##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For Quarterly Period Ended September 30, 2009
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 000-50151
 Allegheny Bancshares, Inc.
  West Virginia
    
    22-3888163(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 
 (Registrants Telephone Number)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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##### 



PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    2Unaudited Consolidated Statements of Income  Nine Months ended September 30, 2009 and 2008
    
    
    2Unaudited Consolidated Statements of Income  Three Months ended September 30, 2009 and 2008
    
    
    3Consolidated Balance Sheets  September 30, 2009 (Unaudited) and December 31, 2008 (Audited)
    
    
    4Unaudited Consolidated Statements of Changes in Stockholders Equity  Nine Months Ended September 30, 2009 and 2008
    
    
    5Unaudited Consolidated Statements of Cash Flows  Nine Months Ended September 30, 2009 and 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    20Item 4T. Controls and Procedures
    
    
    21PART II. OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 2. Changes in Securities
    
    
    21Item 3. Defaults upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    22SIGNATURES
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32
   1




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##### Table of Contents



Part I. Financial Information
 
 Item 1.
    
    Consolidated Financial Statements
 Allegheny Bancshares, Inc.
 
 Consolidated Statements of Income  (In thousands, except for share and per share information)
 Nine Months EndedSeptember 30,2009
    
    
    2008Interest and Dividend Income:Loans and fees
    
    $
    8,561
    
    
    $
    8,490Investment securities  taxable
    
    
    309
    
    
    
    367Investment securities  nontaxable
    
    
    464
    
    
    
    510Deposits and federal funds sold
    
    
    63
    
    
    
    181Total Interest and Dividend Income
    
    
    9,397
    
    
    
    9,548Interest Expense:Deposits
    
    
    3,036
    
    
    
    3,499Borrowings
    
    
    216
    
    
    
    281Total Interest Expense
    
    
    3,252
    
    
    
    3,780Net Interest Income
    
    
    6,145
    
    
    
    5,768Provision for loan losses
    
    
    292
    
    
    
    216Net Interest Income After Provision for Loan Losses
    
    
    5,853
    
    
    
    5,552Noninterest Income:Service charges on deposit accounts
    
    
    723
    
    
    
    637Restricted equity security impairment
    
    
    (604
    )
    
    
    Gain on sale of securities
    
    
    64
    
    
    
    Other income
    
    
    509
    
    
    
    487Total Noninterest Income
    
    
    692
    
    
    
    1,124Noninterest Expense:Salaries and benefits
    
    
    2,322
    
    
    
    2,176Occupancy expenses
    
    
    304
    
    
    
    289Equipment expenses
    
    
    471
    
    
    
    453Other expenses
    
    
    1,699
    
    
    
    1,159Total Noninterest Expenses
    
    
    4,796
    
    
    
    4,077Income before Income Taxes
    
    
    1,749
    
    
    
    2,599Income Tax Expense
    
    
    586
    
    
    
    682Net Income
    
    $
    1,163
    
    
    $
    1,917Earnings Per ShareNet income
    
    $
    1.34
    
    
    $
    2.18Weighted Average Shares Outstanding
    
    
    870,675
    
    
    
    879,350
   2




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##### Table of Contents



Allegheny Bancshares, Inc.
 
 Consolidated Statements of Income  (In thousands, except for share and per share information)
 Three Months EndedSeptember 30,2009
    
    
    2008Interest and Dividend Income:Loans and fees
    
    $
    2,995
    
    
    $
    2,804Investment securities  taxable
    
    
    96
    
    
    
    108Investment securities  nontaxable
    
    
    158
    
    
    
    167Deposits and federal funds sold
    
    
    21
    
    
    
    53Total Interest and Dividend Income
    
    
    3,270
    
    
    
    3,132Interest Expense:Deposits
    
    
    1,046
    
    
    
    1,083Borrowings
    
    
    71
    
    
    
    86Total Interest Expense
    
    
    1,117
    
    
    
    1,169Net Interest Income
    
    
    2,153
    
    
    
    1,963Provision for loan losses
    
    
    125
    
    
    
    81Net Interest Income After Provision for Loan Losses
    
    
    2,028
    
    
    
    1,882Noninterest Income:Service charges on deposit accounts
    
    
    282
    
    
    
    225Other income
    
    
    189
    
    
    
    164Total Noninterest Income
    
    
    471
    
    
    
    389Noninterest Expense:Salaries and benefits
    
    
    799
    
    
    
    729Occupancy expenses
    
    
    106
    
    
    
    100Equipment expenses
    
    
    164
    
    
    
    151Other expenses
    
    
    542
    
    
    
    394Total Noninterest Expenses
    
    
    1,611
    
    
    
    1,374Income before Income Taxes
    
    
    888
    
    
    
    897Income Tax Expense
    
    
    230
    
    
    
    217Net Income
    
    $
    658
    
    
    $
    680Earnings Per ShareNet income
    
    $
    0.76
    
    
    $
    0.77Weighted Average Shares Outstanding
    
    
    870,294
    
    
    
    877,831
   3




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Allegheny Bancshares, Inc.
 
 Consolidated Balance Sheets  (In thousands, except for share and per share information)
 September 30, 2009
    
    
    December 31, 2008Unaudited
    
    
    AuditedASSETSCash and due from banks
    
    $
    5,096
    
    
    $
    2,562Federal funds sold
    
    
    
    
    
    
    1,570Interest bearing deposits in banks
    
    
    15,060
    
    
    
    4,637Investment securities available for sale
    
    
    30,721
    
    
    
    25,685Restricted equity securities
    
    
    748
    
    
    
    1,351Loans receivable, net of allowance for loan losses of $1,524 and $1,396 respectively
    
    
    179,788
    
    
    
    156,982Bank premises and equipment, net
    
    
    6,929
    
    
    
    6,249Interest receivable
    
    
    1,484
    
    
    
    1,276Goodwill
    
    
    1,087
    
    
    
    Bank owned life insurance
    
    
    3,823
    
    
    
    3,693Other assets
    
    
    1,427
    
    
    
    725Total Assets
    
    $
    246,163
    
    
    $
    204,730LIABILITIESDepositsNoninterest bearing demand
    
    $
    25,943
    
    
    $
    20,197Interest bearingDemand
    
    
    31,896
    
    
    
    18,985Savings
    
    
    27,054
    
    
    
    28,567Time deposits over $100,000
    
    
    41,526
    
    
    
    28,211Other time deposits
    
    
    83,855
    
    
    
    71,280Total Deposits
    
    
    210,274
    
    
    
    167,240Accrued expenses and other liabilities
    
    
    737
    
    
    
    841Short-term borrowings
    
    
    1,028
    
    
    
    3,569Long-term debt
    
    
    5,752
    
    
    
    5,920Total Liabilities
    
    
    217,791
    
    
    
    177,570STOCKHOLDERS EQUITYCommon stock; $1 par value, 2,000,000 sharesAuthorized, 900,000 issued
    
    
    900
    
    
    
    900Additional paid in capital
    
    
    900
    
    
    
    900Retained earnings
    
    
    27,794
    
    
    
    26,631Accumulated other comprehensive income
    
    
    573
    
    
    
    320Treasury stock (at cost, 32,191 shares in 2009 and 28,767 shares in 2008)
    
    
    (1,795
    )
    
    
    (1,591
    )Total Stockholders Equity
    
    
    28,372
    
    
    
    27,160Total Liabilities and Stockholders Equity
    
    $
    246,163
    
    
    $
    204,730
   4




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Allegheny Bancshares, Inc.
 
 Consolidated Statements  of Changes in Stockholders Equity  (In thousands)
 Accumulated OtherCommon
    
    
    Additional
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryTotal
    
    
    Stock
    
    
    Paid In Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    StockBalance, December 31, 2008
    
    $
    27,160
    
    
    $
    900
    
    
    $
    900
    
    
    $
    26,631
    
    
    $
    320
    
    
    $
    (1,591
    )Comprehensive IncomeNet Income
    
    
    1,163
    
    
    
    
    
    
    
    
    
    
    
    1,163Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$131
    
    
    253
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    253Total Comprehensive IncomePurchase of Treasury Stock
    
    
    (204
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (204
    )Balance, September 30, 2009
    
    $
    28,372
    
    
    $
    900
    
    
    $
    900
    
    
    $
    27,794
    
    
    $
    573
    
    
    $
    1,795Balance, December 31, 2007
    
    $
    26,731
    
    
    $
    900
    
    
    $
    900
    
    
    $
    25,836
    
    
    $
    154
    
    
    $
    (1,059
    )Comprehensive IncomeNet income
    
    
    1,917
    
    
    
    
    
    
    
    
    
    
    
    1,917Change in unrealized
gain on
available for sale
securities, net of
income tax effect of
$15
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29Total Comprehensive Income
    
    
    1,946Purchase of Treasury Stock
    
    
    (460
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (460
    )Balance, September 30, 2008
    
    $
    28,217
    
    
    $
    900
    
    
    $
    900
    
    
    $
    27,753
    
    
    $
    183
    
    
    $
    (1,519
    )
   5




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##### Table of Contents



Allegheny Bancshares, Inc.
 
 Consolidated Statements of Cash Flows  (In thousands)
 Nine Months EndedSeptember 30,2009
    
    
    2008Cash Flows from Operating Activities:Net income
    
    $
    1,163
    
    
    $
    1,917Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    292
    
    
    
    216Depreciation and amortization
    
    
    346
    
    
    
    346Loss on disposal of fixed assets
    
    
    
    
    
    
    17Net amortization of securities
    
    
    34
    
    
    
    10Gain on sale of securities
    
    
    (64
    )
    
    
    Loss on restricted equity other than temporary impairment
    
    
    604
    
    
    
    Deferred income tax benefit
    
    
    17
    
    
    
    (52
    )Income from life insurance investment
    
    
    (130
    )
    
    
    (131
    )Net change in:Accrued income
    
    
    (208
    )
    
    
    (62
    )Other assets
    
    
    (607
    )
    
    
    (177
    )Accrued expense and other liabilities
    
    
    (349
    )
    
    
    23Net Cash Provided by Operating Activities
    
    
    1,098
    
    
    
    2,107Cash Flows from Investing Activities:Net change in federal funds sold
    
    
    1,570
    
    
    
    (948
    )Cash received from the acquisition of branch offices
    
    
    6,497
    
    
    
    Net change in interest bearing deposits in banks
    
    
    (10,423
    )
    
    
    (4,900
    )Proceeds from sales, calls and maturities of available for sale securities
    
    
    6,453
    
    
    
    6,856Purchase of securities available for sale
    
    
    (11,076
    )
    
    
    (2.201
    )Proceeds from maturity of held to maturity security
    
    
    
    
    
    
    500Purchase of restricted investments
    
    
    
    
    
    
    (614
    )Proceeds from redemption of restricted investments
    
    
    
    
    
    
    167Net increase in loans
    
    
    (9,366
    )
    
    
    (7,219
    )Purchase of bank premises and equipment
    
    
    (158
    )
    
    
    (162
    )Net Cash Used in Investing Activities
    
    
    (16,503
    )
    
    
    (8,521
    )Cash Flows from Financing Activities:Net change in:Demand and savings deposits
    
    
    7,409
    
    
    
    3,522Time deposits
    
    
    13,443
    
    
    
    6,022Short-term borrowings
    
    
    (2,541
    )
    
    
    (184
    )Curtailments of long-term borrowings
    
    
    (168
    )
    
    
    (1,981
    )Purchase of treasury stock
    
    
    (204
    )
    
    
    (460
    )Net Cash Provided by Financing Activities
    
    
    17,939
    
    
    
    6,919Cash and due from banksNet increase in cash and due from banks
    
    
    2,534
    
    
    
    505Cash and due from banks, beginning of period
    
    
    2,562
    
    
    
    2,846Cash and due from banks, end of period
    
    $
    5,096
    
    
    $
    3,351
   6




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##### Table of Contents



Allegheny Bancshares, Inc.
Consolidated Statements of Cash Flows (Continued)  (In thousands)
 Nine Months EndedSeptember 30,2009
    
    
    2008Supplemental Disclosure of Cash Paid During the Period for:Interest
    
    $
    3,258
    
    
    $
    3786Income taxes
    
    $
    864
    
    
    $
    780Transactions related to acquisition of branchesIncrease in assets and liabilities:Loans
    
    $
    13,732
    
    
    
    Bank premises and equipment
    
    $
    869
    
    
    
    Other assets (Goodwill)
    
    $
    1,086
    
    
    
    Deposits
    
    $
    22,182
    
    
    
    Other liabilities
    
    $
    2
   7




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NOTE 1 ACCOUNTING PRINCIPLES:
   Recent Accounting Pronouncements  FASB Accounting
Standards Codification TM FASB Accounting
Standards Codification TM Accounting Standards Codification
      8




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##### Table of Contents



NOTE 2 INVESTMENT SECURITIES:
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedSeptember 30, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueSecurities available for sale:Mortgaged backed obligations of federal agencies
    
    $
    3,714
    
    
    $
    85
    
    
    $
    
    
    
    $
    3,799Government sponsored enterprises
    
    
    8,988
    
    
    
    127
    
    
    
    
    
    
    
    9,115Obligations of states and political subdivisions
    
    
    16,516
    
    
    
    642
    
    
    
    7
    
    
    
    17,151Corporate obligations
    
    
    501
    
    
    
    23
    
    
    
    
    
    
    
    524Other equities
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    132Total
    
    $
    29,851
    
    
    $
    877
    
    
    $
    7
    
    
    $
    30,721
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedDecember 31, 2008
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueSecurities available for sale:Mortgaged backed obligations of federal agencies
    
    $
    2,905
    
    
    $
    34
    
    
    $
    4
    
    
    $
    2,935Government sponsored enterprises
    
    
    6,008
    
    
    
    169
    
    
    
    
    
    
    
    6,177Obligations of states and political subdivisions
    
    
    15,652
    
    
    
    396
    
    
    
    58
    
    
    
    15,991Corporate obligations
    
    
    501
    
    
    
    
    
    
    
    50
    
    
    
    451Other equities
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    131Total
    
    $
    25,197
    
    
    $
    599
    
    
    $
    112
    
    
    $
    25,685
   9




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Less than 12 months
    
    
    12 Months or greaterUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    TotalFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair ValueDescription of Securities:Mortgaged backed obligations of
federal agencies
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Government sponsored enterprises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Obligations of states and
political subdivisions
    
    
    
    
    
    
    
    
    
    
    559
    
    
    
    7
    
    
    
    559Corporate obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    
    
    
    $
    559
    
    
    $
    7
    
    
    $
    559
  AmortizedCost
    
    
    Fair ValueDue:In one year or less
    
    $
    2,495
    
    
    $
    2,530After one year through five years
    
    
    20,426
    
    
    
    20,898After five years through ten years
    
    
    5,388
    
    
    
    5,673After ten years through fifteen years
    
    
    1,542
    
    
    
    1,620Net Cash Provided by Operating Activities
    
    $
    29,851
    
    
    $
    30,721
  NOTE 3 RESTRICTED EQUITY SECURITIES:
    10




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NOTE 4 LOANS RECEIVABLE:
  September 30,
    
    
    December 31,2009
    
    
    2008Real estate loans
    
    $
    84,680
    
    
    $
    72,291Commercial and industrial loans
    
    
    78,543
    
    
    
    70,680Loans to individuals, primarily collateralized by autos
    
    
    13,588
    
    
    
    11,779All other loans
    
    
    4,502
    
    
    
    3,628Total Loans
    
    
    181,312
    
    
    
    158,378Less allowance for loan losses
    
    
    1,524
    
    
    
    1,396Net Loans Receivable
    
    $
    179,788
    
    
    $
    156,982
 NOTE 5 ALLOWANCE FOR LOAN LOSSES:
  Nine Months EndedSeptember 30,2009
    
    
    2008Balance, beginning of period
    
    
    1,396
    
    
    $
    1,186Provision charged to operating expenses
    
    
    292
    
    
    
    216Recoveries of loans charged off
    
    
    124
    
    
    
    87Loans charged off
    
    
    (288
    )
    
    
    (148
    )Balance, end of period
    
    
    1,524
    
    
    $
    1,341
 NOTE 6 LONG TERM DEBT:
  NOTE 7 BANK OWNED LIFE INSURANCE:
   11




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NOTE 8 FAIR VALUE:
 Fair Value Measurements,
    ,
 Investment securities available for sale:
 Restricted equity securities:
 Loans: Accounting
by Creditors for Impairment of a Loan
 Goodwill:
 Other Real Estate Owned:
  12




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##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets recorded at fair value on a recurring basis:Investment securities available for sale
    
    $
    9,115
    
    
    $
    21,606
    
    
    $
    
    
    
    $
    30,721Restricted equity securities
    
    
    
    
    
    
    748
    
    
    
    
    
    
    
    748Total
    
    $
    9,115
    
    
    $
    22,354
    
    
    $
    
    
    
    $
    31,469Assets recorded at fair value on a non recurring basis:Impaired Loans
    
    $
    
    
    
    $
    
    
    
    $
    1,914
    
    
    $
    1,914Goodwill
    
    
    
    
    
    
    
    
    
    
    1,087
    
    
    
    1,087Other real estate owned
    
    
    
    
    
    
    
    
    
    
    824
    
    
    
    824Total
    
    $
    
    
    
    $
    
    
    
    $
    3,825
    
    
    $
    3,825
 NOTE 9 PURCHASE OF TWO BRANCH OFFICES:
   NOTE 10 GOODWILL:
 Goodwill and Other Intangible Assets,
  13




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NOTE 11 BENEFIT PLANS:
 Executive Performance Driven Plan th
   Supplemental Retirement Agreement SERP
  14




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    Forward Looking Statements
   
    
    General economic conditions, either nationally or within the Companys markets, could
be less favorable than expected;
    
    Changes in market interest rates could affect interest margins and profitability;
    
    Competitive pressures could be greater than anticipated; and
    
    Legal or accounting changes could affect the Companys results.
 Critical Accounting Policy
   Allowance for Loan Losses and Provision for Loan Losses
   15




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##### Table of Contents



Results of Operations Overview
  Net Interest Income
    16




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##### Table of Contents



Allegheny Bancshares, Inc.
Net Interest Margin Analysis  (On a Fully Taxable Equivalent Basis) (Dollar Amounts in Thousands)
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2008Average
    
    
    Income/
    
    
    
    
    
    
    Average
    
    
    Income/Balance
    
    
    Expense
    
    
    Rates
    
    
    Balance
    
    
    Expense
    
    
    RatesInterest IncomeLoans
1, 2
    
    $
    170,407
    
    
    $
    8,632
    
    
    
    6.75
    %
    
    $
    151,094
    
    
    $
    8,595
    
    
    
    7.58
    %Federal funds sold
    
    
    784
    
    
    
    
    
    
    
    0.00
    %
    
    
    1,334
    
    
    
    30
    
    
    
    3.00
    %Interest bearing deposits
    
    
    6,349
    
    
    
    63
    
    
    
    1.32
    %
    
    
    6,281
    
    
    
    150
    
    
    
    3.18
    %InvestmentsTaxable
    
    
    11,775
    
    
    
    309
    
    
    
    3.50
    %
    
    
    11,588
    
    
    
    368
    
    
    
    4.23
    %Nontaxable 2
    
    
    16,184
    
    
    
    703
    
    
    
    5.78
    %
    
    
    17,744
    
    
    
    773
    
    
    
    5.81
    %Total Earning Assets
    
    
    205,499
    
    
    
    9,707
    
    
    
    6.30
    %
    
    
    188,041
    
    
    
    9,916
    
    
    
    7.03
    %Interest ExpenseDemand deposits
    
    
    24,215
    
    
    
    167
    
    
    
    0.92
    %
    
    
    16,079
    
    
    
    124
    
    
    
    1.03
    %Savings
    
    
    27,553
    
    
    
    63
    
    
    
    0.30
    %
    
    
    31,341
    
    
    
    281
    
    
    
    1.20
    %Time deposits
    
    
    113,783
    
    
    
    2,807
    
    
    
    3.29
    %
    
    
    96,773
    
    
    
    3,093
    
    
    
    4.26
    %Short-term borrowings
    
    
    1,408
    
    
    
    2
    
    
    
    0.19
    %
    
    
    1,670
    
    
    
    20
    
    
    
    1.60
    %Long-term debt
    
    
    6,175
    
    
    
    214
    
    
    
    4.62
    %
    
    
    7,271
    
    
    
    261
    
    
    
    4.79
    %Total Interest BearingLiabilities
    
    $
    173,134
    
    
    $
    3,253
    
    
    
    2.51
    %
    
    $
    153,134
    
    
    $
    3,779
    
    
    
    3.29
    %Net Interest Margin 1
    
    
    
    
    
    
    6,453
    
    
    
    
    
    
    
    
    
    
    
    6,137Net Yield on InterestEarning Assets
    
    
    
    
    
    
    
    
    
    
    4.19
    %
    
    
    
    
    
    
    
    
    
    
    4.35
    %
 1
    
    Interest on loans includes loan fees.2
    
    An incremental tax rate of 34% was used to calculate the tax
equivalent income. Noninterest Income
  Noninterest Expenses
 th
  17




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##### Table of Contents



Income Tax Expense
  Loans and Provision for Loan Loss
  Loan Portfolio Risk Factors
   September 30,
    
    
    December 31,2009
    
    
    2008Nonaccrual loans
    
    $
    255
    
    
    $
    659Restructured loans
    
    
    134
    
    
    
    139Loans delinquent 90 days or more
    
    
    1,285
    
    
    
    1,034Total Nonperforming Loans
    
    $
    1,674
    
    
    
    1,832
  18




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##### Table of Contents



Deposits
  Borrowings
  Capital
  Uncertainties and Trends
  Liquidity and Interest Sensitivity
    19




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##### Table of Contents



Allegheny Bancshares, Inc.
Interest Sensitivity Analysis  September 30, 2009
 0-3
    
    
    4-12
    
    
    1-5
    
    
    Over 5Months
    
    
    Months
    
    
    Years
    
    
    Years
    
    
    TotalUses of Funds:Loans
    
    $
    22,975
    
    
    $
    24,770
    
    
    $
    54,651
    
    
    $
    78,916
    
    
    $
    181,312Interest bearing deposits
    
    
    12,854
    
    
    
    1,687
    
    
    
    519
    
    
    
    
    
    
    
    15,060Investment securities
    
    
    662
    
    
    
    1,560
    
    
    
    18,881
    
    
    
    9,618
    
    
    
    30,721Restricted Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    748
    
    
    
    748Total
    
    
    36,491
    
    
    
    28,017
    
    
    
    74,051
    
    
    
    89,282
    
    
    
    227,841Sources of Funds:Deposits:Interest bearing demand
    
    
    31,896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,896Savings
    
    
    27,054
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,054Time deposits over $100,000
    
    
    7,195
    
    
    
    18,088
    
    
    
    12,446
    
    
    
    3,797
    
    
    
    41,526Other time deposits
    
    
    16,801
    
    
    
    36,145
    
    
    
    24,054
    
    
    
    6,855
    
    
    
    83,855Short-term borrowings
    
    
    1,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,028Long-term debt
    
    
    1,057
    
    
    
    176
    
    
    
    1,628
    
    
    
    2,891
    
    
    
    5,752Total
    
    $
    85,031
    
    
    $
    54,409
    
    
    $
    38,128
    
    
    $
    13,543
    
    
    $
    191,111Discrete Gap
    
    $
    (48,540
    )
    
    $
    (26,392
    )
    
    $
    35,923
    
    
    $
    75,739
    
    
    $Cumulative Gap
    
    $
    (48,540
    )
    
    $
    (74,932
    )
    
    $
    (39,009
    )
    
    $
    36,730
    
    
    $Ratio of Cumulative Gap
    
    
    -21.30
    %
    
    
    -32.89
    %
    
    
    -17.12
    %
    
    
    16.12
    %To Total Earning Assets
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
   20




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##### Table of Contents



Item 4T.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Controls
  
 Part II. Other Information
 
 Item 1.
    
    Legal Proceedings Not Applicable
 
 Item 2.
    
    Changes in Securities 
  Total Number Of
    
    
    Average PriceDate
    
    Shares Purchased
    
    
    Per ShareMarch 03, 2009
    
    
    500
    
    
    $
    60.00March 11, 2009
    
    
    500
    
    
    $
    60.00June 11, 2009
    
    
    224
    
    
    $
    65.00September 23, 2009
    
    
    2,690
    
    
    $
    60.00
 
 Item 3.
    
    Defaults Upon Senior Securities Not Applicable
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders Not Applicable
 
 Item 5.
    
    Other Information Not Applicable
 
  21




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##### Table of Contents



Item 6.
    
    Exhibits
  No.
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith).31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith).32
    
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith).
  No.
    
    Description
    
    Exhibit Number3.1
    
    
    Articles of Incorporation  Allegheny Bancshares,
Inc.
    
    E2
  No.
    
    Description
    
    Exhibit Number3.3
    
    
    Bylaws of Allegheny Bancshares, Inc.
    
    3.3
  22




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##### Table of Contents



SIGNATURE
  ALLEGHENY BANCSHARES, INC.By:
    /s/ William A. Loving, Jr.Name:
    William A. Loving, Jr.Title:
    Executive Vice President and Chief Executive OfficerBy:
    /s/ L. Kirk BillingsleyName:
    L. Kirk BillingsleyTitle:
    Senior Vice President and Chief Financial Officer   23