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Index to Financial Statements

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

or

Commission file number 0-12724

BELMONT BANCORP.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (740) 695-3323

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark 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 the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

State the aggregate market value of the voting stock held by nonaffiliates of the registrant at June 30, 2003: $45,869,740

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,108,903 shares

Documents Incorporated by Reference:

Documents Incorporated by Reference: Portions of the Registrant’s proxy statement to be filed by April 30, 2004 are incorporated herein by reference into Items 10, 11, 12 and 13.

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PART I

ITEM 1–BUSINESS

BELMONT BANCORP.

Belmont Bancorp., (the “Company” or “Belmont”), is a bank holding company which was organized under the laws of the State of Ohio in 1982. On April 4, 1984, Belmont Bancorp. acquired all of the outstanding capital stock of Belmont National Bank (“BNB” or the “Bank”), a banking corporation organized as a national banking association. BNB provides a variety of financial services and employs 144 people. In addition to the Bank, the Company owns Belmont Financial Network, Inc., a non-bank subsidiary (“BFN”).

BELMONT NATIONAL BANK

BNB provides a wide range of retail banking services to individuals and small to medium-sized businesses. These services include various deposit products, business and personal loans, residential mortgage loans, home equity loans, and other consumer oriented financial services including IRA and Keogh accounts, safe deposit and night depository facilities. BNB also owns automatic teller machines located at branches in Bellaire, Bridgeport, Woodsdale, Elm Grove, Cadiz, the Ohio Valley Mall, Plaza West, Shadyside, Schoenbrunn and New Philadelphia providing 24 hour banking service to our customers. BNB belongs to STAR Systems, Inc., a nationwide ATM network with thousands of locations nationwide. BNB offers a wide variety of fiduciary services. The trust department of the Bank administers personal trusts and estates.

BELMONT FINANCIAL NETWORK

On July 1, 1985, Belmont formed a subsidiary corporation, Belmont Financial Network, Inc. (“BFN”). BFN serves as a community development corporation by investing in a low-income housing project that provides low-income housing and historic tax credits.

SUPERVISION AND REGULATION

Belmont is supervised and examined by the Board of Governors of the Federal Reserve system under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The BHC Act requires the prior approval of the Federal Reserve Board for a bank holding company to acquire or hold more than a 5% voting interest in any bank, and restricts interstate banking activities. The BHC Act allows interstate branching by acquisitions anywhere in the country and acquisition and consolidation in those states that had not opted out by January 1, 1997.

The BHC Act restricts Belmont’s nonbanking activities to those which are determined by the Federal Reserve Board to be closely related to banking and a proper incident thereto. The BHC Act does not place territorial restrictions on the activities of nonbank subsidiaries of bank holding companies. Belmont’s banking subsidiary is subject to limitations with respect to transactions with affiliates.

The enactment of the Graham-Leach-Bliley Act of 1999 (the “GLB Act”) represented a pivotal point in the history of the financial services industry. The GLB Act swept away large parts of a regulatory framework that had its origins in the Depression Era of the 1930s. Effective March 11, 2000, new opportunities became available for banks, other depository institutions, insurance companies and securities firms to enter into combinations that permit a single financial services organization to offer customers a more complete array of financial products and services. The GLB Act provides a new regulatory framework for regulation through the financial holding company which has as its umbrella regulator the Federal Reserve Board. Functional regulation of the financial holding company’s separately regulated subsidiaries will be conducted by their primary functional regulator. The GLB Act requires “satisfactory” or higher Community Reinvestment Act compliance for insured depository institutions and their financial holding companies in order for them to engage in new financial activities. The GLB Act provides a federal right to privacy of non-public personal information of individual customers.

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BNB’s deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). As a national bank, BNB is supervised and examined by the Office of the Comptroller of the Currency.

A substantial portion of the Company’s cash revenue is derived from dividends paid by its subsidiary bank. These dividends are subject to various regulatory restrictions as summarized in Note 15 of the Company’s Consolidated Financial Statements.

A fundamental principle underlying the Federal Reserve’s supervision and regulation of bank holding companies is that bank holding companies should be a source of managerial and financial strength to their subsidiary banks. Subsidiary banks in turn are to be operated in a manner that protects the overall soundness of the institution and the safety of deposits. Bank regulators can take various remedial measures to deal with banks and bank holding companies that fail to meet legal and regulatory standards.

The Financial Reform, Recovery and Enforcement Act of 1989 provides that a holding company’s controlled insured depository institutions are liable for any loss incurred by the FDIC in connection with the default of any FDIC-assisted transaction involving an affiliated insured bank or savings association. The Federal Deposit Insurance Corporation Improvement Act of 1991 created five capital-based supervisory levels for banks and requires bank holding companies to guarantee compliance with capital restoration plans of undercapitalized insured depository affiliates.

The monetary policies of regulatory authorities, including the Federal Reserve Board and the FDIC, have a significant effect on the operating results of banks and bank holding companies. The nature of future monetary policies and the effect of such policies on the future business and earnings of Belmont and its subsidiary bank cannot be predicted.

FOREIGN OPERATIONS

Belmont Bancorp. has no foreign operations.

ITEM 2–PROPERTIES

DESCRIPTION OF PROPERTIES

BNB operates a network of twelve full service branches located in Belmont, Harrison and Tuscarawas Counties in Ohio and Ohio County in West Virginia. In addition to its main office in the Woodsdale section of Wheeling, West Virginia, BNB operates a branch in the Elm Grove section of Wheeling. Locations in Belmont County, Ohio include three branch offices in St. Clairsville and offices in Bridgeport, Lansing, Shadyside, and Bellaire. BNB’s West Main Street office in downtown St. Clairsville serves as the location for the Company’s and the Bank’s executive, administrative, finance and operations functions. The Harrison County branch is located in Cadiz, Ohio. In Tuscarawas County, Ohio, BNB operates two full service offices and one automated facility in New Philadelphia, Ohio. In Washington County, Pennsylvania, BNB operates a loan production office.

All offices are owned by BNB except for the Ohio Valley Mall and Bellaire offices in Ohio and the McMurray office in Pennsylvania. The land for the Elm Grove office is also leased. The Ohio Valley Mall office lease expires in 2008. The Bellaire office lease expires in 2007 and contains a ten year renewal option. The land lease for the Elm Grove office expires in 2005 and provides for four, five-year renewal options. The office lease in McMurray, Pennsylvania expires in 2006 and contains a three-year renewal option.

ITEM 3–LEGAL PROCEEDINGS

The Company and its subsidiaries are involved in legal proceedings through the normal course of business and could face claims, including unasserted claims, which may ultimately result in litigation. It is management’s opinion that the Company’s financial position, results of operations, and cash flows would not be materially affected by the outcome of any pending or threatened legal proceedings, commitments, or claims.

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ITEM 4–SUBMISSION OF MATTERS TO A 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 THE REGISTRANT’S COMMON STOCK AND RELATED SHAREHOLDERS’ MATTERS

The number of shareholders of record for the Company’s stock as of February 9, 2004 was 1,024. The closing price of Belmont stock on March 9, 2004 was $5.50 per share.

Belmont Bancorp.’s common stock has a par value of $0.25 and, since October 1994, has been traded on the Nasdaq SmallCap market.

High and low market prices and dividend information for the past two years for Belmont’s common stock are depicted in the following tables.

Information regarding the limitations on dividends available to be paid can be located in Note 15 of the Notes to the Consolidated Financial Statements in the Company’s financial statements beginning on page F-1 (Item 8).

Treasury stock is accounted for using the cost method. There were 44,292 shares held in treasury on December 31, 2003 and 44,792 shares on December 31, 2002.

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ITEM 6–SELECTED FINANCIAL DATA

The data presented herein should be read in conjunction with the audited Consolidated Financial Statements beginning on page F-1.

Consolidated Five Year Summary of Operations

For the Years Ended December 31, 2003, 2002, 2001, 2000 and 1999 ($000s except per share data)

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ITEM 7–MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The data presented in this discussion should be read in conjunction with the audited consolidated financial statements beginning on page F-1.

FORWARD-LOOKING STATEMENTS

In addition to historic information, this report, as well as the notes to the consolidated financial statements, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than statements of historical fact, including statements regarding the Company’s expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Readers should not place undue reliance on forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, the Company disclaims any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur. Readers should also carefully review any risk factors described in Company reports filed with the Securities and Exchange Commission.

Various statements made in this Report concerning the manner in which the Company intends to conduct its future operations, and potential trends that may impact future results of operations, are forward-looking statements. The Company may be unable to realize its plans and objectives due to various important factors, including, but not limited to, the factors described below. These and other factors are more fully discussed elsewhere in this Report.

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Index to Financial Statements

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Belmont’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow general practices within the industry in which it operates. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management.

The most significant accounting policies followed by the Company are presented in Note 1 to the consolidated financial statements. These policies, along with the disclosure presented in the other financial statement notes and in management’s discussion and analysis of the financial condition and results of operations of the Company, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan losses and the valuation of deferred federal tax assets to be accounting areas that require the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

The allowance for loan losses represents management’s estimate of probable loan losses inherent in the loan portfolio. Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change. The loan portfolio also represents nearly half of the assets on the consolidated balance sheet.

The valuation of deferred federal tax assets represents management’s estimate that the Company will have sufficient taxable income in future years to utilize these assets. The deferred federal tax assets at December 31, 2003 are largely comprised of net operating loss and tax credit carryforwards to future periods. The Company’s ability to use these assets is based on its ability to generate taxable income in sufficient amounts to use the operating losses and tax credits before the applicable expiration dates. Forecasting taxable income in future periods requires the use of estimates for loan, investment and deposit levels, loan losses, noninterest income and expenses, the interest rates applicable to earning assets and interest paying liabilities, and unforeseen events that could have a material impact on the Company’s earnings prospects. Actual results in future periods may vary significantly from the forecasts prepared as of the date of the financial statements.

RESULTS OF OPERATIONS

Summary

Belmont Bancorp. reported net income of $2,778,000, or $0.25 per common share, for the year ended December 31, 2003, compared to $5,997,000, or $0.54 per common share, for the year ended December 31, 2002. For the fourth quarter of 2003, the Company reported net income of $542,000, or $0.05 per common share, versus $1,492,000, or $0.13 per common share, for the fourth quarter of 2002. During 2001, the Company incurred a loss of $415,000, or a loss of $0.04 per common share.

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Index to Financial Statements

Four issues significantly impacted the Company’s earnings during the past three years—litigation, recoveries on loans previously charged off, an improvement in loan quality, and a reduction to tax-exempt assets.

During 2002, the Company resolved a number of legal actions resulting in gross settlement proceeds before expenses of $6,311,000. Various expenses related to the legal actions during 2002 totaled $1,168,000. The Company also incurred substantial expenses related to litigation during 2001.

Earnings during 2003 and 2002 were positively impacted by recoveries on loans previously charged-off and improvements to the credit quality of the loan portfolio. During the second quarter of 2003, the Company recorded a negative loan loss provision in the amount of $1,350,000 to reduce the amount of its allowance for loan loss. The after-tax effect of this transaction was to increase net income by $891,000. Similarly during 2002, the Company recorded negative loan loss provisions totaling $1,029,000; the after-tax effect was to increase net income for 2002 by $679,000. Additional information is discussed below under the heading, “Provision and Allowance for Loan Losses”.

Aided by low interest rates during 2002, the Company continued its balance sheet restructuring and reduced the amount of tax-exempt securities held in its investment portfolio. This restructure was part of a plan to ensure that the Company can utilize net operating loss and tax credit carryforwards in future years. As a result, the Company and Bank eliminated a deferred tax asset valuation allowance of $1,000,000 previously established in 1999. The elimination of the deferred tax asset valuation allowance also positively affected the Company’s earnings and contributed $1,000,000 to net income during the fourth quarter and year ended 2002.

The following table depicts the Company’s performance for the past three years.

Net Interest Income

The primary source of the Company’s revenue is net interest income. Net interest income is the difference between interest income on earning assets such as loans and securities, and interest expense paid on liabilities such as deposits and borrowings. Net interest income is affected by the general level of interest rates, changes in interest rates and by changes in the amount and composition of interest-earning assets and interest-bearing liabilities. The relative performance of the lending and deposit-raising functions is frequently measured by two statistics—net interest margin and net interest rate spread. The net interest margin is determined by dividing fully-taxable equivalent net interest income by average interest-earning assets. The net interest rate spread is the difference between the average fully-taxable equivalent yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. The net interest margin is generally greater than the net interest rate spread due to the additional income earned on those assets funded by non-interest-bearing liabilities, or free funding, such as demand deposits and shareholders’ equity.

The Consolidated Average Balance Sheets and Analysis of Net Interest Income compare interest revenue and interest-earning assets outstanding with interest cost and liabilities outstanding for the years ended December 31, 2003, 2002, and 2001, and compute net interest income, net interest margin and net interest rate spread for each period. All three of these measures are reported on a taxable equivalent basis computed using a 34% effective federal tax rate. Loan fees included in interest income were $616,000 in 2003, $513,000 in 2002, and $521,000 in 2001. Nonaccrual loans and loans held for sale have been included in the average loan balances.

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Index to Financial Statements

Average outstanding securities balances are based upon amortized cost excluding any unrealized gains or losses on securities available for sale.

Consolidated Average Balance Sheets and Analysis of Net Interest Income

For the Years Ended December 31 (Taxable Equivalent Basis)

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The following table shows changes in taxable-equivalent interest income, interest expense, and net interest income due to volume and rate variances for major categories of earning assets and interest-bearing liabilities. The change in interest not solely due to changes in volume or rates has been consistently allocated in proportion to the absolute dollar amount of the change in each and is reflected as the mix.

Analysis of Net Interest Income Changes

Taxable Equivalent Basis

Interest rates across the maturity horizon remained low relative to historical levels during 2003 and 2002. The Federal Open Market Committee (the “FOMC”) maintained a very accommodative stance to aid economic recovery. In late June 2003, the FOMC reduced its targeted federal funds rate by 0.25% to 1.00% following a rate reduction in November 2002 of 0.50%. This followed several federal funds rate cuts during 2001 when the targeted federal funds rate fell from 6.50% at the beginning of 2001 to 1.75% by the end of 2001. Likewise, the prime-lending rate fell from 9.50% at the beginning of 2001 to 4.00% by June 2003. Changing interest rates impact the Company through loan refinancing activity, reinvestment opportunities in loans and investments, and financing costs on its deposit base and other borrowings. Generally, higher interest rates will positively impact the Company’s net interest income, while lower interest rates will negatively impact net interest income. The Company has significantly reduced it cost of funds since 2001; there is little room for further reductions. To increase and retain deposits, competitive pressures may prompt the Company to offer deposit products that result in a migration of its funds to different products paying a higher rate of interest.

The taxable equivalent yield on earning assets fell to 5.30% for the year ended 2003 compared to 5.96% in 2002, a decline of 66 basis points. The yield on earning asset in 2001 was 7.31%. The cost of interest-bearing liabilities fell to 2.23% for the year ended 2003 compared to 2.84% in 2002, a decline of 61 basis points. The cost of interest-bearing liabilities was 4.26% during 2001. The Company’s net interest margin declined to 3.43% in 2003 from 3.56% in 2002. The net interest margin for 2001 was 3.54%.

The Company’s taxable equivalent net interest income decreased 1.0% to $9,307,000 in 2003 from $9,401,000 in 2002. Average total interest-earning assets increased to $271.0 million in 2003 from $264.4 million in 2002 and $260.7 million in 2001. Average loans increased to $140.3 million during 2003 compared to $120.5 million in 2002. Average securities exempt from income tax declined to $2.1 million for 2003 compared to $18.0 million during 2002 and $39.2 million during 2001.

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Index to Financial Statements

Average total interest-bearing liabilities increased to $226.8 million during 2003 compared to $224.1 million during 2002. Depositors remained reluctant to extend time deposit maturities due to low interest rates. Consequently, the average deposit mix shifted and average time deposits fell to $75.3 million during 2003 compared to $86.1 in 2002 and $113.9 million in 2001. Average savings deposits increased to $98.6 million during 2003 from $89.0 million in 2002 and $69.8 million in 2001. This change in deposit mix positively impacted Company’s overall cost of funds.

Other Operating Income

Changes in various categories of other income are depicted in the following table:

Included in noninterest income for the year ended 2002 was $6.3 million in proceeds from legal settlements. During December 2001, the Company reached a comprehensive legal settlement wherein the Company resolved five lawsuits, including a costly derivative action. Each case, concluded as a result of the comprehensive settlement, was either directly or indirectly related to losses incurred by the Company during 1998 and 1999 for commercial loans to a former commercial customer and an interim-lending program offered by the Bank to the borrower’s customers.

Trust fees are affected by the valuation of the stock market because most fees are assessed based on market values. Trust fees increased 14.7% to $547,000 in 2003 compared to $477,000 in 2002 as the result of market conditions and an increase in the trust fee schedule. Trust fees declined 19.6% to $477,000 for 2002 compared to $593,000 for 2001 as the result of lower market valuations in 2002 versus 2001. Also, a trust with assets of $9 million was closed during the second quarter of 2002.

Service charges on deposits totaled $1,407,000 for 2003 compared to $918,000 for 2002 and 2001. The increase in service charges for 2003 was principally due to the introduction during the second quarter of a new product and the implementation of a new service charge. Management expects deposit service charge income will increase during the first five months of 2004 compared to the first five months of 2003 since the new product offering was introduced in June 2003.

Earnings on bank-owned life insurance policies were $64,000 for 2003, $70,000 for 2002, and $224,000 for 2001. During December 2001, the Company redeemed approximately $3.1 million in bank-owned life insurance policies. This represented all of the Company’s bank-owned life insurance policies except for those providing a life-insurance benefit for retirees and one uninsurable officer.

Mortgage lending volumes remained strong during 2003 as the result of refinancing activity related to low mortgage interest rates and correspondent mortgage lending relationships established with other financial institutions. Through these relationships the Bank provides underwriting and documentation preparation for the correspondent, and in some instances, purchases the mortgage loans originated by the correspondent for subsequent

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Index to Financial Statements

sale in the secondary market. A component of gains on sale of loans and loans held for sale includes capitalized mortgage servicing rights. This right represents the value associated with servicing loans sold in the secondary market. Capitalization of mortgage servicing rights totaled $220,000 for 2003, $166,000 for 2002 and $241,000 for 2001. Mortgage servicing fees increased to $180,000 for 2003 compared to $159,000 in 2002 and $122,000 in 2001 corresponding to the increase total loans serviced for others during these periods. Future increases to mortgage servicing fees are largely dependent upon the volume of mortgage loans originated and sold in the secondary market.

Other income includes, among other miscellaneous items, commissions and fees unrelated to loan origination, brokerage fees, loan documentation preparation fees, rental income, and check printing charges. Other income increased 25.1% to $583,000 for the year ended 2003 compared to $460,000 for 2002 and $471,000 for 2001. Contributing to the increase in other income from 2002 to 2003 were increases in brokerage fees totaling $41,000 and restitution payments received from a former employee totaling $102,000.

Securities gains recorded during 2003 totaled $348,000 and included gains on sales of equity securities of $142,000. During 2002, the Company sold approximately $29 million in tax-exempt municipal bonds for an aggregate loss of $212,000. Other gains realized through investment sales resulted in net securities gains of $27,000 for the year ended 2002. In addition, calls and maturities of bonds totaled approximately $15 million during 2003 and $17 million 2002. The sale of the tax-exempt municipal bonds during 2002 was a continuation of the Company’s efforts to minimize interest rate risk exposure in long-term investments and to increase taxable income. (At year-end 2003, the Company had a net operating loss carryforward totaling $14.8 million and tax credit carryforwards totaling $1.5 million.) Securities losses recorded during 2001 totaled $120,000 and included a writedown in book value of $113,000 for a financial institution stock owned by the Company; this stock was subsequently sold during 2003.

Operating Expenses

The table below details the dollar amounts of and percentage changes in various categories of expense for the three years ended 2003, 2002, and 2001: