
Statistical Disclosure by Bank Holding Companies. Page references are to the
Annual Report to Shareholders for the year ended December 31, 2001, and such
pages are incorporated herein by reference.
Page
1. Distribution of Assets, Liabilities and Stockholders' equity;
Interest Rates and Interest Differential
a. Average Balance Sheets 4
b. Analysis of Net Interest Earnings 4
c. Rate Volume Analysis of Changes in
Interest Income and Expense 5
2. Investment Portfolio
a. Book Value of Investments
Book values of investment securities at December 31, 2001
and 2000 are as follows (in thousands):
December 31, December 31,
2001 2000
----------- ------------
Securities held to maturity:
Obligations of states
and political subdivisions $ 8,854 $ 10,878
------ ---------
Total held to maturity $ 8,854 $ 10,878
------ ---------
Securities available for sale :
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 31,353 $ 43,047
Obligations of states
and political subdivisions 7,917 2,051
Corporate debt securities 8,086 592
Mortgage-backed securities 25,535 15,286
Equity Securities 457 388
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Total available for sale 73,348 61,364
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Total $ 82,202 $ 72,242
======= ========
b. Maturity Schedule of Investments 7
c. Securities of Issuers Exceeding 10% of Stockholders'
Equity N/A
The Corporation does not have any securities of Issuers,
other than U.S. Government and U.S. Government
agencies and corporations, which exceed 10% of
Stockholders' Equity.
Statistical Information - continued
- -------------------------------------
3. Loan Portfolio
a. Types of Loans 27
b. Maturities and Sensitivity to Changes in
Interest Rates 9
c. Risk Elements 11
d. Other Interest Bearing Assets N/A
4. Summary of Loan Loss Experience 10, 12, 13
5. Deposits
a. Breakdown of Deposits by Categories,
Average Balance and Average Rate Paid 4
b. Maturity Schedule of Time Certificates of
Deposit and Other Time Deposits of $100,000 or more 29
6. Return on Equity and Assets 2
7. Short-Term Borrowings 14, 31
Item 2 PROPERTIES
- --------------------------------
The Holding Company and its subsidiary banks owned and/or leased property
as of December 31, 2001 as described below.
Progressive Bank, N.A. presently owns the land and building at 1701
Warwood Avenue, Wheeling, West Virginia where the bank's Warwood offices are
located. The two-story building has been totally renovated and has
approximately 15,500 square feet in total area. The office has three drive-in
facilities adjacent to the rear of the building and customer parking to the
north side of the building. A lot on North Seventeenth Street, southwest of the
building, is used for employee parking. A two-story home located at 1709
Warwood Avenue was purchased in 1985 for the purpose of providing rental income
and additional employee parking. Progressive Bank, N.A. also owns a lot
adjacent to the bank for future expansion.
Progressive Bank, N.A. also owns the building and approximately 50% of
the land at 875 National Road, Wheeling, West Virginia at which the Woodsdale
branch is located. The Woodsdale branch has expanded its one-story building to
a total of approximately 6,050 square feet in area in 1994. This expansion was
accomplished by the purchase of approximately 6,600 square feet of land located
immediately west of the existing bank office property in 1993. The office has a
four lane drive-in facility at the rear of the building and one drive-in
automatic teller machine in the front of the building. The remaining portion of
the land is leased to the bank until 2003 with 2 ten-year options to renew.
Progressive Bank, N.A. also owns the Wellsburg branch office located at
744 Charles Street, Wellsburg, West Virginia. This office is a 3 story building
with over 8,400 square feet of total area. This office includes an on-premises
drive-in facility. This office also services the full service automated teller
machine located at 8th and Commerce Streets, Wellsburg, West Virginia.
Progressive Bank, N.A. has a land lease for the 8th and Commerce Streets
property until year 2005.
Progressive Bank, N.A. has a license agreement to operate the Moundsville
supermarket branch office located at 1306 Lafayette Avenue, Moundsville, West
Virginia. The license is for a five year term commencing December 1, 1994, with
two five year options to renew.
Progressive Bank, N.A. owns the building and land located at 809
Lafayette Avenue, Moundsville, West Virginia. The office is a two-story
building with approximately 7,430 square feet of total area. This office also
has a three lane drive in facility.
Progressive Bank, N.A. owns the New Martinsville branch office located at
425 Third Street, New Martinsville, West Virginia. The office is a single story
brick branch bank facility with approximately 3,642 square foot of area. This
office also has a two lane drive-in at the rear of the facility.
Progressive Bank, N.A. owns the building and land for the Bellaire branch
office located at 426 34th Street, Bellaire, Ohio, including its drive-in
facilities at the rear of the building. The bank office is housed in a
one-story building, which includes office space in its basement for a total of
4,500 square feet of office area. The bank also owns a lot adjacent to the
parking lot.
Progressive Bank, N.A. - Buckhannon purchased one of two parcels of land
and the building occupied by its full-service banking facility in Buckhannon,
West Virginia on January 14, 1988. The remaining parcel of land was purchased
on October 31, 1998. The Buckhannon office is a one story building with
approximately 1,760 square feet of office area. The office has a three lane
drive-in facility located at the rear of the building. On November 14, 1995,
Progressive Bank, N.A. - Buckhannon entered into a lease agreement for the land
and building for its Weston branch office. The Weston branch office is located
at #10 Market Square Shopping Center, Weston, West Virginia. This lease is for
a period of five years commencing March 1, 1996, with three successive five
year options to renew.
The Holding Company does not have any encumbrances or capital leases on
its personal property.
Item 3 Legal Proceedings
- ------------------------------------
The nature of the business of the Holding Company's subsidiaries
generates a certain amount of litigation involving matters arising in the
ordinary course of business. The Company is unaware of any litigation other
than ordinary routine litigation incidental to the business of the Company, to
which it or any of its subsidiaries is a party or of which any of their
property is subject.
Item 4 Submission of Matters to Vote of Security Holders
- -------------------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters
- --------------------------------------------------------------------------------
As of December 31, 2001, the Holding Company had 380 shareholders of
record who collectively held 1,538,443 of the 2,000,000 authorized shares of
the Holding Company, par value $5.00 per share.
On February 13, 1995, the Holding Company's common stock was filed and
became effective under section 12(g) of the Securities and Exchange Act of
1934. On February 21, 1995, the Holding Company was approved for listing its
securities on the American Stock Exchange's Emerging Company Marketplace and
began trading under the symbol FWV.EC on March 8, 1995. The Holding Company
subsequently filed Form 8A to register its common stock under Section 12(b) of
the Securities and Exchange Act of 1934 which became effective on March 1,
1995. On June 16, 1995, the Holding Company was approved for listing its
securities on the American Stock Exchange primary list and began trading under
the symbol FWV on June 20, 1995.
The following table sets forth the high and low sales prices of the
common stock of the Holding Company as reported by the American Stock Exchange.
Period Stock Prices
- ----------- -----------------
Low High
--------- ---------
2001
- ------------
4th Quarter $ 15.15 $ 18.85
3rd Quarter $ 15.00 $ 17.85
2nd Quarter $ 13.25 $ 15.70
1st Quarter $ 12.60 $ 14.38
2000
- ------------
4th Quarter $ 13.00 $ 14.63
3rd Quarter $ 13.88 $ 14.50
2nd Quarter $ 14.25 $ 15.50
1st Quarter $ 15.13 $ 16.50
Dividends
The Holding Company has paid regular quarterly cash dividends since it
became a bank holding company in 1975, and assuming the ability to do so, it is
anticipated that the Holding Company will continue to declare regular quarterly
cash dividends. Total dividends declared and paid by the Holding Company in
2001 were $.68 per share and $.64 per share for 2000.
The following table sets forth annual dividend, net income and ratio of
dividends to net income of the Holding Company for 2001, 2000 and 1999. The
values stated have been adjusted for the two percent common stock dividend to
shareholders of record as of December 1, 2000; and the twenty percent common
stock dividend to shareholders of record as of November 1, 1999.
DIVIDEND HISTORY OF HOLDING COMPANY
--------------------------------------
(per share)
Ratio-
Dividends to
Dividend Net Income Net Income
------------- ------------- -------------
2001 .68 1.57 43.3%
2000 .64 1.51 42.3%
1999 .54 1.59 33.9%
The ability of the Holding Company to pay dividends will depend on the
earnings of its subsidiary banks and their financial condition, as well as
other factors such as market conditions, interest rates and regulatory
requirements. Therefore, no assurances may be given as to the continuation of
the Holding Company's ability to pay dividends or maintain its present level of
earnings. See Note 16 to the audited Consolidated Financial Statements for a
discussion on subsidiary dividends.
The common stock of the Holding Company is not subject to any redemption
provisions or restrictions on alienability. The common stock is entitled to
share pro rata in dividends and in distributions in the event of dissolution or
liquidation. There are no options, warrants, privileges or other rights with
respect to Holding Company stock at the present time, nor are any such rights
proposed to be issued.
Item 6 Selected Financial Data
- --------------------------------------
Selected Financial Data on page 2 of the Annual Report to Shareholders
of First West Virginia Bancorp, Inc. for the year ended December 31, 2001,
included in this report as Exhibit 13.1, is incorporated herein by reference.
------------
Item 7 Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------------
Results of Operations
- ---------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations on Pages 3 through 16 of the Annual Report to Shareholders of First
West Virginia Bancorp, Inc. for the year ended December 31, 2001, included in
this report as Exhibit 13.1, is incorporated herein by reference.
------------
Item 7A Quantitative and Qualitative Disclosures About Market Risk
- ------------------------------------------------------------------------
The information required by Item 7A is noted in part in Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Interest Rate Risk on Pages 15 through 16 of the Annual Report to Shareholders
of First West Virginia Bancorp, Inc. for the year ended December 31, 2001,
included in this report as Exhibit 13.1, is incorporated herein by reference.
--------------
Item 8 Financial Statements and Supplementary Data
- --------------------------------------------------------
The report of independent auditors and consolidated financial statements,
included on pages 19 through 37 of the Annual Report to Shareholders of First
West Virginia Bancorp, Inc. for the year ended December 31, 2001, included in
this report as Exhibit 13.1, are incorporated herein by reference.
-------------
Selected quarterly financial data included on page 17 of the Annual Report to
Shareholders of First West Virginia Bancorp, Inc. for the year ended December
31, 2001, included in this report as Exhibit 13.1, is incorporated herein by
-------------
reference.
Item 9 Changes In and Disagreements with Accountants on Accounting and
- ----------------------------------------------------------------------------
Financial Disclosure
- ----------------------
Not Applicable
PART III
- -----------------
Item 10 Directors and Executive Officers of Registrant
- ------------------------------------------------------------
(a) Directors of the Registrant
----------------------------
The information required by Item 10 of FORM 10-K related to Directors of the
-------
Registrant appears in the First West Virginia Bancorp, Inc.'s 2002
Proxy Statement dated March 13, 2002 for Annual Meeting of Stockholders to be
held April 9, 2002, included in this report as Exhibit 99, is incorporated
----------
herein by reference.
Executive Officers of the Registrant
- ----------------------------------------
The following table sets forth selected information about the principal
officers of the Holding Company.
TABLE
- --------------------------------------------------------------------------------------------------------
Name Age All Positions with Holding Company and Subsidiaries
- --------------------------------------------------------------------------------------------------------
Laura G. Inman 60 Chairman of the Board of the Holding Company since
1998; Vice Chairman of the Board of the Holding
Company 1995-1998; Senior Vice President of the
Holding Company 1993-1995; Senior Vice President of
Progressive Bank, N.A. since 1993; Director of the
Holding Company and Director of Progressive Bank, N.A.
since 1993.
- --------------------------------------------------------------------------------------------------------
Sylvan J. Dlesk 63 Vice Chairman of the Board of the Holding Company
since 2000; Director of Holding Company and Director
of Progressive Bank, N.A. since 1988.
- --------------------------------------------------------------------------------------------------------
Charles K. Graham 56 President and Chief Executive Officer of the Holding
Company since 2000; Director of the Holding Company
since 2000; Executive Vice President of the Holding
Company 1986-2000; Vice President of the Holding Company
1979-1986; President of Progressive Bank, N.A. since
1985; Executive Vice President of Progressive Bank, N.A.
1979-1985; Vice Chairman of Progressive Bank, N.A.-
Buckhannon since 2000; and Director of Progressive Bank,
N.A.- Buckhannon since 1986.
- --------------------------------------------------------------------------------------------------------
Beverly A. Barker 48 Executive Vice President, Chief Operating Officer, and
Treasurer of the Holding Company since 2000; Senior Vice
President and Treasurer of the Holding Company 1995-2000;
Senior Vice President, Secretary and Treasurer of the
Holding Company 1993-1995; Vice President, Secretary /
Treasurer of the Holding Company 1990-1993; Executive
Vice President, Chief Operating Officer and Cashier
since 2000; Executive Vice President, Cashier of
Progressive Bank, N.A. 1995-2000; Vice President,
Cashier and Secretary of Progressive Bank, N.A. 1990-1995.
- --------------------------------------------------------------------------------------------------------
Jeffrey C. Gannon 38 Senior Vice President and Senior Loan Officer of the Holding
Company since July, 2001; Senior Vice President and Senior
Loan Officer of Progressive Bank, N.A. since July, 2001.
- --------------------------------------------------------------------------------------------------------
Francie P. Reppy 41 Senior Vice President and Chief Financial Officer of
the Holding Company since 2000; Controller of the Holding
Company 1992-2000; Senior Vice President and Chief Financial
Officer of Progressive Bank, N.A. since 2000; Controller of
Progressive Bank, N.A. 1992-2000.
- --------------------------------------------------------------------------------------------------------
Connie R. Tenney 46 Vice President of the Holding Company since 1996;
President, Chief Executive Officer, Cashier and
Secretary of Progressive Bank, N.A.- Buckhannon
since 1995; Director of Progressive Bank, N.A. -
Buckhannon since 1990; Executive Vice President,
Cashier and Secretary of Progressive Bank, N.A.-
Buckhannon 1990-1995; Cashier and Secretary 1986-1990
- --------------------------------------------------------------------------------------------------------
With the exception of Connie R. Tenney, all the principal officers of the
Holding Company reside in or near Wheeling, West Virginia. Connie R. Tenney
resides near Buckhannon, West Virginia.
With the exception of Jeffrey C. Gannon, who has been employed by the
Holding Company since July, 2001, each of the executive officers of the Holding
Company has been employed as an officer or employee of the Holding Company for
more than 5 years. Jeffrey C. Gannon was previously employed by First Merit
Bank, N.A. in New Castle, P.A. from 1998 to 2001 as a Vice President of
Corporate Lending and by PNC Bank, Williamsport, PA from 1995 to 1998 as a
Commercial Banking Officer II.
Item 11 Executive Compensation
- ---------------------------------------
The information required by Item 11 of FORM 10-K related to Executive
-------
Compensation appears in the First West Virginia Bancorp, Inc.'s 2002 Proxy
Statement dated March 13, 2002 for Annual Meeting of Stockholders to be held
April 9, 2002, included in this report as Exhibit 99, is incorporated herein
-----------
by reference.
Item 12 Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------------
The information required by Item 12 of FORM 10-K appears in the First West
-------
Virginia Bancorp, Inc.'s 2002 Proxy Statement dated March 13, 2002 for Annual
Meeting of Stockholders held April 9, 2002, included in this report as
Exhibit 99, is incorporated herein by reference.
- -----------
Item 13 Certain Relationships and Related Transactions
- -------------------------------------------------------------
The information required by Item 13 of FORM 10-K appears in the First West
-------
Virginia Bancorp, Inc.'s 2002 Proxy Statement dated March 13, 2002 for Annual
Meeting of Stockholders held April 9, 2002, included in this report as
Exhibit 99, is incorporated herein by reference and in Note 11 of the Notes
- -----------
to Consolidated Financial Statements appearing at Page 32 of the Annual Report
to Shareholders for the year ended December 31, 2001, included in this report
as Exhibit 13.1, and incorporated herein by reference.
------------
PART IV
- --------
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8
- ----------------------------------------------------------------------------
(a) Financial Statements Filed; Financial Statement Schedules
-----------------------------------------------------------
The following consolidated financial statements of First West Virginia
Bancorp, Inc. and subsidiaries, included in the Annual Report to Shareholders
for the year ended December 31, 2001, are incorporated by reference in Item 8:
-------
Exhibit 13.1
Page Number
Report of Certified Public Accountant ..........................................................18
Consolidated Balance Sheet (December 31, 2001 and December 31, 2000)............................19
Consolidated Statements of Income (Years ended December 31, 2001, 2000 and 1999)................20
Consolidated Statements of Changes in Stockholders' Equity (Years ended December 31, 2001,
2000 and 1999) .................................................................................21
Consolidated Statements of Cash Flows (Years ended December 31, 2001, 2000 and 1999)............22
Notes to Consolidated Financial Statements (Years ended December 31, 2001, 2000 and 1999) 23 - 37
(b) Reports on Form 8-K
-----------------------
No reports on Form 8-K were filed during the fourth quarter of 2001.
(c) Exhibits
------------
The exhibits listed in the Exhibit Index on page 19 of this FORM 10-K
are filed herewith or incorporated by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
First West Virginia Bancorp, Inc.
---------------------------------
(Registrant)
By: /s/ Charles K. Graham
----------------------------------------------
Charles K. Graham
President and Chief Executive Officer/Director
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signatures Title Date
-------------- ------- --------
President, Chief
/s/ Charles K. Graham Executive Officer March 22, 2002
- -------------------------------------------- and Director
Charles K. Graham
/s/ Francie P. Reppy Senior Vice President March 22, 2002
- -------------------------------------------- and Chief Financial Officer
Francie P. Reppy
/s/ Sylvan J. Dlesk Director March 22, 2002
- --------------------------------------------
Sylvan J. Dlesk
/s/ Laura G. Inman Director March 22, 2002
- --------------------------------------------
Laura G. Inman
/s/ James C. Inman, Jr. Director March 22, 2002
- --------------------------------------------
James C. Inman, Jr.
/s/ R. Clark Morton Director March 22, 2002
- --------------------------------------------
R. Clark Morton
/s/ William G. Petroplus Director March 22, 2002
- --------------------------------------------
William G. Petroplus
EXHIBIT INDEX
The following exhibits are filed herewith and/or are incorporated herein
by reference.
Exhibit
Number Description
- ------- -----------
3.1 Certificate and Articles of Incorporation of First West Virginia Bancorp, Inc.
Incorporated herein by reference.
3.2 Bylaws of First West Virginia Bancorp, Inc.
Incorporated herein by reference.
10.1 Employment Contract dated December 31, 2001 between
First West Virginia Bancorp, Inc. and Charles K. Graham.
Filed herewith and incorporated herein by reference.
10.2 Employment Contract dated December 31, 2001 between
First West Virginia Bancorp, Inc. and Beverly A. Barker.
Filed herewith and incorporated herein by reference.
10.4 Lease dated July 20, 1993 between Progressive Bank, N.A., formerly
known as "First West Virginia Bank, N.A.", and Angela I. Stauver.
Incorporated herein by reference.
10.5 Lease dated February 1, 1989 between First West Virginia Bancorp,
Inc. and Progressive Bank, N.A., formerly known as "Farmers
and Merchants National Bank in Bellaire." Incorporated herein by
reference.
10.6 Banking Services License Agreement dated October 26, 1994 between
Progressive Bank, N.A., formerly known as "First West Virginia Bank,
N.A.", and The Kroger Co. Incorporated herein by reference.
10.7 Lease dated November 14, 1995 between Progressive Bank, N.A.
- Buckhannon and First West Virginia Bancorp, Inc. and O. V. Smith
& Sons of Big Chimney, Inc. Incorporated herein by reference.
10.8 Lease dated May 20, 1998 between Progressive Bank, N.A.
and Robert Scott Lumber Company. Incorporated herein by reference.
10.9 Lease dated May 12, 2001 between Progressive Bank, N.A.
and Sylvan J. Dlesk and Rosalie J. Dlesk doing business as Dlesk Realty
& Investment Company. Incorporated herein by reference.
11.1 Statement regarding computation of per share earnings.
Filed herewith and incorporated herein by reference.
12.1 Statement regarding computation of ratios.
Filed herewith and incorporated herein by reference.
13.1 Annual Report to Shareholders, as listed in Part II, Item 8
Filed herewith and incorporated herein by reference.
13.2 Management's Report on Financial Statements
Filed herewith and incorporated herein by reference.
21.1 Subsidiaries of the Holding Company.
Filed herewith and incorporated herein by reference.
22 Proxy statement for the Annual Shareholders meeting to be held
April 9, 2002 Filed herewith and incorporated herein by reference.
23 Consent of S.R. Snodgrass, A.C.
Filed herewith and incorporated herein by reference.