þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Kentucky
|
61-1206757
|
|
(State
or other jurisdiction of incorporation organization)
|
(I.R.S.
Employer Identification No.)
|
|
2883
Fifth Avenue
Huntington,
West Virginia
|
25702
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number (304)
525-1600
|
Large
accelerated filer o.
|
Accelerated
filer o.
|
Non-accelerated
filer þ
|
(UNAUDITED)
|
|||||||
2006
|
|
|
2005
|
|
|||
ASSETS
|
|||||||
Cash
and due from banks
|
$
|
16,135
|
$
|
16,080
|
|||
Federal
funds sold
|
32,965
|
18,812
|
|||||
136,146
|
137,419
|
||||||
327,526
|
328,717
|
||||||
(7,579
|
)
|
(7,892
|
)
|
||||
Net
loans
|
319,947
|
320,825
|
|||||
Federal
Home Loan Bank and Federal Reserve Bank stock
|
3,062
|
3,060
|
|||||
Premises
and equipment, net
|
7,243
|
7,126
|
|||||
Real
estate and other property acquired through foreclosure
|
1,973
|
2,049
|
|||||
Interest
receivable
|
2,692
|
2,661
|
|||||
Goodwill
|
15,816
|
15,816
|
|||||
Other
assets
|
3,168
|
4,476
|
|||||
Total
assets
|
$
|
539,147
|
$
|
528,324
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Deposits
|
|||||||
Non-interest
bearing
|
$
|
73,782
|
$
|
69,856
|
|||
Time
deposits, $100,000 and over
|
44,232
|
42,169
|
|||||
Other
interest bearing
|
329,993
|
323,818
|
|||||
Total
deposits
|
448,007
|
435,843
|
|||||
Securities
sold under agreements to repurchase
|
9,351
|
9,317
|
|||||
Federal
Home Loan Bank advances
|
8,168
|
8,334
|
|||||
6,900
|
-
|
||||||
1,402
|
1,402
|
||||||
8,505
|
15,722
|
||||||
Interest
payable
|
734
|
724
|
|||||
Other
liabilities
|
794
|
2,695
|
|||||
Total
liabilities
|
483,861
|
474,037
|
|||||
Preferred
stock, no par value; 1,000,000 shares authorized;
|
|||||||
none
issued or outstanding
|
-
|
-
|
|||||
Common
stock, no par value; 10,000,000 shares authorized;
|
|||||||
5,236,899
shares issued and outstanding
|
1,108
|
1,105
|
|||||
Additional
paid in capital
|
43,511
|
43,458
|
|||||
Retained
earnings
|
12,809
|
11,442
|
|||||
(2,142
|
)
|
(1,718
|
)
|
||||
Total
stockholders' equity
|
55,286
|
54,287
|
|||||
Total
liabilities and stockholders' equity
|
$
|
539,147
|
$
|
528,324
|
Three
Months Ended March 31,
|
|||||||
2006
|
2005
|
||||||
Interest
income
|
|||||||
Loans,
including
fees
|
$
|
6,089
|
$
|
5,636
|
|||
Securities
available for
sale
|
|||||||
Taxable
|
1,267
|
1,219
|
|||||
Tax-exempt
|
23
|
25
|
|||||
Federal
funds sold and
other
|
297
|
165
|
|||||
Total
interest income
|
7,676
|
7,045
|
|||||
Interest
expense
|
|||||||
Deposits
|
1,949
|
1,517
|
|||||
Repurchase
agreements and
other
|
57
|
36
|
|||||
FHLB
advances and other
borrowings
|
204
|
143
|
|||||
Debentures
|
262
|
622
|
|||||
Total
interest expense
|
2,472
|
2,318
|
|||||
Net
interest income
|
5,204
|
4,727
|
|||||
Provision
for loan losses
|
(194
|
)
|
243
|
||||
Net
interest income after
provision for loan losses
|
5,398
|
4,484
|
|||||
Non-interest
income
|
|||||||
Service
charges on deposit
accounts
|
600
|
581
|
|||||
Electronic
banking
income
|
111
|
86
|
|||||
Secondary
market mortgage
income
|
51
|
26
|
|||||
Other
|
136
|
213
|
|||||
898
|
906
|
||||||
Non-interest
expenses
|
|||||||
Salaries
and employee
benefits
|
2,262
|
2,327
|
|||||
Occupancy
and equipment
expenses
|
483
|
601
|
|||||
Outside
data
processing
|
470
|
234
|
|||||
Professional
fees
|
134
|
134
|
|||||
Taxes,
other than payroll,
property and income
|
137
|
82
|
|||||
Write-downs,
expenses, sales of
other
real estate owned,
net
|
(25
|
)
|
12
|
||||
Supplies
|
85
|
83
|
|||||
Other
expenses
|
700
|
760
|
|||||
4,246
|
4,233
|
||||||
Income
before income taxes
|
2,050
|
1,157
|
|||||
Provision
for income taxes
|
683
|
354
|
|||||
Net
income
|
$
|
1,367
|
$
|
803
|
|||
Weighted
average shares outstanding:
|
|||||||
Basic
|
5,235
|
5,232
|
|||||
Diluted
|
5,267
|
5,244
|
|||||
Net
income per share:
|
|||||||
Basic
|
$
|
0.26
|
$
|
0.15
|
|||
Diluted
|
0.26
|
0.15
|
Three
Months Ended March 31,
|
|||||||
2006
|
|
2005
|
|||||
Net
income
|
$
|
1,367
|
$
|
803
|
|||
Other
comprehensive income (loss):
|
|||||||
Unrealized
gains and (losses)
arising during the period
|
(642
|
)
|
(1,848
|
)
|
|||
Reclassification
of realized
amount
|
-
|
-
|
|||||
Net
change in unrealized gain (loss) on
securities
|
(642
|
)
|
(1,848
|
)
|
|||
Less
tax impact
|
(218
|
)
|
(628
|
)
|
|||
Other
comprehensive income
(loss):
|
(424
|
)
|
(1,220
|
)
|
|||
Comprehensive
income (loss)
|
$
|
943
|
$
|
(417
|
)
|
||
2006
|
2005
|
||||||
Cash
flows from operating activities
|
|||||||
Net
income
|
$
|
1,367
|
$
|
803
|
|||
Adjustments
to reconcile net
income to net cash from
operating
activities
|
|||||||
Depreciation
|
272
|
221
|
|||||
Provision
for loan losses
|
(194
|
)
|
243
|
||||
Amortization,
net
|
20
|
77
|
|||||
Stock
compensation expense
|
29
|
-
|
|||||
FHLB
stock dividends
|
(34
|
)
|
(25
|
)
|
|||
OREO
writedowns (gains on sales),
net
|
(21
|
)
|
10
|
||||
Changes
in :
|
|||||||
Interest
receivable
|
(31
|
)
|
39
|
||||
Other
assets
|
1,310
|
(445
|
)
|
||||
Interest
payable
|
10
|
(4,908
|
)
|
||||
Other
liabilities
|
(1,901
|
)
|
1,304
|
||||
Net
cash from operating
activities
|
827
|
(2,681
|
)
|
||||
Cash
flows from investing activities
|
|||||||
Purchases
of securities available
for sale
|
(6,459
|
)
|
(5,536
|
)
|
|||
Proceeds
from maturities and calls
of securities available for sale
|
7,069
|
8,741
|
|||||
Redemption
of FHLB stock, net of
purchases
|
32
|
58
|
|||||
Net
change in federal funds
sold
|
(14,153
|
)
|
(6,085
|
)
|
|||
Net
change in loans
|
969
|
1,863
|
|||||
Purchases
of premises and
equipment, net
|
(389
|
)
|
(167
|
)
|
|||
Proceeds
from sale of other real
estate acquired through foreclosure
|
200
|
251
|
|||||
Net
cash from investing
activities
|
(12,731
|
)
|
(875
|
)
|
|||
Cash
flows from financing activities
|
|||||||
Net
change in
deposits
|
12,164
|
7,244
|
|||||
Repayment
of Federal Home Loan
Bank advances
|
(166
|
)
|
(167
|
)
|
|||
Proceeds
from other
borrowings
|
7,000
|
-
|
|||||
Repayment
of other borrowed
funds
|
(100
|
)
|
(800
|
)
|
|||
Early
redemption of Trust
Preferred Securities
|
(7,000
|
)
|
|||||
Proceeds
from stock option
exercises
|
27
|
-
|
|||||
Net
change in federal funds
purchased
|
-
|
(1,838
|
)
|
||||
Net
change in agreements to
repurchase securities
|
34
|
85
|
|||||
Net
cash from financing
activities
|
11,959
|
4,524
|
|||||
Net
change in cash and cash equivalents
|
55
|
968
|
|||||
Cash
and cash equivalents at beginning of period
|
16,080
|
14,474
|
|||||
Cash
and cash equivalents at end of period
|
$
|
16,135
|
$
|
15,442
|
2006
|
2005
|
||||||
Supplemental
disclosures of cash flow information:
|
|||||||
Cash
paid during period for interest
|
$
|
2,462
|
$
|
7,226
|
|||
Loans
transferred to real estate acquired through foreclosure
|
103
|
458
|
|||||
March
31, 2006
|
||||||
Year
|
Total
|
Net
Income
|
||||
Subsidiary
|
Location
|
Acquired
|
Assets
|
Qtr
|
||
Citizens
Deposit Bank & Trust
|
Vanceburg,
Kentucky
|
1991
|
$118,328
|
$601
|
||
Farmers
Deposit Bank
|
Eminence,
Kentucky
|
1996
|
82,185
|
336
|
||
Ohio
River Bank
|
Ironton,
Ohio
|
1998
|
80,773
|
231
|
||
First
Central Bank, Inc.
|
Philippi,
West Virginia
|
1998
|
101,359
|
372
|
||
Boone
County Bank, Inc.
|
Madison,
West Virginia
|
1998
|
152,828
|
426
|
||
Mt.
Vernon Financial Holdings, Inc.
|
Huntington,
West Virginia
|
1999
|
1,870
|
(3)
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||
Available
for sale
|
|||||||||||||
U.
S. Treasury securities
|
$
|
6,437
|
$
|
-
|
$
|
(84
|
)
|
$
|
6,353
|
||||
U.
S. agency securities
|
95,697
|
-
|
(2,050
|
)
|
93,647
|
||||||||
Obligations
of states and political
subdivisions
|
2,416
|
21
|
(8
|
)
|
2,429
|
||||||||
Mortgage-backed
securities
|
34,818
|
1
|
(1,127
|
)
|
33,692
|
||||||||
Corporate
securities
|
25
|
-
|
-
|
25
|
|||||||||
Total
available for sale
|
$
|
139,393
|
$
|
22
|
$
|
(3,269
|
)
|
$
|
136,146
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||
Available
for sale
|
|||||||||||||
U.
S. Treasury securities
|
$
|
3,952
|
$
|
3
|
$
|
(14
|
)
|
$
|
3,941
|
||||
U.
S. agency securities
|
97,209
|
-
|
(1,909
|
)
|
95,300
|
||||||||
Obligations
of states and political
subdivisions
|
2,487
|
31
|
(4
|
)
|
2,514
|
||||||||
Mortgage-backed
securities
|
36,349
|
2
|
(712
|
)
|
35,639
|
||||||||
Corporate
securities
|
25
|
-
|
-
|
25
|
|||||||||
Total
available for sale
|
$
|
140,022
|
$
|
36
|
$
|
(2,639
|
)
|
$
|
137,419
|
Less
than 12 Months
|
12
Months or More
|
Total
|
|||||||||||||||||
Description
of Securities
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||
U.S.
treasury securities
|
$
|
6,353
|
$
|
(84
|
)
|
$
|
-
|
$
|
-
|
$
|
6,353
|
$
|
(84
|
)
|
|||||
U.S.
agency securities
|
19,115
|
(308
|
)
|
74,532
|
(1,742
|
)
|
93,647
|
(2,050
|
)
|
||||||||||
Obligations
of states and
political
subdivisions
|
423
|
(5
|
)
|
233
|
(3
|
)
|
656
|
(8
|
)
|
||||||||||
Mortgage-backed
securities
|
18,022
|
(452
|
)
|
15,538
|
(675
|
)
|
33,560
|
(1,127
|
)
|
||||||||||
Total
temporarily impaired
|
$
|
43,913
|
$
|
(849
|
)
|
$
|
90,303
|
$
|
(2,420
|
)
|
$
|
134,216
|
$
|
(3,269
|
)
|
Less
than 12 Months
|
12
Months or More
|
Total
|
|||||||||||||||||
Description
of Securities
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
Fair
Value
|
Unrealized
Loss
|
|||||||||||||
U.S.
treasury securities
|
$
|
968
|
$
|
(14
|
)
|
$
|
-
|
$
|
-
|
$
|
968
|
$
|
(14
|
)
|
|||||
U.S.
agency securities
|
22,096
|
(332
|
)
|
73,204
|
(1,577
|
)
|
95,300
|
(1,909
|
)
|
||||||||||
Obligations
of states and
political
subdivisions
|
397
|
(4
|
)
|
-
|
-
|
397
|
(4
|
)
|
|||||||||||
Mortgage-backed
securities
|
22,328
|
(341
|
)
|
11,968
|
(371
|
)
|
34,296
|
(712
|
)
|
||||||||||
Total
temporarily impaired
|
$
|
45,789
|
$
|
(691
|
)
|
$
|
85,172
|
$
|
(1,948
|
)
|
$
|
130,961
|
$
|
(2,639
|
)
|
2006
|
2005
|
||||||
Commercial,
secured by real estate
|
$
|
92,242
|
$
|
85,989
|
|||
Commercial,
other
|
38,842
|
49,362
|
|||||
Real
estate construction
|
11,351
|
11,070
|
|||||
Residential
real estate
|
137,427
|
134,570
|
|||||
Agricultural
|
1,405
|
1,670
|
|||||
Consumer
and home equity
|
41,878
|
42,092
|
|||||
Other
|
4,381
|
3,964
|
|||||
$
|
327,526
|
$
|
328,717
|
2006
|
2005
|
||||||
Impaired
loans at period end with an allowance
|
$
|
8,557
|
$
|
7,926
|
|||
Impaired
loan at period end with no allowance
|
-
|
291
|
|||||
Amount
of allowance for loan losses allocated
|
1,667
|
1,921
|
2006
|
2005
|
||||||
Non-accrual
loans
|
$
|
3,754
|
$
|
3,751
|
|||
Accruing
loans which are contractually past due 90 days or more
|
2,013
|
853
|
|||||
Restructured
loans
|
1,527
|
1,540
|
|||||
Total
|
$
|
7,294
|
$
|
6,144
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Balance,
beginning of period
|
$
|
7,892
|
$
|
9,384
|
|||
Gross
charge-offs
|
(427
|
)
|
(550
|
)
|
|||
Recoveries
|
308
|
190
|
|||||
Provision
for loan losses
|
(194
|
)
|
243
|
||||
Balance,
end of period
|
$
|
7,579
|
$
|
9,267
|
Mar
31,
2006
|
December
31,
2005
|
Regulatory
Minimum
Requirements
|
To
Be Considered
Well
Capitalized
|
|
Tier
I Capital (to Risk-Weighted Assets)
|
16.2%
|
17.8%
|
4.0%
|
6.0%
|
Total
Capital (to Risk-Weighted Assets)
|
17.5%
|
19.1%
|
8.0%
|
10.0%
|
Tier
I Capital (to Average Assets)
|
9.6%
|
10.6%
|
4.0%
|
5.0%
|
2006
|
2005
|
2004
|
||||||||
Risk-free
interest rate
|
4.62
|
%
|
3.70
|
%
|
3.15
|
%
|
||||
Expected
option life (yrs)
|
5.00
|
5.00
|
5.00
|
|||||||
Expected
stock price volatility
|
0.26
|
0.25
|
0.25
|
|||||||
Dividend
yield
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
||||
Weighted
average fair value of options
granted during the year
|
$
|
5.21
|
$
|
3.48
|
$
|
2.64
|
Three
Months Ended
|
||||
Mar.
31, 2005
|
||||
Net
income, as reported
|
$
|
803
|
||
Deduct:
Stock-based compensation expense determined under fair value based
method,
net of tax
|
(15
|
)
|
||
Pro
forma income
|
$
|
788
|
||
Basic
earnings per share, as reported
|
$
|
0.15
|
||
Pro
forma basic earnings per share
|
0.15
|
|||
Diluted
earnings per share, as reported
|
$
|
0.15
|
||
Pro
forma diluted earnings per share
|
0.15
|
-
- - - - - 2006 - - - - - -
|
-
- - - - - 2005 - - - - - -
|
||||||||||||
Weighted
Average
Exercise
|
Weighted
Average
Exercise
|
||||||||||||
Options
|
Price
|
Options
|
Price
|
||||||||||
Outstanding
at beginning of year
|
111,750
|
$
|
11.05
|
83,650
|
$
|
10.65
|
|||||||
Grants
|
35,250
|
16.00
|
35,000
|
11.62
|
|||||||||
Exercises
|
(3,002
|
)
|
9.02
|
-
|
-
|
||||||||
Forfeitures
|
-
|
-
|
(2,400
|
)
|
8.63
|
||||||||
Outstanding
at March 31,
|
143,998
|
$
|
12.30
|
116,250
|
$
|
10.98
|
|||||||
-
- - - - - - - - - - Outstanding - - - - - - - - - - -
|
-
- - - Currently Exercisable - - - -
|
|||||||||||||||||||||
Range
of Exercise Prices
|
Number
|
Weighted
Average Remaining Contractual Life
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
Number
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic Value
|
|||||||||||||||
$7.50
to $10.00
|
43,249
|
7.4
|
$
|
8.70
|
$
|
313
|
34,924
|
$
|
8.56
|
$
|
258
|
|||||||||||
$10.01
to $12.50
|
54,499
|
5.5
|
11.91
|
220
|
31,508
|
12.13
|
120
|
|||||||||||||||
$15.01
to $17.50
|
46,250
|
8.2
|
16.12
|
0
|
11,000
|
16.50
|
0
|
|||||||||||||||
Outstanding
at March 31, 2006
|
143,998
|
6.9
|
12.30
|
$
|
533
|
77,432
|
11.14
|
$
|
378
|
|||||||||||||
(In
Thousands)
|
|||||||
2006
|
2005
|
||||||
Non-accrual
loans
|
$
|
3,754
|
$
|
3,751
|
|||
Accruing
loans which are contractually past
due 90 days or more
|
2,013
|
853
|
|||||
Restructured
|
1,527
|
1,540
|
|||||
Total
non-performing loans
|
7,294
|
6,144
|
|||||
Other
real estate acquired through foreclosure
|
1,973
|
2,049
|
|||||
Total
non-performing assets
|
$
|
9,267
|
$
|
8,193
|
|||
Non-performing
loans as a percentage of
total loans
|
2.23
|
%
|
1.87
|
%
|
|||
Non-performing
assets as a percentage of
total assets
|
1.72
|
%
|
1.55
|
%
|
1.
|
Core
deposits consisting of both consumer and commercial deposits and
certificates of deposit of $100,000 or more. Management believes
that the
majority of its $100,000 or more certificates of deposit are no
more
volatile than its other deposits. This is due to the nature of
the markets
in which the subsidiaries operate.
|
2.
|
Cash
flow generated by repayment of loans and
interest.
|
3.
|
Arrangements
with correspondent banks for purchase of unsecured federal
funds.
|
4.
|
The
sale of securities under repurchase agreements and borrowing from
the
Federal Home Loan Bank.
|
5.
|
Maintenance
of an adequate available-for-sale security portfolio. The Company
owns
$136.1 million of securities at market value as of March 31, 2006.
|