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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 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to .
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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 12, 1997, was
$20,152,675.00. (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 12,
1997:
Common Stock, $5.00 Par Value 806,107 shares
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The total number of pages are 122 ; Exhibit Index is located on page 27
page 1
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
into which Document
Documents is incorporated
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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, 1996. ------------------------
Portions of First West Part III, Items 10,
Virginia Bancorp, Inc.'s 11, 12, and 13
Proxy statement for the
1997 Annual Meeting
of Shareholders. ------------------------
page 2
FORM 10-K INDEX
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PART I
Item 1 Business 4
Item 2 Properties 16
Item 3 Legal Proceedings 17
Item 4 Submission of Matters to a Vote of
Security Holders 17
PART II
Item 5 Market for the Registrant's Common Stock and
Related Stockholder Matters 18
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 19
Item 8 Financial Statements and Supplementary Data 20
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 20
PART III
Item 10 Directors and Executive Officers of
Registrant 21
Item 11 Executive Compensation 22
Item 12 Security Ownership of Certain Beneficial
Owners and Management 24
Item 13 Certain Relationships and Related
Transactions 24
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K 25
Signatures 26
Exhibit Index 27
page 3
PART 1
Item 1 BUSINESS
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(a) General Development of Business
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The Registrant, 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."
The registrant currently has three wholly-owned banking subsidiaries
and include: Progressive Bank, N.A., formerly known as "First West Virginia
Bank, N.A.", in Wheeling, West Virginia; Progressive Bank, N.A. - Buckhannon,
formerly known as "First West Virginia Bank, N.A. - Buckhannon", in
Buckhannon, West Virginia; and Progressive Bank, N.A. - Bellaire, formerly
known as "Farmers and Merchants National Bank", in Bellaire, Ohio. The Common
Name of "Progressive Bank, N.A." was adopted by the subsidiary banks of the
Holding Company in November, 1995.
Progressive Bank, N. A. is a community bank serving all of Ohio,
Brooke and Marshall counties in the state of West Virginia, and a portion of
the west bank of the Ohio River, located in the State of Ohio. The bank
operates two full-service offices in Ohio county, Wheeling, West Virginia, one
full-service office in Brooke county, Wellsburg, West Virginia, one
full-service office in Marshall county, Moundsville, West Virginia, and a
full-service Automated Teller Machine (ATM) at West Liberty State College,
Ohio county, West Liberty, 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. During December, 1994,
Progressive Bank, N.A. opened a full-service supermarket bank branch office in
Moundsville, West Virginia. Progressive Bank, N.A. had total assets of
$100,955,895 as of December 31, 1996.
Progressive Bank, N.A. - Buckhannon, acquired in 1986, is a community
bank serving parts of Upshur and Lewis counties in the state of West Virginia.
Progressive Bank, N.A. - Buckhannon opened a full service branch office in
Weston, West Virginia in April, 1996. As of December 31, 1996, Progressive
Bank, N.A. - Buckhannon had total assets of $23,555,488.
In 1988, the Holding company acquired Progressive Bank, N.A.,
Bellaire, Ohio, a community bank serving the City of Bellaire and Pultney
Township in the state of Ohio. Progressive Bank, N.A. - Bellaire had total
assets of $19,803,679 as of December 31, 1996.
Total Holding Company assets as of December 31, 1996, which include
the assets of its operating subsidiary banks, were $144,545,710. 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 806,107 shares were
issued and outstanding as December 31, 1996 to 408 shareholders.
Shareholders' equity at that date was $12,649,278.
page 4
(b) 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
Holding company might also engage in permitted non-banking activities; a list
of such activities is provided herein.
First West Virginia Bancorp, Inc.'s business is not seasonal. As of
December 31, 1996, none of the subsidiary banks were engaged in any operation
in foreign countries and none has had transactions with customers in foreign
countries.
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.
Approximately 70% of the bank's lending activities are around this area. The
overall makeup of the region's economy continues to change from heavy industry
to state-of-the-art manufacturing, information/service-based office
operations, advanced technology/research and a growing tourism industry. This
allows for diversification of the economy to one more balanced between goods
producing firms and service producing companies. The Wheeling MSA, which
encompasses a major portion of the bank's lending activities is experiencing
modest growth. The United States Chamber of Commerce has projected an increase
in the number of manufacturing jobs in this MSA up to the year 2000;
projecting employment to increase by 26.4 percent over the same time period.
In summary, the number of jobs produced in this regional economy have
increased over the past few years. Unemployment is down from past years,
although it still remains at a point above the national and state level. For
the short term the outlook is for a modest but healthy growth to continue.
Given the historical experience of economic difficulties that have prevailed
in this region, unemployment and growth have been less favorable than the
national averages. The region has also seen a decline in population and
number of households as well as an increase in the average age of its
population. As previously noted, several of these trends have begun to
improve over the past several years; however, should unsatisfactory trends
continue to persist, effects on the bank's loan demand, as well as the overall
asset quality, could be adversely affected.
In addition to the Upper Ohio Valley in the northern part of the
state, the bank also has a presence in Upshur County, which is located in the
central section of West Virginia, approximately 150 miles from the bank's
major area of concentration and located in an area not a part of a
Metropolitan area. Employment and population trends over the past few years
have been somewhat erratic; however, overall trends in these areas have been
positive. Per Capita income has historically been below both national and
state levels. Service industries comprise the largest segment of employment
in this region, with timber
page 5
and state and local government making up the next two highest categories.
With the recent location of the fingerprinting identification operation of the
Federal Bureau of Investigation, the economy of central West Virginia has
taken a significant step forward. To capitalize on this business opportunity,
Progressive Bank, N.A. - Buckhannon opened a full-service branch facility with
a 24 hour automated teller machine (ATM) and drive thru facility in April,
1996. The positioning of this branch facility, in what is considered to be
the retail hub of Lewis county is expected to enhance the deposit growth and
lending opportunities of the Bank. Due to the consistency of economic trends
experienced over the past several years, the risks associated with the
concentration of loans in this region are considered to be normal.
The operations of the Holding Company focus primarily on the
management of its subsidiary banks. Progressive Bank, N.A. operates in and
about Wheeling, Ohio County, West Virginia and Wellsburg, Brooke County, West
Virginia. The Wellsburg branch office in Wellsburg, West Virginia is located
approximately 12.5 miles north from Wheeling. Ohio County, West Virginia
adjoins Brooke County, West Virginia. The Moundsville branch office is
located in Moundsville, Marshall County, West Virginia. Marshall County, West
Virginia adjoins Ohio County and is approximately 12 miles south of
Wheeling, West Virginia. Progressive Bank, N.A.-Buckhannon operates in and
about Buckhannon, Upshur County, West Virginia. Buckhannon is located
approximately 152 miles from Wheeling. The Weston branch office of
Progressive Bank, N.A. - Buckhannon, located in Weston, West Virginia, is
approximately 13 miles from Buckhannon. Weston, West Virginia is
approximately 139 miles from Wheeling. Progressive Bank, N.A. - Bellaire
operates in and about Bellaire, Belmont County, Ohio. Bellaire is located
approximately 6 miles from Wheeling.
Competition involving the Holding Company is generally felt at the
subsidiary level. All phases of the banks' business are highly competitive.
As of December 31, 1996 there were 6 commercial banks and 1 federally
chartered savings and loan association operating in Wheeling in competition
with Progressive Bank, N.A. In the Wellsburg area there was 1 commercial bank
with 1 office and 1 federally chartered savings and loan competing with the
Wellsburg branch office of Progressive Bank, N.A. In the Moundsville area
there were 2 commercial banks and 1 federally chartered savings and loan
competing with the Moundsville branch office. In the Buckhannon area there
were 3 commercial banks competing with Progressive Bank, N.A.-Buckhannon.
There were 3 commercial banks located in the Weston area. In the Bellaire
area there was 1 commercial bank and 2 federally or state chartered savings
and loan associations. 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 demand and time deposits, NOW
accounts and money market funds. A comparison of total deposits and total
assets indicates that Progressive Bank, N.A., Wheeling, ranks 5th in the
Wheeling area, 3rd in the Wellsburg area, and 4th in the Moundsville area
among the commercial banks and savings and loan associations. Progressive
Bank, N.A. - Buckhannon ranks 4th in the Buckhannon area and 4th in Weston,
and Progressive Bank, N.A. - Bellaire ranks 4th in the Bellaire area.
The overall picture for the West Virginia economy and all banks' service
area remains very optimistic. Employment and real income gains in 1996 have
been strong and the unemployment rate is down. The outlook for 1997 through
1998 calls for sustained employment and real income growth in the 1.75 to 2.25
percent range. This growth is somewhat slower than that recorded during the
1995-1996 period, but well above the growth ranges of the 1980's. Management
anticipates the economic projections will continue to promote steady
manageable growth while sustaining normal profitable operations.
page 6
(c) 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 an annual report 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 and its
non-banking subsidiaries. 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, on the taking of stock of
the Holding Company by the subsidiaries as collateral for loans to any
borrower, on purchases by the subsidiaries of certain assets from the Holding
Company, and the payment of dividends by the subsidiaries to the Holding
Company.
The Federal Reserve Board permits bank holding companies, subject to
certain limitations, to engage in certain non-banking activities that are
closely related to banking or managing or controlling banks. Some permitted
non-banking activities include: making or acquiring, for its own account or
the account of others, loans and other extensions of credit; operating as an
industrial bank, or industrial loan company, in the manner authorized by state
law; servicing loans and other extensions of credit; performing or carrying on
any one or more of the functions or activities that may be performed or
carried on by a trust company in the manner authorized by federal or state
law; acting as an investment or financial advisor; leasing real or personal
property; making equity or debt investments in corporations or projects
designed primarily to promote community welfare, such as the economic
rehabilitation and the development of low income areas; providing bookkeeping
services or financially oriented data processing services for a holding
company and its subsidiaries; acting as an insurance agent or a broker, to a
limited extent, in relation to insurance directly related to an extension of
credit; acting as an underwriter for credit life insurance which is directly
related to extensions of credit by the bank holding company system; providing
courier services for certain financial documents; providing management
consulting advice to nonaffiliated banks; selling retail money orders having a
face value of not more than $1,000.00, traveler's checks and U.S. savings
bonds; performing appraisals of real estate; arranging commercial real estate
equity financing under certain limited circumstances; providing securities
brokerage services related to securities credit activities; underwriting and
dealing in government obligations and money market
page 7
instruments; providing foreign exchange advisory and transactional services;
and acting under certain circumstances, as futures commission merchant for
nonaffiliated persons in the execution and clearance on major commodity
exchanges of future contracts and options. The Holding Company does not
engage in any non-banking activity, and it does not have a specific intention
to enter into such activities in the future.
Federal Reserve Board approval is required before the Holding Company
or a non-bank subsidiary of 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.
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
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.
page 8
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, 1996, 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
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.
Prompt Corrective Action
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
page 9
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.
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.
page 10
Holding Company Guaranty
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 new system, the 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.
During 1995, the FDIC Board of Directors reduced the assessment rates
to BIF insured financial institutions. On August 8, 1995, the FDIC Board of
Directors voted to reduce the deposit insurance premiums paid by most BIF
members as a result of achieving the designated reserve level of 1.25% of
insured deposits. These assessment rates for BIF institutions were effective
as of June 1, 1995, and range from .04% to .31% depending upon the assessment
category into which the insured institution is placed. Under this assessment
rate schedule for institutions in the BIF, the best rated institutions paid
an annual rate of four cents per $100 of domestic deposits, which was down
from the 23 cents per hundred in effect prior to June 1, 1995. The weakest
institutions continued to pay the 31 cents per $100 of domestic deposits. On
November 14, 1995, the FDIC Board of Directors again reduced the insurance
premiums paid on deposits by BIF members. Assessment rates were lowered by 4%
from the rates in effect at June 1, 1995, and were effective as of the first
semiannual period in 1996. The new assessment rates ranged from 0% to 27%,
subject to the statutory requirement that all BIF institutions pay at least
$2,000 annually for FDIC insurance. Under this assessment rate schedule, the
best rated institutions would pay the statutory annual minimum of $2,000,
while the weakest institutions would pay an annual rate of 27 cents per $100
of domestic deposits.
page 11
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 connection
with the elimination of the mandatory minimum assessments, the Board decided
to refund the minimum assessment of $500 paid by certain BIF insured
institutions for the fourth quarter of 1996. 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. Prior to enactment of this law, the Savings Association
Insurance Fund (SAIF) member institutions were entirely responsible for the
cost of funding these interest payments. The FICO assessment will fluctuate
based on a defined rate applied to deposits held in periods after the date of
legislation. The FICO assessment annual rate for BIF insured institutions is
approximately 1.29 basis points on BIF-assessable deposits and effective with
the first semiannual period of 1997.
Insurance on deposits may be terminated by the FDIC after notice and
hearing, upon a finding by the FDIC that a national bank has engaged in unsafe
or unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, rule, regulation, order or
condition imposed by, or written agreement with, the FDIC. Additionally, the
FDIC may temporarily suspend insurance on new deposits received by a national
bank that has no tangible capital and no goodwill included in core capital.
(d) Income Taxes
------------
The Holding Company and its subsidiaries are required to file annual
income tax returns with the Internal Revenue Service ("IRS"). In addition,
the Holding Company and its West Virginia subsidiaries file income tax returns
in West Virginia. The Progressive Bank, N.A. - Bellaire, Bellaire, Ohio is
required to file a separate West Virginia income tax return based on a special
apportionment consisting of its income from West Virginia sources in relation
to its total income sources. The West Virginia tax code provides a special
allowance for exempt income arising from investments in certain governmental
obligations and residential real estate loans. The exemption percentage
applies to both West Virginia income tax and the business franchise tax
assessed on equity. Progressive Bank, N.A. - Bellaire is required to file
separate franchise returns in Ohio.
Under the current provisions of the Internal Revenue Code, the Holding
Company and its subsidiaries are required to pay their taxes based on the
higher of current rates or alternative minimum tax ("AMT") rates. The
alternative minimum tax computation generally includes the modification of
regular taxable income by increasing such amounts for differences in
depreciation methods, bad debt deductions in excess of actual experience, and
tax exempt income. The AMT rate on the adjusted income is 20% with available
carry-overs for the amount in excess of the regular tax. The Holding Company
and its subsidiaries have not been in the AMT position since its enactment.
Deferred tax assets and liabilities are provided for timing
differences between financial accounting and tax accounting. The major
component of the net deferred tax assets is the difference of the tax bad debt
reserve and the book bad debt reserve. At December 31, 1996, the subsidiary
banks had a book bad debt reserve of $1,160,302 and a tax bad debt reserve of
$404,071.
page 12
(e) Monetary Policies
-----------------
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.
(f) Employees
---------
As of December 31, 1996, the Holding Company had 7 part-time
employees. As of December 31, 1996, the subsidiary banks of the Holding
Company had a total of 70 full-time employees and 16 part-time employees. No
employees are union participants or subject to a collective bargaining
agreement.
(g) 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. Regulations in the state of West
Virginia permits the reciprocal interstate branching or acquisition of banks
and bank holding companies after July 1, 1997. Similarly, regulations in the
state of Ohio has 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. Under this new legislation, interstate acquisitions will be
permitted in all states on July 1, 1995. Also, branching will be permitted in
all states on July 1, 1997 provided that a state doesn't opt out and restrict
interstate branching within their borders prior thereto.
(h) 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
will require 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 will include, but not be 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. While compliance with these additional
rules and regulations will add to the complexity of the Holding company
operation, management of the Holding company believes that the added expense
and administrative burdens will be well offset by the increased visibility,
access to capital markets and other benefits which it has anticipated from
this registration.
page 13
(i) Possible Acquisition 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.
The Board of Directors of the Holding Company prefers to remain
autonomous and presently has no plans to merge the Holding Company into a
larger bank holding company or to encourage an acquisition by a larger bank
holding company.
page 14
(g) Statistical Information
--------------------------
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, 1996, and
such pages are incorporated herein by reference.
1. Distribution of Assets, Liabilities
and Stockholders' equity; Interest Rates
and Interest Differential
a. Average Balance Sheets 5
b. Analysis of Net Interest Earnings 5
c. Rate Volume Analysis of Changes in
Interest Income and Expense 6
2. Investment Portfolio
a. Book Value of Investments 10
b. Maturity Schedule of Investments 11
c. Securities of Issuers Exceeding 10%
of Stockholders' Equity 12
3. Loan Portfolio
a. Types of Loans 13
b. Maturities and Sensitivity to Changes in
Interest Rates 14
c. Risk Elements
16
d. Other Interest Bearing Assets N/A
4. Summary of Loan Loss Experience 17, 18 ,19
5. Deposits
a. Breakdown of Deposits by Categories,
Average Balance and Average Rate Paid 5
b. Maturity Schedule of Time Certificates of
Deposit and Other Time Deposits of
$100,000 or more 20
6. Return on Equity and Assets 20
7. Short-Term Borrowings 21, 41
page 15
Item 2 Properties
----------
The Holding Company and its subsidiary banks owned and/or leased
property as of December 31, 1996 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 employee parking space. That property is currently used as office
space and is rented to a law firm under a month-to-month lease. 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 four drive-in facilities 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.
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. - Bellaire owns the building and land 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. That bank also leases a lot adjacent to the parking lot from
the Holding Company.
The Holding Company also owns property located at 868 National Road,
Wheeling, West Virginia. The Holding Company acquired this property for
purposes of future expansion. The property is currently subject to a
commercial lease.
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
is currently being leased, but the Holding Company has an option to buy the
property if it chooses to do so. The Buckhannon office is a one story
building with approximately 1,760 square feet of office area. The office has
3 drive-in facilities 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.
page 16
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. However, there are no proceedings now pending or
threatened before any court or administrative agency to which the Holding
Company or its subsidiaries are a party or to which their property is subject.
Item 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.
page 17
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters
--------------------------------------------------------------------
As of December 31, 1996, the Holding Company had 408 shareholders of
record who collectively held 806,107 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.
Prior to March 8, 1995, the stock of the Holding Company was not
listed on any exchange, nor were there recognized markets for its stock.
However, local stock brokerage firms in Wheeling, West Virginia, attempted to
make a market in the stock of the Holding Company and other local banks and
bank holding companies by offering to purchase the stock as principal and then
reselling that stock at a slightly higher price to known shareholders or other
interested parties. Bid and ask prices were occasionally quoted in local
newspapers; however, the market-making efforts of these firms would not
constitute a listing on any securities exchange, nor were there sufficient
trades to indicate the existence of a regular public trading market.
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
for each full quarterly period since the Company's common stock was listed
with the American Stock Exchange.
Period Stock Prices
------------- ---------------
Low High
-------- --------
1996
-------------
4th Quarter $ 24.25 $ 25.25
3rd Quarter $ 21.38 $ 22.00
2nd Quarter $ 21.00 $ 22.00
1st Quarter $ 21.00 $ 21.88
1995
-------------
4th Quarter $ 21.00 $ 22.00
3rd Quarter $ 18.00 $ 21.75
2nd Quarter $ 15.13 $ 18.25
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 1996 were $.71 per share and $.51 per share for 1995.
page 18
The following table sets forth annual dividend, net income and ratio of
dividends to net income of the Holding Company for 1996 and 1995. The values
stated have been adjusted for the four percent stock dividend to stockholders
of record on December 2, 1996; the two percent common stock dividend to
stockholders of record as of December 1, 1995, and the two-for-one stock split
effective April 15, 1994.
DIVIDEND HISTORY OF HOLDING COMPANY
-----------------------------------
(per share)
Ratio-
Dividends to
Dividend Net Income Net Income
---------- ------------ ------------
1996 .71 2.04 34.8%
1995 .51 1.82 28.0%
1994 .56 1.60 35.0%
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, 1996,
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 24 of the Annual Report to
Shareholders of First West Virginia Bancorp, Inc. for the year ended December
31, 1996, included in this report as Exhibit 13.1, is incorporated herein by
reference.
page 19
Item 8 Financial Statements and Supplementary Data
-------------------------------------------
The report of independent auditors and consolidated financial
statements, included on pages 27 through 49 of the Annual Report to
Shareholders of First West Virginia Bancorp, Inc. for the year ended December
31, 1996, included in this report as Exhibit 13.1, are incorporated herein by
reference. Selected quarterly financial data included on page 25 of the
Annual Report to Shareholders of First West Virginia Bancorp, Inc. for the
year ended December 31, 1996, 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
page 20
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 1997 Proxy
Statement dated March 12, 1997 for Annual Meeting of Stockholders to be held
April 8, 1997, included in this report as Exhibit 99, is incorporated herein
by reference.
(b) 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
- ------------------------------------------------------------------------------
George F. Beneke 83 Chairman of the Board of the Holding Company since
1979; Director of the Holding Company since 1973;
Director of Progressive Bank, N.A. since 1958;
Director of Progressive Bank, N.A.-Bellaire since
1988
- ------------------------------------------------------------------------------
Ronald L. Solomon 57 President and Chief Executive Officer of the
Holding Company since 1978; Vice Chairman of the
Board of Progressive Bank, N.A. since 1985; Chief
Executive Officer and Director of Progressive Bank,
N.A. since 1978; Vice Chairman of the Board and
Director of Progressive Bank, N.A.
- Buckhannon since 1986; Director of Progressive
Bank, N.A.
- Bellaire since 1988
- ------------------------------------------------------------------------------
Laura G. Inman 54 Vice Chairman of the Board of the Holding Company
since 1995; 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.
- ------------------------------------------------------------------------------
Charles K. Graham 51 Executive Vice President of the Holding Company
since 1986; 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; and Director of Progressive
Bank, N.A.- Buckhannon since 1986
- ------------------------------------------------------------------------------
page 21
- ------------------------------------------------------------------------------
Beverly A. Barker 43 Senior Vice President and Treasurer of the Holding
Company since 1995; 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, Cashier of Progressive Bank, N.A. since
1995; Vice President, Cashier and Secretary of
Progressive Bank, N.A. 1990-1995
- ------------------------------------------------------------------------------
Francie P. Reppy 36 Controller of the Holding Company since 1992;
Controller of Progressive Bank, N.A. since 1992
- ------------------------------------------------------------------------------
Connie R. Tenney 41 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
- ------------------------------------------------------------------------------
David E. Yaeger 41 Vice President of the Holding Company since 1996;
President and Chief Executive Officer of
Progressive Bank, N.A.- Bellaire since 1994
- ------------------------------------------------------------------------------
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 Laura G. Inman, who has been employed by the
Holding Company since January, 1993, Francie P. Reppy, who has been employed
by the Holding Company since February, 1992, and David E. Yaeger, who has been
employed by the Holding Company since October, 1994, 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. Laura G. Inman served as chairman
and president of Wellsburg Banking and Trust company of Wellsburg, West
Virginia from 1969, until that bank's merger into Progressive Bank, N.A. in
1993. Francie P. Reppy was previously employed by WesBanco Bank Wheeling and
held several positions within the Internal Audit Department from 1987 until
1992. David E. Yaeger was previously employed by Norwest Bank Minnesota, N.A.
from 1981 until 1994 and held several positions including Assistant Vice
President of Commercial Lending.
page 22
Item 11 Executive Compensation
----------------------
EXECUTIVE COMPENSATION
----------------------
NAME OF CAPACITIES IN WHICH CASH COMPENSATION
INDIVIDUAL SERVED
OF MEMBER IN YEAR SALARIES BONUS PROFIT OTHER ANNUAL
GROUP SHARING COMPENSATION
- ---------------------------------------------------------------------------------------------------------------------------
Ronald L. Solomon President and Chief Executive 1996 $ 99,996.00 $ 62,762.00 $15,769.50 $ 8,939.25(1)n
Officer of the Company; Vice
Chairman of Board of Directors & 1995 $ 99,492.00 $ 50,653.00 $14,680.30 $ 7,097.52(1)
CEO of Progressive Bank, N.A.;
and Vice Chairman of Progressive 1994 $ 97,500.00 $ 43,127.00 $12,875.52 $ 7,161.48(1)
Bank, N.A. - Buckhannon
- ---------------------------------------------------------------------------------------------------------------------------
Charles K. Graham Executive Vice President of the 1996 $ 69,996.00 $ 43,884.00 $10,804.12 $ 6,214.96(2)
Company; President of Progressive
Bank, N.A.; Director of 1995 $ 68,100.00 $ 34,629.00 $ 9,849.53 $ 4,127.52(2)
Progressive Bank N.A. -
Buckhannon 1994 $ 66,408.00 $ 29,363.00 $ 8,563.07 $ 4,041.48(2)
- ---------------------------------------------------------------------------------------------------------------------------
All Executive -- 1996 $404,568.00 $165,600.00 $55,367.18 $26,314.54
Officers =========== =========== ========== ==========
as a Group (7)
-- 1995 $403,476.00 $143,300.00 $47,144.80 $22,372.31
=========== =========== ========== ==========
-- 1994 $355,458.00 $118,200.00 $40,486.29 $17,793.27
=========== =========== ========== ==========
NOTE: (1) This amount includes the value of Mr. Solomon's membership to the
Wheeling Country Club and Fort Henry Club.
(2) This amount includes the value of Mr. Graham's membership to the
Wheeling Country Club.
The additional information required by Item 11 of FORM 10-K related to
Executive Compensation appears in the First West Virginia Bancorp, Inc.'s 1997
Proxy Statement dated March 12, 1997 for Annual Meeting of Stockholders to be
held April 8, 1997, included in this report as Exhibit 99, is incorporated
herein by reference.
page 23
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 1997 Proxy Statement dated March 12, 1997 for
Annual Meeting of Stockholders held April 8, 1997, 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 1997 Proxy Statement dated March 12, 1997 for
Annual Meeting of Stockholders held April 8, 1997, 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 43 of the Annual Report to
Shareholders for the year ended December 31, 1996, included in this report as
Exhibit 13.1, and incorporated herein by reference.
page 24
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, 1996, are incorporated by reference in Item 8:
Exhibit 13.1
Page Number
Report of Certified Public Accountant.......................................27
Consolidated Balance Sheet (December 31, 1996 and December 31, 1995)........28
Consolidated Statements of Income (Years ended December 31, 1996,
1995 and 1994)..............................................................29
Consolidated Statements of Changes in Stockholders' Equity
(Years ended December 31, 1996, 1995 and 1994)..............................30
Consolidated Statements of Cash Flows (Years ended December 31, 1996,
1995 and 1994)..............................................................31
Notes to Consolidated Financial Statements
(Years ended December 31, 1996, 1995 and 1994).........................32 - 49
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the fourth quarter of 1996.
(c) Exhibits
--------
The exhibits listed in the Exhibit Index on page 27 of this FORM 10-K
are filed herewith or incorporated by reference.
page 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
First West Virginia Bancorp, Inc.
---------------------------------
(Registrant)
By: /s/
---------------------------------
Ronald L. Solomon
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
---------- ----- ----
/s/ President, Chief Executive March 12, 1997
- ------------------------- Officer and Director
Ronald L. Solomon
/s/ Controller March 12, 1997
- -------------------------
Francie P. Reppy
/s/ Director March 12, 1997
- -------------------------
George F. Beneke
/s/ Director March 12, 1997
- -------------------------
Sylvan J. Dlesk
/s/ Director March 12, 1997
- -------------------------
Thomas A. Noice
/s/ Director March 12, 1997
- -------------------------
Laura G. Inman
/s/ Director March 12, 1997
- -------------------------
James C. Inman, Jr.
/s/ Director March 12, 1997
- -------------------------
R. Clark Morton
/s/ Director March 12, 1997
- -------------------------
Karl W. Neumann
page 26
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 January 2, 1997 between
First West Virginia Bancorp, Inc. and Ronald L. Solomon.
Filed herewith and incorporated herein by reference.
10.2 Employment Contract dated January 2, 1997 between
First West Virginia Bancorp, Inc. and Charles K. Graham.
Filed herewith and incorporated herein by reference.
10.3 Lease dated July 20, 1993 between Progressive Bank, N.A., formerly
known as "First West Virginia Bank, N.A.", and Angela I. Stauver.
Incorporated herein by reference.
10.4 Lease dated March 26, 1992 between First West Virginia Bancorp, Inc.
and the estate of Thomas L. Stockert, Jr., and the Tom Stockert
Corporation. Incorporated herein by reference.
10.5 Lease dated February 1, 1989 between First West Virginia Bancorp,
Inc. and Progressive Bank, N.A. -Bellaire, formerly known as
"Farmers and Merchants National Bank in Bellaire." Incorporated
herein by reference.
10.6 Banking Services License Agreement dated October 26, 1994 between
Progressive Bank, N.A., formerly known as "First West Virginia Bank,
N.A.", and The Kroger Co. Incorporated herein by reference.
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.
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.
22.1 Subsidiaries of the Holding Company.
Filed herewith and incorporated herein by reference.
24 Consent of S.R. Snodgrass, A.C.
Filed herewith and incorporated herein by reference.
27 Financial Data Schedule
99 Proxy statement for the Annual Shareholders meeting to be held
April 8, 1997
Filed herewith and incorporated herein by reference.
page 27