----

----

 

**FORM 10-Q**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D. C. 20549**

**Quarterly Report Under Section13 or 15 (d)********of the SecuritiesExchange Act of 1934**

**For Quarter Ended June 30, 2001**

**Commission File Number 2-95114**
| **LOGAN COUNTY BANCSHARES, INC.**                       |
|---------------------------------------------------------|
|                                                         |
| (Exact Name of  Registrant as Specified in Its Charter) |

 
| **WEST  VIRGINIA**                                              |       |
|-----------------------------------------------------------------|------------|
|                                                                 |       |
| (State or other  jurisdiction of incorporation or organization) |       |
|                                                            |       |
| **55-0660015**                                                  |       |
|                                                                 |       |
| (IRS Employer  Identification Number)                      |       |
|                                                            |       |
| **P. O.  BOX 597, LOGAN, WEST VIRGINIA**                        | **25601**  |
|                                                                 |            |
| (Address of Principal  Executive Offices)                       | (Zip Code) |
|                                                            |
| **(304)  752-1166**                                             |
|                                                                 |
| (Registrant's  telephone number including area code)            |
|                                                                 |            |  |

 

Indicateby check mark whether the  registrant(1) has filed all reportsrequiredto be filed by Section 13  or 15 (d) ofthe Securities ExchangeActof 1934  during the preceding 12 months(or  for such shorter periodthat the registrant was required to  file such reports) and (2) has beensubject to such filing requirements for the past90 days. Yesx  No o

 

APPLICABLEONLY TO CORPORATE ISSUERS:

 

Indicate  the number of shares  outstanding,  of each of the  issuer's classes ofcommon stock, as of the latest practicable date.   716,991

 

----

----

 

LOGAN COUNTY BANCSHARES,INC.

 

| PART  I -  FINANCIAL  INFORMATION |
|----------------------------------------|
|                                   |   |
| ITEM I.                                | FINANCIAL  STATEMENTS: |
|                                   |   |
|                                   | Consolidated  Statement of Condition As of June 30, 2001 and 2000 and December  31, 2000. |
|                                   |   |
|                                   | Consolidated Statement  of Income For the Three Month Period Ended June 30, 2001 and 2000. |
|                                   |   |
|                                   | Consolidated  Statement of Income For the Six Month Period Ended June 30, 2001 and 2000. |
|                                   |   |
|                                   | Consolidated  Statement  of Changes in  Stockholders' Equity  for the Six Month Period Ended June 30, 2001 and 2000. |
|                                   |   |
|                                   | Consolidated  Statement of Cash Flows for the Six Month Period Ended June 30, 2001 and  2000. |
|                                   |   |
|                                   | Notes to  Consolidated Financial Statements |
|                                   |   |
| ITEM  2.                               | MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|                                   |   |
| PART II- OTHER  INFORMATION            |
|                                   |   |
| SIGNATURES                             |   |

 

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESConsolidatedStatement of ConditionJune 30, 2001 and 2000 and December 31, 2000(In Thousands)

| ASSETS                                                        |                                                                                                    |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                               |                                                                                                    |
|                                                          | June  30,                                                                                               |   | December  31, |   |
|                                                          | 2001                                                                                                    |   | 2000 |   | 2000 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
| CASH AND DUE FROM  BANKS                                      | $                                                                                                       | 5,955 |   | $ | 6,013 |   | $ | 4,686 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| INVESTMENT SECURITIES:                                        |                                                                                                    |   |   |   |   |   |
|                                                          | AVAILABLE FOR  SALE                                                                                     | 21,848 |   | 28,409 |   | 29,618 |   |
|                                                          | HELD TO MATURITY                                                                                        | 0 |   | 0 |   | 0 |   |
| FEDERAL FUNDS SOLD                                            | 25,210                                                                                                  |   | 0 |   | 4,280 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| LOANS:                                                        |                                                                                                    |   |   |   |   |   |
|                                                          | TOTAL LOANS                                                                                             | 116,031 |   | 112,895 |   | 113,641 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
|                                                          | RESERVE FOR LOAN  LOSSES                                                                                | 848 |   | 613 |   | 702 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | NET LOANS                                                                                               | 115,183 |   | 112,282 |   | 112,939 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| BANK PREMISES AND  EQUIPMENT                                  | 3,493                                                                                                   |   | 3,706 |   | 3,594 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| ACCRUED INTEREST AND  OTHER ASSETS                            | 1,857                                                                                                   |   | 2,846 |   | 2,363 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | $                                                                                                       | 173,546 |   | $ | 153,256 |   | $ | 157,480 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| LIABILITIES  AND STOCKHOLDERS' EQUITY               |                                                                                                    |
|                                                               |                                                                                                    |
| DEPOSITS:                                                     |                                                                                                    |   |   |   |   |   |
|                                                          | DEMAND DEPOSITS:                                                                                        |   |   |   |   |   |   |
|                                                          | NON-INTEREST                                                                                            | $ | 28,006 |   | $ | 20,524 |   | $ | 23,343 |   |
|                                                          | INTEREST BEARING                                                                                        | 21,421 |   | 20,213 |   | 19,435 |   |
|                                                          | SAVINGS DEPOSITS                                                                                        | 36,160 |   | 33,498 |   | 32,288 |   |
|                                                          | TIME DEPOSITS                                                                                           | 68,377 |   | 59,673 |   | 63,657 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | TOTAL DEPOSITS                                                                                          | 153,964 |   | 133,908 |   | 138,723 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| FEDERAL FUNDS  PURCHASED AND SECURITIES                       |                                                                                                    |   |   |   |   |   |
|                                                          | SOLD UNDER  AGREEMENTS TO REPURCHASE                                                                    | 2,000 |   | 3,810 |   | 2,000 |   |
| ACCRUED AND OTHER  LIABILITIES AND                            | 686                                                                                                     |   | 555 |   | 718 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| INCOME TAXES PAYABLE:                                         |                                                                                                    |   |   |   |   |   |
|                                                          | CURRENT                                                                                                 | 81 |   | 69 |   | 18 |   |
|                                                          | DEFERRED                                                                                                | 114 |   | 72 |   | 7 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | TOTAL LIABILITIES                                                                                       | 156,845 |   | 138,414 |   | 141,466 |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| STOCKHOLDERS' EQUITY:                                         |                                                                                                    |   |   |   |   |   |
|                                                          | COMMON  STOCK-$1.67 PAR VALUE; AUTHORIZED - 780,000 SHARES OUTSTANDING-716,991 SHARES  IN 2000 AND 1999 | 1,300 |   | 1,300 |   | 1,300 |   |
|                                                          | SURPLUS                                                                                                 | 2,408 |   | 2,408 |   | 2,408 |   |
|                                                          | RETAINED EARNINGS                                                                                       | 13,853 |   | 11,994 |   | 13,166 |   |
|                                                          | TREASURY STOCK                                                                                          | (860 | ) | (860 | ) | (860 | ) |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | TOTAL  STOCKHOLDERS' EQUITY                                                                             | 16,701 |   | 14,842 |   | 16,014 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          | $                                                                                                       | 173,546 |   | $ | 153,256 |   | $ | 157,480 |   |
|                                                          |                                                                                                         |   |  |   |  |   |
|                                                          |                                                                                                    |   |   |   |   |   |
| SEE ACCOMPANYING NOTES  TO CONSOLIDATED FINANCIAL STATEMENTS. |
|                                                               |                                                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESConsolidatedStatement of IncomeFor the Three Month Periods Ended June 30, 2001and 2000(In Thousands)

|                                  | 2001                                                 |   | 2000          |   |
|---------------------------------------|------------------------------------------------------|--------|---------------|--------|
|                                  |                                                      |   |               |   |
| INTEREST INCOME:                      |                                                 |   |          |   |
|                                  | INTEREST ON LOANS                                    | $      | 2,777         |   | $ | 2,315 |   |
|                                  | INTEREST ON  INVESTMENTS                             | 370    |          | 469    |   |
|                                  | INTEREST ON  FEDERAL FUNDS SOLD                      | 222    |          | 9      |   |
|                                  |                                                      |   |               |   |
|                                  | 3,369                                                |   | 2,793         |   |
|                                  |                                                 |   |          |   |
| INTEREST EXPENSE:                     |                                                 |   |          |   |
|                                  | INTEREST ON  DEPOSITS                                | 1,293  |          | 1,081  |   |
|                                  | INTEREST OTHER                                       | 35     |          | 69     |   |
|                                  |                                                      |   |               |   |
|                                  | NET INTEREST  INCOME                                 | 2,041  |          | 1,643  |   |
|                                  |                                                 |   |          |   |
| PROVISION FOR LOAN  LOSSES            | 110                                                  |   | 0             |   |
|                                  |                                                      |   |               |   |
|                                  | NET INTEREST  INCOME AFTER PROVISION FOR LOAN LOSSES | 1,931  |     | 1,643  |     |
|                                  |                                                 |   |          |   |
| OTHER INCOME:                         |                                                 |   |          |   |
|                                  | SERVICE FEES                                         | 168    |          | 184    |   |
|                                  | OTHER OPERATING  INCOME                              | 6      |          | 8      |   |
|                                  |                                                      |   |               |   |
|                                  | TOTAL OTHER  INCOME                                  | 174    |          | 192    |   |
|                                  |                                                 |   |          |   |
| OTHER EXPENSES:                       |                                                 |   |          |   |
|                                  | SALARIES AND  BENEFITS                               | 527    |          | 522    |   |
|                                  | EXPENSE OF BANK  PREMISES AND EQUIPMENT              | 143    |          | 134    |   |
|                                  | OTHER OPERATING  EXPENSES                            | 555    |          | 374    |   |
|                                  |                                                      |   |               |   |
|                                  | TOTAL OTHER  EXPENSES                                | 1,225  |          | 1,030  |   |
|                                  |                                                 |   |          |   |
| INCOME BEFORE INCOME  TAXES           | 880                                                  |   | 805           |   |
|                                  |                                                 |   |          |   |
| INCOME TAXES                          | 347                                                  |   | 292           |   |
|                                  |                                                      |   |               |   |
|                                  | NET INCOME                                           | $      | 533           |   | $ | 513 |   |
|                                  |                                                      |   |               |   |
|                                  |                                                 |   |          |   |
| PER SHARE OF COMMON  STOCK NET INCOME | $                                                    | 0.74   |          | $      | 0.72 |   |
|                                  |                                                      |   |               |   |
|                                       |                                                      |        |               |        |  |  |  |  |

SEEACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESConsolidatedStatement of IncomeForthe Six Month Periods Ended June 30, 2001 and 2000(In Thousands)

|                                  | 2001                                                 |   | 2000          |   |
|---------------------------------------|------------------------------------------------------|--------|---------------|--------|
|                                  |                                                      |   |               |   |
| INTEREST INCOME:                      |                                                 |   |          |   |
|                                  | INTEREST ON LOANS                                    | $      | 5,219         |   | $ | 4,556 |   |
|                                  | INTEREST ON  INVESTMENTS                             | 790    |          | 947    |   |
|                                  | INTEREST ON  FEDERAL FUNDS SOLD                      | 382    |          | 14     |   |
|                                  |                                                      |   |               |   |
|                                  | 6,391                                                |   | 5,517         |   |
|                                  |                                                 |   |          |   |
| INTEREST EXPENSE:                     |                                                 |   |          |   |
|                                  | INTEREST ON  DEPOSITS                                | 2,566  |          | 2,237  |   |
|                                  | INTEREST OTHER                                       | 69     |          | 69     |   |
|                                  |                                                 |        |          |        |   |
|                                  | NET INTEREST  INCOME                                 | 3,756  |          | 3,211  |   |
|                                  |                                                 |   |          |   |
| PROVISION FOR LOAN  LOSSES            | 140                                                  |   | 0             |   |
|                                  |                                                      |   |               |   |
|                                  | NET INTEREST  INCOME AFTER PROVISION FOR LOAN LOSSES | 3,616  |     | 3,211  |     |
|                                  |                                                 |   |          |   |
| OTHER INCOME:                         |                                                 |   |          |   |
|                                  | SERVICE FEES                                         | 318    |          | 330    |   |
|                                  | OTHER OPERATING  INCOME                              | 41     |          | 49     |   |
|                                  |                                                      |   |               |   |
|                                  | TOTAL OTHER  INCOME                                  | 359    |          | 379    |   |
|                                  |                                                 |   |          |   |
| OTHER EXPENSES:                       |                                                 |   |          |   |
|                                  | SALARIES AND  BENEFITS                               | 1040   |          | 1061   |   |
|                                  | EXPENSE OF BANK  PREMISES AND EQUIPMENT              | 285    |          | 271    |   |
|                                  | OTHER OPERATING  EXPENSES                            | 978    |          | 728    |   |
|                                  |                                                      |   |               |   |
|                                  | TOTAL OTHER EXPENSES                                 | 2,303  |          | 2,060  |   |
|                                  |                                                 |   |          |   |
| INCOME BEFORE INCOME  TAXES           | 1672                                                 |   | 1530          |   |
|                                  |                                                 |   |          |   |
| INCOME TAXES                          | 632                                                  |   | 549           |   |
|                                  |                                                      |   |               |   |
|                                  | NET INCOME                                           | $      | 1,040         |   | $ | 981 |   |
|                                  |                                                      |   |               |   |
|                                  |                                                 |   |          |   |
| PER SHARE OF COMMON  STOCK NET INCOME | $                                                    | 1.45   |          | $      | 1.37 |   |
|                                  |                                                      |   |               |   |
|                                       |                                                      |        |               |        |  |  |  |  |

 

SEEACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESConsolidatedStatement in Changes in Stockholders' EquityForthe Six Month Periods Ended June 30, 2001 and 2000(In Thousands)

|                                                                                         | Common Stock |          | Surplus |           | Retained  Earnings |          | Accumulated  OtherComprehensive  Income, Net |          | Treasury  Stock |          | Total  |   |
|----------------------------------------------------------------------------------------------|-------------------|---------------|---------|----------------|--------------------|---------------|----------------------------------------------|---------------|-----------------|---------------|--------|--------|
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| BALANCE - DECEMBER 31 2000                                                              | $                 | 1,300         |    | $              | 2,408              |          | $                                            | 13,237        |            | $             | (71    | )      | $ | (860 | ) | $ | 16,014 |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| COMPREHENSIVE INCOME                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| NET INCOME FOR THE SIX  MONTHS ENDED  JUNE 30, 2000                                     | 0                 |     | 0       |      | 1,040              |     | 0                                            |     | 0               |     | 1,040  |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| NET UNREALIZED GAINS  (LOSSES) ON AVAILABLE FOR-SALE SECURITIES                    |              |          |    |           |               |          | 128                                          |          |            |          | 128    |   |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
| TOTAL COMPREHENSIVE  INCOME                                                                  | 0                 |          | 0       |           | 1040               |          | 128                                          |          | 0               |          | 1168   |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| DIVIDENDS ON 716,991  SHARES COMMON  STOCK @ $0.57                                      |              |          |    |           | (481               | )             |                                         |          |            |          | (481   | )      |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
|                                                                                         | $                 | 1,300         |    | $              | 2,408              |          | $                                            | 13,796        |            | $             | 57     |   | ($860 | ) | $ | 16,701 |   |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| BALANCE -  DECEMBER 31                                                                       |              |          |    |           |               |          |                                         |          |            |          |   |   |
| 1999                                                                                         | $                 | 1,300         |    | $              | 2,408              |          | $                                            | 12,236        |            | $             | (641   | )      | $ | (860 | ) | $ | 14,443 |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| COMPREHENSIVE  INCOME                                                                        |              |          |    |           |               |          |                                         |          |            |          |   |   |
| NET  INCOME FOR THE SIX MONTHS ENDED JUNE  30, 2000                                     | 0                 |          | 0       |           | 981                |          | 0                                            |          | 0               |          | 981    |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| CHANGE IN  NET UNREALIZED HOLDING GAINS  (LOSSES)ON AVAILABLE  FOR-SALE SECURITIES |              |          |    |           |               |          | (124                                         | )             |            |          | (124   | )      |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |        |
| TOTAL  COMPREHENSIVE INCOME                                                                  | 0                 |          | 0       |           | 981                |          | (124                                         | )             | 0               |          | 857    |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
|                                                                                         |              |          |    |           |               |          |                                         |          |            |          |   |   |
| DIVIDENDS  ON 716,991 SHARES COMMON STOCK @ $0.64                                       |              |          | (458    | )              |               |          |                                         |          | 1               |          | (458   | )      |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
|                                                                                         | $                 | 1,300         |    | $              | 2,408              |          | $                                            | 12,759        |            | $             | (765   | )      | $ | (860 | ) | $ | 14,842 |   |
|                                                                                         |                   |          |         |           |                    |          |                                              |          |                 |          |        |   |
|                                                                                              |                   |               |         |                |                    |               |                                              |               |                 |               |        |        |  |  |  |  |  |  |  |  |

 

SEEACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESCONSOLIDATEDSTATEMENT OF CASH FLOWSFORTHE SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000

|                                                  | 2001                                                                                                   |    | 2000   |   |
|-------------------------------------------------------|--------------------------------------------------------------------------------------------------------|---------|--------|--------|
|                                                  |                                                                                                        |    |        |   |
| CASH FLOWS FROM  OPERATING ACTIVITIES:                |                                                                                                   |    |   |   |
|                                                  | NET INCOME                                                                                             | $       | 1,040  |   | $ | 981 |   |
|                                                  | ADJUSTMENTS TO  RECONCILE NET                                                                          |    |   |   |   |
|                                                  | INCOME TO NET  CASH PROVIDED BY OPERATING ACTIVITIES:                                                  |    |   |   |   |
|                                                  | DEPRECIATION                                                                                           | 134     |   | 133    |   |
|                                                  | SECURITY  AMORTIZATION AND ACCREATION                                                                  | 0       |   | 5      |   |
|                                                  | MARKET VALUE  AMORTIZATION                                                                             | (2      | )      | (2     | ) |
|                                                  | PROVISION FOR LOAN  LOSSES                                                                             | 140     |   | 0      |   |
|                                                  | (INCREASE)  DECREASE IN OTHER ASSETS                                                                   | 506     |   | 134    |   |
|                                                  | INCREASE  (DECREASE) IN OTHER                                                                          |    |   |   |   |
|                                                  | LIABILITIES                                                                                            | 20      |   | (147   | ) |
|                                                  |                                                                                                        |    |        |   |
|                                                  | NET CASH PROVIDED  BY OPERATING ACTIVITIES                                                             | 1,838   |   | 1,104  |   |
|                                                  |                                                                                                   |    |   |   |
| CASH FLOWS FROM  INVESTING ACTIVITIES:                |                                                                                                   |    |   |   |
|                                                  | PROCEEDS FROM  SALE OF SECURITIES AVAILABLE FOR SALE                                                   | 22,500  |   | 0      |   |
|                                                  | PROCEEDS FROM  MATURITIES OF SECURITIES AVAILABLE FOR SALE                                             | 3,977   |   | 3,400  |   |
|                                                  | PROCEEDS FROM  MATURITIES OF SECURITIES HELD TO MATURITY                                               | 0       |   | 0      |   |
|                                                  | PURCHASE OF  SECURITIES AVAILABLE FOR SALE                                                             | (18,459 | )      | (2,000 | ) |
|                                                  | NET (INCREASE)  DECREASE IN FEDERAL FUNDS SOLD                                                         | (20,930 |   | 0      |   |
|                                                  | NET (INCREASE)  DECREASE IN LOANS                                                                      | (2,384  | )      | (3,411 | ) |
|                                                  | PURCHASE OF BANK  PREMISES AND EQUIPMENT                                                               | (33     | )      | (65    | ) |
|                                                  |                                                                                                        |    |        |   |
|                                                  | NET CASH PROVIDED  BY INVESTING ACTIVITIES                                                             | (15,329 | )      | (2,076 | ) |
|                                                  |                                                                                                   |    |   |   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                |                                                                                                   |    |   |   |
|                                                  | NET INCREASE  (DECREASE) IN DEMAND DEPOSITS                                                            | 6,649   |   | 2,406  |   |
|                                                  | NET INCREASE  (DECREASE) IN SAVINGS DEPOSITS                                                           | 3,872   |   | 2,474  |   |
|                                                  | NET INCREASE  (DECREASE) IN TIME DEPOSITS                                                              | 4,720   |   | 1,409  |   |
|                                                  | NET INCREASE  (DECREASE) IN FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENT TO  REPURCHASE | 0       |   | (6,030 | ) |
|                                                  | DIVIDENDS PAID                                                                                         | (481    | )      | (458   | ) |
|                                                  |                                                                                                   |         |   |        |   |
|                                                  |                                                                                                   | 14,760  |   | (199   | ) |
|                                                  |                                                                                                        |    |        |   |
| NET INCREASE  (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,269                                                                                                  |    | (1,171 | )      |
|                                                  |                                                                                                   |    |   |   |
| CASH AND CASH  EQUIVALENT AT BEGINNING OF PERIOD      | 4,686                                                                                                  |    | 7,184  |   |
|                                                  |                                                                                                        |    |        |   |
| CASH AND CASH  EQUIVALENT AT END  OF PERIOD      | $                                                                                                      | 5,955   |   | $      | 6,013 |   |
|                                                  |                                                                                                        |    |        |   |
|                                                       |                                                                                                        |         |        |        |  |  |  |  |  |  |

 

SEEACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

June 30, 2001

 

LOGAN COUNTY BANCSHARES,INC. AND SUBSIDIARIESNotes to Consolidated FinancialStatements

| 1.     | Financial  Statements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |           The  foregoing   statements  are  unaudited;  however,  in  the opinion  of the  Management,  all adjustments (comprising of   only  normal recurring  accruals) necessary for a fair presentation of the financial statements have  been included.                                                                                                                                                                                                                                                                                                                          |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| 2.     | Basis  of Consolidation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |           The  Consolidated   Statement  of  Condition   and  Consolidated Statement of  Income of  Logan County BancShares, Inc. include the activity of Logan Bank and  Trust Company and Bank of Chapmanville, a wholly owned subsidiary.                                                                                                                                                                                                                                                                                                                                                     |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| 3.     | Year  2000 Assessment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   |           Management has initiated a  Company-wide program to assess its data processing, information systems  and customer service programs to ensure  the Company's  operating  capabilities in the  year 2000.  Currently,  the   Company's  subsidiary  Bank,  LB&T,  uses   EDS,  a regional provider of financial   institution data processing as it's primary provider of computer services and data processing.  EDS has certified it's  hardware  and  software are  Year 2000,  and beyond, compliant. |   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|   |           The  Company  contracted  to    have  their  computer   hardware evaluated   for  Year  2000    compliance  and  estimates additional computer hardware and software   costs to be approximately $455,000. These costs were capitalized and will be a mortized over five  years. It is the   opinion of management that the cost   of converting these systems and  the annual a mortization, thereof,  will not materially impact the results of operation or its financial position.                      |   |

 

MANAGEMENT'SDISCUSSION AND ANALYSIS OFFINANCIALCONDITION AND RESULTS OF OPERATIONS

             The following  is a discussion and  analysisfocused  on significant changes inthe  financial condition andresults  of operations  of Logan County Bancshares, Inc.EARNINGS SUMMARY             TheCompany  reported net  income of $1,046,000. for the  six months endedJune  30, 2001 compared to  $981,000. for the six  months ended June 30, 2000,representing a 6.01%  increase.  This increase was primarily the resultof  the increase in net  interest income of $545,000.,  decrease inother income  of $20,000.  and increase  in  all operating  expenses of $383,000. and decrease in income taxes of $83,000.             Earningsper  common share were $1.45  for the six months  ended June 30,2001 compared with $1.37 for the same period of 2000.             LoganCounty  Bancshares' annualizedreturn  on assets (ROA)  for the sixmonth period ended  June 30, 2001 was1.20% compared  to 1.28% forthe six  month period ended June 30, 2000.  Annualized return onshareholders' equity  (ROE) was   12.45%  and 13.21%  at  June 30,   2001  and 2000, respectively.NET INTEREST INCOME             The  most significant  component  of Logan County  Bancshares'  net earnings is net  interest income, which represents the  excess of interest income earnedon earning assets over the interest expense paid for sources offunds.  Net interest income is  affected by changes in volumeresulting from growth and alteration of the balance sheet composition, aswell as by fluctuationsin market  interest rates and maturitiesof  sources and uses of funds.             Interest income amounted to$6,391,000. at June 30, 2001, an increase of  $874,000. from  June  30, 2000.   Interest  expense also  increased $329,000.,resulting in an overall increase  of$545,000. or 16.97% in net interestincome between June 30, 2001 and June 30, 2000.PROVISION FOR LOAN LOSSES AND ASSET QUALITY             The  provision for  loan   losses represents  charges  to earnings necessary  tomaintain  an adequate  allowance for  potential future loan losses.   Management's  determination  of  the appropriate  level of  the allowance  is based on an  ongoing analysis  of credit quality and  loss potentialin the  loan portfolio, actual loanloss  experience relativeto the  size  and characteristics  of  the loan portfolio,  change  in the composition  and risk  characteristics  of the loan  portfolio  and the anticipated  influence of  national  and local  economic conditions.   The adequacy  of the allowance  for  loan losses is  reviewed quarterly  and adjustmentsare made as considered necessary.              Forthe six month period ended  June 30,2001 and 2000, the provision for loan losses was $140,000. and $0.  respectively.             Thereserve for  loan losses was $848,000.at June  30, 2001 comparedto $613,000. at June 30, 2000.  Expressed as a percentage of loans (net of unearnedincome),  the reserve for loan  losses was .74% at  June 30, 2001 and .54% at June 30, 2000. 

Asummary  of the  Company's past  due loans  andnonperforming  assets is providedin the following table.
 

SUMMARY OF PAST DUE LOANS ANDNONPERFORMING ASSETS(in thousands of dollars
 June  30,    2001 2000    Loans past due 90 or  more days  still accruing interest$2,254   $2,738      Nonperforming assets:     Nonaccruing loans422 596  Other real estate  owned154 384     $576 $980    
 

NONINTERESTINCOME             Noninterest  income includes  revenues  from all  sources other  than interest  income.  For  the  six  month  period  ended June  30,  2001, noninterest  income  totalled  $359,000.,  representing  a   decrease  of $20,000., or 5.28%  from the $379,000. recorded during the  same period of 2000.  This increase was primarily due to decreasesin service fees income of $12,000.

NONINTERESTEXPENSE

             Noninterest expense comprisesoverhead costs which are not related to interestexpense  or to losses from  loans or securities.  As of June 30, 2001,the  Company's noninterest expensetotalled  $2,303,000.,increasing $243,000. over the $2,060,000. of noninterest expense for the six months ended  June30,  2000.  Expressed  as a  percentage of  assets, annualized noninterestexpense was 2.69% at June  30, 2000,compared to 2.69% at June 30, 2000.             Salariesand  employee benefits are Logan  County Bancshares'largest noninterest  cost,  representing  approximately   45%  and 51%  of  total noninterest expense at  June 30,  2001 and 2000.  Salaries  and employee benefitsdecreased  $21,000., or 2.00% at  June 30, 2001 compared  to June 30,2000.  This decrease is primarily due topayroll timimg.INCOME TAXES             Logan  County Bancshares'  federal income  taxexpense,  for the  six month  period ended  June30,  2001,  reflected a  $83,000.increase  when comparedto the  same period of 2000.  Income tax expense equalled 37.80% and35.88% of income before taxes at June 30, 2001 and 2000, respectively. Forfinancial  reporting purposes,income  tax expense does not  equal the statutory income tax rate of43%  when applied to pretax income,primarily becauseof timing differences included in income before income taxes.
Balance Sheet Data:

             Total assets increased by $16,066,000.  between year end and June 30, 2001to a balance of $173,546,000.  The majorcomponent of this change was adecrease  in Investment  Securities of $7,770,000.,  loan increases  of$2,390,000., federal  funds  sold  increase  of  $20,930,000.  and  cash increasedby $1,269,000.  The primary source  of funds for this change was anincrease in deposits of $15,211,000., and net income of $1,040,000.Liquidity:

             Managing  Logan's liquidity requirements primarily  involvesmeeting the  loan  demand, deposit  withdrawal  and  the cash flow  requirements. Logan's  primary sources  of  liquid  assets are federal  funds sold  and investmentsecurities maturing in less than  oneyear.  These items can be convertedinto funds in a short period of time. At June 30, 2001, Federal FundsSold  amounted to  $25,210,000. and  securities maturing within one year amounted to $2,998,000.  These are comparedto the  balances atJune 30, 2000 of $0 in Federal Funds Sold and maturing InvestmentSecurities of $2,100,000.due within one year.             Traditionally,banks  have been able  to manage liquidity based  on a relatively  stable group of  core  deposits.  The deposits,  demand  and consumerdeposits under $l00,000. are considered the most stable and least expensivesource  of funds.  During 2001 and  2000, bankscontinue  to be faced withmore  volatile, interest sensitive fundsand have  had to match their  funding requirements  by  using assets  and  liability  management techniques. Capital Resources:             Logan'scapital position is based on its stockholders' equity and the primary sourceof  such equity has been retained  earnings. Since Logan's formation, it has accumulated Retained  Earnings of $13,853,000. and hasa total  Stockholders'  Equity of $16,701,000.  as  of June 30,  2001;  as compared  to $11,994,000.  of  Retained Earnings and total Stockholders' equity of $14,842,000. at June30, 2000.             Theequity  capital was 9.62% and  9.68% of total assets  at June 30, 2001  and  2000  respectively.   Logan County   Bancshares  exceeds all regulatorycapital guide lines and has  not beenadvised by any regulatory agencyof any minimum capital requirement. Effects of Inflation:             The  impact  of  inflation   on a  financial   institution  differs significantly from  that  exerted on an  industrial  concern, primarily becausea  financial institution's  assets and liabilities  consist almost entirely of  monetary items.  The low  proportion of theBank's  net fixed assets to  total assets  reduces both the potential of  inflatedearnings resulting  from   understated  depreciation  charges  and  the  potential significantunderstatement of asset  values.  However, inflation does have aconsiderable indirect impact on  banks,including increased loan demand,as it becomes necessary for  producers and consumers to acquireadditional fundsto  maintain the  same levels of  consumption, inventories, and new investments.  Inflation also frequently results in higher interest rates whichcan affect both yields on  earningassets and rates paid on deposits andother interest-bearing liabilities.

 

PARTII. - OTHER INFORMATION

 

NONE.

SIGNATURES

 

             Pursuant to the requirementsof  the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.
 LOGAN COUNTY  BANCSHARES, INC.  (Registrant)      Date    Harvey  Oakley, President (Signature)        Date    Eddie  D. Canterbury, Exec. Vice Pres. (Signature)