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United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2005

or

For the transition period from              to             

Commission File Number: 0-12724

Belmont Bancorp.

(Exact name of registrant as specified in its charter)

(740)-695-3323

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

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 requirement for the past 90 days.    x  Yes    ¨  No

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

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

Common Stock, $0.25 par value,

11,126,278 shares outstanding

as of May 10, 2005

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BELMONT BANCORP.

Quarter Ended March 31, 2005

INDEX

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Belmont Bancorp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited) ($000s except share and per share amounts)

See the Notes to the Consolidated Financial Statements.

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Belmont Bancorp. and Subsidiaries

Consolidated Statements of Income

(Unaudited) ($000s except per share amounts)

See the Notes to the Consolidated Financial Statements.

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Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2005 and 2004

(Unaudited) ($000’s)

See the Notes to the Consolidated Financial Statements.

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Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited) ($000s except per share amounts)

See the Notes to the Consolidated Financial Statements.

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PART I - FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Belmont Bancorp and its subsidiaries, Belmont National Bank (the “Bank”) and Belmont Financial Network. Material intercompany accounts and transactions have been eliminated.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

The foregoing financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial statements have been included. A summary of the Company’s significant accounting policies is set forth in Note 1 to the Consolidated Financial Statements in the Company’s Annual Report to Shareholders on Form 10-K for the year ended December 31, 2004.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates particularly subject to change would include the allowance for loan losses, deferred tax valuation allowance, other than temporary impairment of securities, and loss contingencies.

While management monitors the revenue streams of the various Company products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s service operations are considered by management to be aggregated in one reportable operating segment.

Earnings Per Common Share: Average shares outstanding used to compute basic and diluted earnings per share differ due to stock option grants. The average number of shares outstanding used to compute basic and diluted earnings per share was as follows:

Comprehensive Income: The components of other comprehensive income were as follows:

Stock Compensation: Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income for options granted with an exercise price equal to or greater than the market

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price of the underlying common stock at date of grant. Compensation expense is reflected in net income for certain options granted with an exercise price below the market price of the underlying common stock at the date of the grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”.

2. Securities

The estimated fair values of securities available for sale were as follows:

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The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity are summarized as follows:

Securities with unrealized losses at March 31, 2005 and year-end 2004, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

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The Company evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal government or its sponsored enterprises, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

Unrealized losses on securities have not been recognized into income because management has the intent and ability to hold the securities for the foreseeable future and believes the issuers have the ability to repay its obligations upon maturity, repayment, or redemption.

3. Loans and Allowance for Loan Losses

Loans outstanding are as follows:

Non-accruing loans amounted to $2,953,000 at March 31, 2005, down from $3,353,000 at year-end 2004. Generally, non-accruing loans are considered impaired and are also included in the impaired loan table below. Loans past due 90 days and still accruing interest were $173,000 at March 31, 2005 and $5,000 at year-end 2004.

Impaired loans were as follows:

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Activity in the allowance for loan losses is summarized as follows:

The entire allowance represents a valuation reserve which is available for future charge-offs.

4. Stock Option Plan

In May 2001, the Company’s shareholders approved the Belmont Bancorp. 2001 Stock Option Plan (the “Plan”). The Plan authorized the granting of up to 1,000,000 shares of common stock as incentive and nonqualified stock options. Generally, one fourth of the options awarded become exercisable on each of the four anniversaries of the date of grant. However, some of the options granted in 2001 vested immediately on the date of the grant with the remaining amount vesting over the next three to four years. The option period expires 10 years from the date of grant. If the Company’s shareholders approve the proposed merger with Sky Financial Group, Inc., all options will vest immediately.

The following is a summary of the activity in the Plan for the three months ended March 31, 2005:

Pro forma information for net income and earnings per common share is presented in Note 1.

5. Litigation

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.

6. Agreement and Plan of Merger

On December 21, 2004, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Sky Financial Group, Inc. (“Sky Financial”). The proposed transaction, subject to approval by the Company’s shareholders, involves the acquisition and merger of the Company with and into Sky Financial with Sky Financial being the survivor of the holding company merger. Shortly after the holding company merger, Sky Financial intends to merge Belmont National Bank with and into Sky Bank, with Sky Bank being the survivor of the bank merger. The parties anticipate that, subject to shareholder approval at a special meeting of shareholders on May 23, 2005, the holding company merger will occur on or about June 1, 2005, and the bank merger will occur on or about June 3, 2005.

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ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

In addition to historic information, this quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, statements concerning the manner in which the Company intends to conduct its future operations and potential trends that may impact future results of operations. 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. 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 and, due to many factors, 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. These factors include general economic conditions which could increase loan losses above loan loss reserves, competition from other banking institutions, financial institutions and nonbank or non-regulated companies or firms that engage in similar activities with significantly greater resources, credit, market, operational, liquidity and interest rate risks, fiscal and monetary policies and legislation impacting future operations and performance and adverse business conditions. Readers should carefully review the risk factors set forth below and other risk factors described in the Company’s reports filed with the Securities and Exchange Commission. 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.

RISK FACTORS

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

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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 more than half of the assets on the consolidated balance sheet.

The valuation of deferred federal tax assets represents management’s judgment that the Company will have sufficient taxable income in future years to utilize these assets. The deferred federal tax assets at March 31, 2005, 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.

RESULTS OF OPERATIONS

SUMMARY

For the three months ended March 31, 2005, Belmont Bancorp. earned $568,000, or $0.05 per common share, compared to earnings of $687,000, or $0.06 per common share, for the three months ended March 31, 2004.

Earnings during the first quarter of 2005 were impacted by the announcement that the Company’s subsidiary, Belmont National Bank, would close three branch offices, each located no more than four miles from another full service branch office of the Bank. Two of the offices to be closed are leased, and additional depreciation and amortization expense totaling $134,000 was recorded since the estimated remaining useful lives of the fixed assets associated with these leases were reduced to correspond with the date the offices are expected to close at the end of May 2005.

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The Company also incurred legal expenses of approximately $75,000 during the first quarter of 2005 related to the previously announced proposed merger with Sky Financial Group, Inc. (“Sky”).

Average assets decreased to $298 million for the first quarter of 2005, compared to $304 million for the first quarter of 2004. Total assets at March 31, 2005 were $294 million, down from $302 million at year-end 2004.

NET INTEREST INCOME

During the first quarter of 2005, interest rates were generally higher than at year-end 2004. The Federal Open Market Committee (the “FOMC”) increased the targeted federal funds rate two times during the first quarter of 2005 to 2.75%. Since the beginning of 2001, the targeted federal funds rate was reduced from 6.50% to 1.00% by June 2003. In June 2004, the FOMC began to increase the targeted federal funds rate with successive rate increases of 25 basis points, and by December 2004, the target had increased to 2.25%. Despite the rise in short term interest rates, longer term interest rates remain low and the yield curve continued to flatten. The 10 year U.S. Treasury note is an indicator of the trend in mortgage interest rates, and the closing yield on the 10 year note was 4.49% at March 31, 2005, up from 4.22% at year-end 2004. 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.

Net interest income on a taxable equivalent basis decreased $43,000 for the first quarter of 2005 compared to the first quarter of 2004. Average earning assets decreased to $277 million during the first quarter of 2005 from $282 million for the first quarter of 2004. The taxable equivalent net interest margin was 3.81% for both the first quarter of 2005 and the first quarter of 2004. The taxable equivalent net interest margin for the fourth quarter of 2004 was 3.89%. The net interest rate spread (the difference between the average yields on earning assets and interest-bearing liabilities) was 3.48% for the first three months of 2005 compared to 3.50% for the comparable period of 2004. The taxable equivalent yield on earning assets increased to 5.47% from 5.41%, an increase of 6 basis points, during the first quarter of 2005 compared to the first quarter of 2004. This increase was offset by an increase of 8 basis points in the cost of interest-bearing liabilities to 1.99% from 1.91%.

OTHER OPERATING INCOME

Changes in various categories of other income are depicted in the table below.

Trust fees increased 2.4% to $170,000 for the first quarter of 2005 compared to $166,000 for the first quarter of 2004. Trust fees are affected by the valuation of the stock and bond markets because most fees are assessed based on the underlying market values of trust accounts.

Service charges on deposits totaled $277,000 for the first quarter of 2005 compared to $323,000 for the comparable period of 2004, a decline of 14.2%. Fees charged for insufficient funds decreased $28,000 during the first quarter of 2005 compared to 2004, and activity and account maintenance service fees declined by about $19,000 for the comparable periods.

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Mortgage servicing fees are collected from the Federal Home Loan Mortgage Corporation (“Freddie Mac”) for the Company’s role in servicing mortgage loans sold to Freddie Mac. Generally, the Company receives 0.25% of the outstanding loan balance for servicing. Mortgage servicing fees decreased to $40,000 for first quarter of 2005 compared to $46,000 for the comparable quarter of 2004. The portfolio of loans serviced for Freddie Mac declined slightly to $67.2 million at March 31, 2005 compared to $67.9 million at year-end 2004. The portfolio totaled $71.4 million at March 31, 2004. 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 was unchanged for the first quarter of 2005 compared to the comparable period of 2004.

OPERATING EXPENSES

The following table shows the dollar amounts and the percent change in various components of operating expenses.

At March 31, 2005, the Company employed 128 full time equivalent employees compared to 131 full time equivalent employees at the end of March 2004. Compensation expense decreased $59,000, or 5.9%, for the first quarter of 2005 compared to the first quarter of 2004. Benefit costs increased 2.3% for the same period reflecting the increased cost of providing healthcare benefits to employees.

Occupancy costs increased $75,000, or 30.9%, for the first quarter of 2005 compared to the same period of 2004. Likewise, furniture and equipment expense increased $65,000, or 31.7%. These increases were principally related to accelerated depreciation on fixed assets for leased branch offices that are expected to close at the end of May 2005.

Legal fees increased $63,000, or 165.8%, for the first quarter of 2005 compared to the same period of 2004. Legal fees for the current quarter included approximately $75,000 for fees related to the proposed merger with Sky. The proposed merger is subject to shareholder approval at a special meeting to be held on May 23, 2005, and is expected to be completed on June 1, 2005.

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Examination and audit costs decreased 45.9% to $33,000 for the first quarter of 2005 from $61,000 for the same period of 2004. The reduction in cost reflects a cost savings for eliminating costs associated with external audits for 2005 for the Company and its Trust Department pending completion of the anticipated merger into Sky during 2005.

Data processing expenses include costs associated with data communication lines, outsourced data processing services for the Trust Department, and fees charged for contingent disaster recovery processing. Data processing costs increased $5,000, or 9.6%, for the first quarter of 2005 compared to the same period of 2004 and included approximately $3,000 in de-conversion fees paid to the Bank’s core processing software provider for the proposed merger with Sky.

Other taxes increased $18,000, or 18.9%, for the first quarter of 2005 compared to the same period of 2004. Of this increase, $15,000 was related to higher costs for Ohio corporate franchise tax which is a tax assessed on the Bank’s capital base.

Net amortization of mortgage servicing rights (“MSR”) decreased to $27,000 for the first quarter of 2005 compared to $41,000 for the comparable quarter of 2004. Activity associated with MSR, amortization of MSR and reductions to a valuation allowance established during 2002 to reduce the carrying value of MSR to estimated fair value is summarized in the following table.