##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2003



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission File Number: 0-12724



---



Belmont Bancorp.

(Exact name of registrant as specified in its charter)



|Ohio                                                           |  | 34-1376776                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|325 Main St., Bridgeport, Ohio                                 |  | 43912                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



(740)-695-3323

(Registrants telephone number, including area code)



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



---



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



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



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



Common Stock, $0.25 par value,

11,108,903
shares outstanding

as of October 22, 2003



---



---

##### Table of Contents

BELMONT BANCORP.

Quarter Ended September 30, 2003



INDEX



|Part I. FINANCIAL INFORMATION                                                                                                                                         |  |   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                                                                                                                                                                      | 
|Item 1. Financial Statements                                                                                                                                          |  |   
|                                                                                                                                                                      | 
|Consolidated Balance Sheets  September 30, 2003 and December 31, 2002                                                                                                |  | 3 
|                                                                                                                                                                      | 
|Consolidated Statements of Income-Three Months Ended September 30, 2003 and September 30, 2002                                                                        |  | 4 
|                                                                                                                                                                      | 
|Consolidated Statements of Income-Nine Months Ended September 30, 2003 and September 30, 2002                                                                         |  | 5 
|                                                                                                                                                                      | 
|Condensed Consolidated Statements of Cash Flows-Nine Months Ended September 30, 2003 and September 30, 2002                                                           |  | 6 
|                                                                                                                                                                      | 
|Condensed Consolidated Statements of Changes in Shareholders Equity Three Months Ended September 30, 2003 and 2002 and Nine Months Ended September 30, 2003 and 2002 |  | 7 
|                                                                                                                                                                      | 
|Notes to the Consolidated Financial Statements                                                                                                                        |  | 8 
|                                                                                                                                                                      | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                         |  | 13
|                                                                                                                                                                      | 
|Item 3. Quantitative and Qualitative Disclosure about Market Risk                                                                                                     |  | 20
|                                                                                                                                                                      | 
|Item 4. Controls and Procedures                                                                                                                                       |  | 20
|                                                                                                                                                                      | 
|Part II  OTHER INFORMATION                                                                                                                                           |  |   
|                                                                                                                                                                      | 
|Item 1. Legal Proceedings                                                                                                                                             |  | 21
|                                                                                                                                                                      | 
|Item 2. Changes in Securities and Use of Proceeds                                                                                                                     |  | 21
|                                                                                                                                                                      | 
|Item 3. Defaults upon Senior Securities                                                                                                                               |  | 21
|                                                                                                                                                                      | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                                                                           |  | 21
|                                                                                                                                                                      | 
|Item 5. Other Information                                                                                                                                             |  | 21
|                                                                                                                                                                      | 
|Item 6. Exhibits and Reports on Form 8-K                                                                                                                              |  | 21
|                                                                                                                                                                      | 
|Signature page                                                                                                                                                        |  | 23
|                                                                                                                                                                      | 
|Certifications                                                                                                                                                        |  |   



2



---

##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Balance Sheets

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

|                                                                                              |  | September 30, 2003 |         |   | December 31, 2002 |  
|--------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------- | -
|                                                                                              | 
|Assets                                                                                        |  |                    |         |   |                   |  
|Cash and due from banks                                                                       |  | $                  | 9,254   |   |                   | $
|Interest-bearing deposits in other banks                                                      |  |                    | 1,128   |   |                   |  
|Federal funds sold                                                                            |  |                    | 3,600   |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Cash and cash equivalents                                                                     |  |                    | 13,982  |   |                   |  
|Loans held for sale                                                                           |  |                    | 101     |   |                   |  
|Securities available for sale at fair value                                                   |  |                    | 122,912 |   |                   |  
|Securities held to maturity (estimated fair value of $274 in 2003)                            |  |                    | 250     |   |                   |  
|Loans                                                                                         |  |                    | 146,340 |   |                   |  
|Less allowance for loan losses                                                                |  |                    | (4,035  | ) |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Net loans                                                                                     |  |                    | 142,305 |   |                   |  
|Premises and equipment, net                                                                   |  |                    | 6,038   |   |                   |  
|Deferred federal tax assets                                                                   |  |                    | 4,684   |   |                   |  
|Cash surrender value of life insurance                                                        |  |                    | 1,328   |   |                   |  
|Accrued income receivable                                                                     |  |                    | 1,492   |   |                   |  
|Other assets                                                                                  |  |                    | 3,652   |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Total assets                                                                                  |  | $                  | 296,744 |   |                   | $
|                                                                                              |  |                    |         |   |                   |  
|Liabilities and Shareholders Equity                                                          |  |                    |         |   |                   |  
|Liabilities                                                                                   |  |                    |         |   |                   |  
|Non-interest bearing deposits:                                                                |  |                    |         |   |                   |  
|Demand                                                                                        |  | $                  | 28,351  |   |                   | $
|Interest-bearing deposits:                                                                    |  |                    |         |   |                   |  
|Demand                                                                                        |  |                    | 29,598  |   |                   |  
|Savings                                                                                       |  |                    | 98,247  |   |                   |  
|Time                                                                                          |  |                    | 76,558  |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Total deposits                                                                                |  |                    | 232,754 |   |                   |  
|Securities sold under repurchase agreements                                                   |  |                    | 1,003   |   |                   |  
|Long-term borrowings                                                                          |  |                    | 25,273  |   |                   |  
|Accrued interest on deposits and other borrowings                                             |  |                    | 346     |   |                   |  
|Other liabilities                                                                             |  |                    | 2,366   |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Total liabilities                                                                             |  |                    | 261,742 |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Shareholders Equity                                                                          |  |                    |         |   |                   |  
|                                                                                              |  |                   
|Preferred stock - authorized 90,000 shares with no par value; no shares issued or outstanding |  |                    |        |   |                   |  
|Common stock - $0.25 par value, 17,800,000 shares authorized; 11,153,195 shares issued        |  |                    | 2,788   |   |                   |  
|Additional paid-in capital                                                                    |  |                    | 17,552  |   |                   |  
|Retained earnings                                                                             |  |                    | 14,743  |   |                   |  
|Treasury stock at cost (44,292 shares at 9/30/03; 44,792 shares at 12/31/02)                  |  |                    | (997    | ) |                   |  
|Accumulated other comprehensive income                                                        |  |                    | 916     |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Total shareholders equity                                                                    |  |                    | 35,002  |   |                   |  
|                                                                                              |  |                    |         |   |                   |  
|Total liabilities and shareholders equity                                                    |  | $                  | 296,744 |   |                   | $
|                                                                                              |  |                    |         |   |                   |  



See the Notes to the
Consolidated Financial Statements.



3



---

##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Statements of Income

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



|                                                    |  | For the Three Months Ended September 30, |      
|--------------------------------------------------- |  | ---------------------------------------- | -----
|                                                    |  | 2003                                     |      
|Interest and Dividend Income                        |  |                                          |      
|Loans:                                              |  |                                          |      
|Taxable                                             |  | $                                        | 2,291
|Tax-exempt                                          |  |                                          | 36   
|Securities:                                         |  |                                          |      
|Taxable                                             |  |                                          | 1,100
|Tax-exempt                                          |  |                                          | 20   
|Dividends                                           |  |                                          | 44   
|Interest on federal funds sold                      |  |                                          | 15   
|                                                    |  |                                          |      
|Total interest and dividend income                  |  |                                          | 3,506
|                                                    |  |                                          |      
|Interest Expense                                    |  |                                          |      
|Deposits                                            |  |                                          | 954  
|Other borrowings                                    |  |                                          | 257  
|                                                    |  |                                          |      
|Total interest expense                              |  |                                          | 1,211
|                                                    |  |                                          |      
|Net interest income                                 |  |                                          | 2,295
|Provision for loan losses                           |  |                                          |     
|                                                    |  |                                          |      
|Net interest income after provision for loan losses |  |                                          | 2,295
|                                                    |  |                                          |      
|Noninterest Income                                  |  |                                          |      
|Trust fees                                          |  |                                          | 128  
|Service charges on deposits                         |  |                                          | 424  
|Other operating income                              |  |                                          | 111  
|Securities gains                                    |  |                                          | 105  
|Gains on sale of loans and loans held for sale      |  |                                          | 171  
|                                                    |  |                                          |      
|Total noninterest income                            |  |                                          | 939  
|                                                    |  |                                          |      
|Noninterest Expense                                 |  |                                          |      
|Salary and employee benefits                        |  |                                          | 1,376
|Net occupancy expense of premises                   |  |                                          | 215  
|Equipment expenses                                  |  |                                          | 206  
|Legal fees                                          |  |                                          | 47   
|Legal settlements expense                           |  |                                          |     
|Other operating expenses                            |  |                                          | 867  
|                                                    |  |                                          |      
|Total noninterest expense                           |  |                                          | 2,711
|                                                    |  |                                          |      
|Income before income taxes                          |  |                                          | 523  
|Income Tax Expense                                  |  |                                          | 117  
|                                                    |  |                                          |      
|Net income                                          |  | $                                        | 406  
|                                                    |  |                                          |      
|Earnings per common share:                          |  |                                          |      
|Basic                                               |  | $                                        | 0.04 
|Diluted                                             |  | $                                        | 0.04 



See the Notes to the
Consolidated Financial Statements.



4



---

##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Statements of Income

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



|                                                    |  | For the Nine MonthsEnded September 30, |       
|--------------------------------------------------- |  | -------------------------------------- | ------
|                                                    |  | 2003                                   |       
|Interest and Dividend Income                        |  |                                        |       
|Loans:                                              |  |                                        |       
|Taxable                                             |  | $                                      | 6,784 
|Tax-exempt                                          |  |                                        | 113   
|Securities:                                         |  |                                        |       
|Taxable                                             |  |                                        | 3,444 
|Tax-exempt                                          |  |                                        | 87    
|Dividends                                           |  |                                        | 133   
|Interest on federal funds sold                      |  |                                        | 90    
|                                                    |  |                                        |       
|Total interest and dividend income                  |  |                                        | 10,651
|                                                    |  |                                        |       
|Interest Expense                                    |  |                                        |       
|Deposits                                            |  |                                        | 3,150 
|Other borrowings                                    |  |                                        | 747   
|                                                    |  |                                        |       
|Total interest expense                              |  |                                        | 3,897 
|                                                    |  |                                        |       
|Net interest income                                 |  |                                        | 6,754 
|Provision for loan losses                           |  |                                        | (1,350
|                                                    |  |                                        |       
|Net interest income after provision for loan losses |  |                                        | 8,104 
|                                                    |  |                                        |       
|Noninterest Income                                  |  |                                        |       
|Trust fees                                          |  |                                        | 388   
|Service charges on deposits                         |  |                                        | 1,033 
|Legal settlements                                   |  |                                        |      
|Other operating income                              |  |                                        | 507   
|Securities gains                                    |  |                                        | 348   
|Gains on sale of loans and loans held for sale      |  |                                        | 464   
|                                                    |  |                                        |       
|Total noninterest income                            |  |                                        | 2,740 
|                                                    |  |                                        |       
|Noninterest Expense                                 |  |                                        |       
|Salary and employee benefits                        |  |                                        | 3,892 
|Net occupancy expense of premises                   |  |                                        | 671   
|Equipment expenses                                  |  |                                        | 597   
|Legal fees                                          |  |                                        | 107   
|Legal settlements expense                           |  |                                        | 103   
|Other operating expenses                            |  |                                        | 2,400 
|                                                    |  |                                        |       
|Total noninterest expense                           |  |                                        | 7,770 
|                                                    |  |                                        |       
|Income before income taxes                          |  |                                        | 3,074 
|Income Tax Expense                                  |  |                                        | 838   
|                                                    |  |                                        |       
|Net income                                          |  | $                                      | 2,236 
|                                                    |  |                                        |       
|Earnings per common share:                          |  |                                        |       
|Basic                                               |  | $                                      | 0.20  
|Diluted                                             |  | $                                      | 0.20  



See
the Notes to the Consolidated Financial Statements.



5



---

##### Table of Contents

Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2003 and 2002

(Unaudited) ($000s)



|                                                                           |  | 2003 |         |   | 2002 |  
|-------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | -
|Cash from Operating Activities                                             |  | $    | 2,373   |   |      | $
|                                                                           |  |     
|Investing Activities                                                       |  |      |         |   |      |  
|Proceeds from:                                                             |  |      |         |   |      |  
|Maturities and calls of securities                                         |  |      | 14,478  |   |      |  
|Sales of securities available for sale                                     |  |      | 5,960   |   |      |  
|Principal collected on mortgage-backed securities                          |  |      | 22,964  |   |      |  
|Sales of loans                                                             |  |      | 0       |   |      |  
|Sales of other real estate owned                                           |  |      | 1,010   |   |      |  
|Purchases of:                                                              |  |      |         |   |      |  
|Securities available for sale                                              |  |      | (45,268 | ) |      |  
|Securities held to maturity                                                |  |      | (250    | ) |      |  
|Premises and equipment                                                     |  |      | (279    | ) |      |  
|Changes in:                                                                |  |      |         |   |      |  
|Loans, net                                                                 |  |      | (15,367 | ) |      |  
|                                                                           |  |      |         |   |      |  
|Cash from investing activities                                             |  |      | (16,752 | ) |      |  
|                                                                           |  |      |         |   |      |  
|Financing Activities                                                       |  |      |         |   |      |  
|Changes in:                                                                |  |      |         |   |      |  
|Deposits                                                                   |  |      | 2,511   |   |      |  
|Repurchase agreements                                                      |  |      | (304    | ) |      |  
|Proceeds from:                                                             |  |      | 0       |   |      |  
|Issuance of treasury stock                                                 |  |      | 2       |   |      |  
|Advances on long-term debt                                                 |  |      | 4,235   |   |      |  
|Payments on long-term debt                                                 |  |      | (12     | ) |      |  
|Dividends Paid on common stock                                             |  |      | (1,111  | ) |      |  
|                                                                           |  |      |         |   |      |  
|Cash from financing activities                                             |  |      | 5,321   |   |      |  
|                                                                           |  |      |         |   |      |  
|Increase (Decrease) in Cash and Cash Equivalents                           |  |      | (9,058  | ) |      |  
|Cash and Cash Equivalents, Beginning of Year                               |  |      | 23,040  |   |      |  
|                                                                           |  |      |         |   |      |  
|Cash and Cash Equivalents at September 30                                  |  | $    | 13,982  |   |      | $
|                                                                           |  |      |         |   |      |  
|Cash payments for interest                                                 |  | $    | 3,929   |   |      | $
|Cash payments for income taxes                                             |  |      | 25      |   |      |  
|Non-cash transfers from loans to other real estate owned and repossessions |  |      | 1,140   |   |      |  
|Declaration of cash dividends to be paid                                   |  |      | 333     |   |      |  



See
the Notes to the Consolidated Financial Statements.



6



---

##### Table of Contents

Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Changes in
Shareholders Equity

(Unaudited) ($000s)

|                                                                                                               |  | Three Months EndedSeptember 30,
|-------------------------------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                                               |  | 2003                           
|Balance, beginning of period                                                                                   |  | $                              
|Comprehensive income (loss):                                                                                   |  |                                
|Net income                                                                                                     |  |                                
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |                                
|                                                                                                               |  |                                
|Total comprehensive income (loss)                                                                              |  |                                
|Dividends declared                                                                                             |  |                                
|Common stock options vested                                                                                    |  |                                
|                                                                                                               |  |                                
|Balance, end of period                                                                                         |  | $                              
|                                                                                                               |  |                                
|                                                                                                               | 
|                                                                                                               |  | Nine Months EndedSeptember 30, 
|                                                                                                               |  | 2003                           
|Balance, beginning of period                                                                                   |  | $                              
|Comprehensive income:                                                                                          |  |                                
|Net income                                                                                                     |  |                                
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |                                
|                                                                                                               |  |                                
|Total comprehensive income                                                                                     |  |                                
|Dividends declared                                                                                             |  |                                
|Treasury stock sold                                                                                            |  |                                
|Common stock options vested                                                                                    |  |                                
|                                                                                                               |  |                                
|Balance, end of period                                                                                         |  | $                              
|                                                                                                               |  |                                



See
the Notes to the Consolidated Financial Statements.



7



---

##### Table of Contents

PART I - FINANCIAL INFORMATION



ITEM 1FINANCIAL STATEMENTS



BASIS OF PRESENTATION



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



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



1. Summary of Significant Accounting Policies



The
foregoing financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial statements have been included. A summary of the
Companys significant accounting policies is set forth in Note 1 to the Consolidated Financial Statements in the Companys Annual Report to Shareholders on Form 10-K for the year ended December 31, 2002.



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



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



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



|                                    |  | Basic      |  | Diluted   
|----------------------------------- |  | ---------- |  | ----------
|Average shares outstanding          |  | 2003       |  | 2002      
|For the three months ended Sept. 30 |  | 11,108,903 |  | 11,108,403
|For the nine months ended Sept. 30  |  | 11,108,632 |  | 11,104,634



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



|                                                            |  | Three monthsendedSeptember 30, |      |   | Nine monthsendedSeptember 30, |  
|----------------------------------------------------------- |  | ------------------------------ | ---- | - | ----------------------------- | -
|(Expressed in thousands)                                    |  | 2003                           |      |   | 2002                          |  
|Unrealized holding gains (losses) arising during the period |  | $                              | (862 | ) |                               | $
|Reclassification adjustment                                 |  |                                | (105 | ) |                               |  
|                                                            |  |                                |      |   |                               |  
|Net gains (losses) arising during the period                |  |                                | (967 | ) |                               |  
|Tax effect                                                  |  |                                | (329 | ) |                               |  
|                                                            |  |                                |      |   |                               |  
|Other comprehensive income (loss)                           |  | $                              | (638 | ) |                               | $
|                                                            |  |                                |      |   |                               |  



8



---

##### Table of Contents

Stock Compensation:Employee compensation expense under stock options is reported using the intrinsic value
method. No stock-based compensation cost is reflected in net income for options granted with an exercise price equal to or greater than the market price of the underlying common stock at date of grant. Compensation expense is reflected in net income
for certain options granted with an exercise price below the market price of the underlying common stock at the date of the grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair
value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.



|                                                                                      |  | For the Three Months Ended September 30, |      |   | For the Nine Months Ended September 30, |  
|------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---- | - | --------------------------------------- | -
|(Expressed in thousands except per share amounts)                                     |  | 2003                                     |      |   | 2002                                    |  
|Net income as reported                                                                |  | $                                        | 406  |   |                                         | $
|Add: Expense, net of tax, included in net income for options granted below fair value |  |                                          | 3    |   |                                         |  
|Deduct: Stock-based compensation expense determined under fair value based method     |  |                                          | (40  | ) |                                         |  
|                                                                                      |  |                                          |      |   |                                         |  
|Pro forma net income                                                                  |  | $                                        | 369  |   |                                         | $
|                                                                                      |  |                                          |      |   |                                         |  
|Basic earnings per share as reported                                                  |  | $                                        | 0.04 |   |                                         | $
|Pro forma basic earnings per share                                                    |  |                                          | 0.03 |   |                                         |  
|                                                                                      |  |                                          |      |  
|Diluted earnings per share as reported                                                |  | $                                        | 0.04 |   |                                         | $
|Pro forma diluted earnings per share                                                  |  |                                          | 0.03 |   |                                         |  



Newly Issued But Not Yet Effective
Accounting Standards



The Financial Accounting Standards
Board (FASB) recently issued two new accounting standards, Statement 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, and Statement 150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities, both of which generally were effective in the quarter beginning July 1, 2003. Because the Company does not have these instruments or is only nominally involved in these instruments, the new accounting standards will not
materially affect the Companys operating results or financial condition.



| | 2. | Securities
| | -- | ----------



Securities held to maturity at September 30, 2003 included a corporate debt issue with a book value of $250,000 and an estimated fair value of $274,000. No securities were classified as held to maturity at December
31, 2002.



9



---

##### Table of Contents

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



|                                                                                      |  | September 30, 2003   |        
|------------------------------------------------------------------------------------- |  | -------------------- | -------
|(Expressed in thousands)                                                              |  | Estimated Fair Value |        
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 22,921 
|Tax-exempt obligations of states and political subdivisions                           |  |                      | 1,821  
|Taxable obligations of states and political subdivisions                              |  |                      | 20,534 
|Mortgage-backed securities                                                            |  |                      | 45,052 
|Collateralized mortgage obligations                                                   |  |                      | 14,914 
|Corporate debt                                                                        |  |                      | 9,940  
|Asset-backed securities                                                               |  |                      | 603    
|                                                                                      |  |                      |        
|Total debt securities                                                                 |  |                      | 115,785
|Marketable equity securities                                                          |  |                      | 7,127  
|                                                                                      |  |                      |        
|Total available for sale                                                              |  | $                    | 122,912
|                                                                                      |  |                      |        



|                                                                                      |  | December 31, 2002    |        
|------------------------------------------------------------------------------------- |  | -------------------- | -------
|(Expressed in thousands)                                                              |  | Estimated Fair Value |        
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 33,004 
|Tax-exempt obligations of states and political subdivisions                           |  |                      | 3,596  
|Taxable obligations of states and political subdivisions                              |  |                      | 20,042 
|Mortgage-backed securities                                                            |  |                      | 36,002 
|Collateralized mortgage obligations                                                   |  |                      | 9,806  
|Corporate debt                                                                        |  |                      | 13,011 
|Asset-backed securities                                                               |  |                      | 1,017  
|                                                                                      |  |                      |        
|Total debt securities                                                                 |  |                      | 116,478
|Marketable equity securities                                                          |  |                      | 6,316  
|                                                                                      |  |                      |        
|Total available for sale                                                              |  | $                    | 122,794
|                                                                                      |  |                      |        



3. Loans and Allowance
for Loan Losses



Loans outstanding are as follows:



|(Expressed in thousands)                                |  | September 30, 2003 |         | December 31, 2002
|------------------------------------------------------- |  | ------------------ | ------- | -----------------
|Real estate-construction                                |  | $                  | 5,070   |                  
|Real estate-mortgage                                    |  |                    | 55,959  |                  
|Real estate-secured by nonfarm, nonresidential property |  |                    | 57,655  |                  
|Commercial, financial and agricultural                  |  |                    | 22,296  |                  
|Obligations of political subdivisions in the U.S.       |  |                    | 2,271   |                  
|Installment and credit card loans to individuals        |  |                    | 3,089   |                  
|                                                        |  |                    |         |                  
|Loans receivable                                        |  | $                  | 146,340 |                  
|                                                        |  |                    |         |                  



10



---

##### Table of Contents

Non-accruing loans amounted to $2,690,000 at September 30, 2003 and $3,171,000 at December 31, 2002.
Loans past due 90 days and still accruing interest were $4,000 at September 30, 2003 and $32,000 at December 31, 2002. Most non-accruing loans are also identified as impaired loans in the following table.



Impaired loans were as follows:



|(Expressed in thousands)                                   |  | September 30,2003 |       | December 31,2002
|---------------------------------------------------------- |  | ----------------- | ----- | ----------------
|Impaired loans with no allocated allowance for loan losses |  | $                 | 100   |                 
|Impaired loans with allocated allowance for loan losses    |  |                   | 2,871 |                 
|                                                           |  |                   |       |                 
|Total                                                      |  | $                 | 2,971 |                 
|                                                           |  |                   |       |                 
|Amount of the allowance for loan losses allocated          |  | $                 | 1,054 |                 



|(Expressed in thousands)                     |  | September 30,2003 |       | September 30,2002
|-------------------------------------------- |  | ----------------- | ----- | -----------------
|Average impaired loans                       |  | $                 | 3,120 |                  
|Interest income recognized during impairment |  |                   | 0     |                  
|Cash-basis interest income recognized        |  |                   | 0     |                  



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



|                                           |  | Three months endedSeptember 30, |       |   | Nine months endedSeptember 30, |  
|------------------------------------------ |  | ------------------------------- | ----- | - | ------------------------------ | -
|(Expressed in thousands)                   |  | 2003                            |       |   | 2002                           |  
|Balance, beginning of period               |  | $                               | 3,940 |   |                                | $
|Provision for loan losses                  |  |                                 | 0     |   |                                |  
|Loans charged-off                          |  |                                 | (71   | ) |                                |  
|Recoveries on loans previously charged-off |  |                                 | 166   |   |                                |  
|                                           |  |                                 |       |   |                                |  
|Net (charge-offs) recoveries               |  |                                 | 95    |   |                                |  
|                                           |  |                                 |       |   |                                |  
|Balance, end of period                     |  | $                               | 4,035 |   |                                | $
|                                           |  |                                 |       |   |                                |  



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



4. Stock Option Plan



In May 2001, the Companys
shareholders approved the Belmont Bancorp. 2001 Stock Option Plan (the Plan). The Plan authorized the granting of up to 1,000,000 shares of common stock as incentive and nonqualified stock options. Generally, one fourth of the options
awarded become exercisable on each of the four anniversaries of the date of grant. However, some of the options granted in 2001 vested immediately on the date of the grant with the remaining amount vesting over the next three to four years. The
option period expires 10 years from the date of grant.



11



---

##### Table of Contents

The following is a summary of the activity in the Plan for the nine months ended September 30, 2003:



|                              |  | Available for Grant |   |  | OptionsOutstanding |   |  | Weighted Average ExercisePrice
|----------------------------- |  | ------------------- | - |  | ------------------ | - |  | ------------------------------
|Balance at January 1, 2003    |  | 691,500             |   |  | 301,500            |   |  | $                             
|Exercised                     |  |                    |   |  | (500               | ) |  | $                             
|Forfeitures                   |  | 14,000              |   |  | (14,000            | ) |  | $                             
|Granted                       |  | (5,000              | ) |  | 5,000              |   |  | $                             
|                              |  |                     |   |  |                    |   |  |                               
|Balance at September 30, 2003 |  | 700,500             |   |  | 292,000            |   |  | $                             
|                              |  |                     |   |  |                    |   |  |                               



The Company accounts
for the stock options under Accounting Principles Board Opinion No. 25, which requires expense recognition only when the exercise price is less than the market value of the underlying stock at the measurement date. Compensation expense, net of
taxes, of $9,000 and $16,000 was recognized for the nine months ended September 30, 2003 and 2002, respectively, to reflect the impact of granting certain options below their market price. Pro forma information for net income and earnings per common
share is presented in Note 1.



5. Litigation



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



12



---

##### Table of Contents

ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF
OPERATIONS



FORWARD-LOOKING STATEMENTS



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



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



| |  | The Company has recognized substantial loan losses in past years, principally related to loans made under the direction of prior management. The volume of classified loans remains
high relative to the Companys peers. While the Company has created what it believes are appropriate loan loss reserves, the Company could incur significant additional loan losses in future periods, particularly if general economic conditions
or conditions in particular industries in which its loans are concentrated deteriorate.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company is subject to increasingly vigorous and intense competition from other banking institutions and from various financial institutions and other nonbank or non-regulated
companies or firms that engage in similar activities. Many of these institutions have significantly greater resources than the Company.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Certain credit, market, operational, liquidity and interest rate risks associated with the Companys business operations as well as changes in business and economic conditions,
competition, fiscal and monetary policies and legislation could impact the future operations and performance of the Company.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



RESULTS OF OPERATIONS



SUMMARY



Belmont Bancorp. reported net income of $406,000, or $0.04 per common share for the three months ended September 30, 2003, compared to $689,000, or $0.06
per common share, for the three months ended September 30, 2002. For the first nine months of 2003, the Company reported net income of $2,236,000, or $0.20 per common share, versus $4,505,000, or $0.40 per common share, for the first nine months of
2002. Earnings during 2002 were positively impacted by the distribution of settlement proceeds from the Companys derivative action during the first and second quarters of 2002.



13



---

##### Table of Contents

Total assets at September 30, 2003 were $296.7 million compared to $289.5 million at year-end 2002. Total
loans increased to $146.3 million at September 30, up from $130.8 million at December 31, 2002. Average assets were $296 million for the third quarter of 2003, compared to $284 million for the third quarter of 2002. Average assets for the nine
months ended September 30, 2003 were $292 million compared to $284 million for the comparable period last year.



Total shareholders equity increased to $35.0 million at September 30, 2003 compared to $34.8 million at year-end 2002. During the third quarter of
2003, the Company paid a special cash dividend to common shareholders totaling $1.1 million and declared a regular cash dividend on its common shares totaling $333,000 for payment in October 2003.



NET INTEREST INCOME



Interest rates across the maturity horizon remained low relative to
historical levels during the first nine months of 2003. The Federal Open Market Committee (the FOMC) maintained a very accommodative stance to aid economic recovery. In late June 2003, the FOMC reduced its targeted federal funds rate by
0.25% following a rate reduction in November 2002 of 0.50%. Changing interest rates impact the Company through loan refinancing activity, reinvestment opportunities in loans and investments, and financing costs on its deposit base and other
borrowings. Generally, higher interest rates will positively impact the Companys net interest income, while lower interest rates will negatively impact net interest income.



Net interest income on a taxable equivalent basis decreased $147,000 for the third quarter of 2003 compared to the third
quarter of 2002. The taxable equivalent net interest margin was 3.37% for the third quarter of 2003, down from 3.41% for the second quarter of 2003 and 3.45% for the first quarter of 2003. The net interest margin for the third quarter of 2002 was
3.72%. The net interest rate spread (the difference between the average yields on earning assets and interest-bearing liabilities) was 3.03% for the third quarter of 2003 compared to 3.30% for the comparable period of 2002. The taxable equivalent
yield on earning assets declined to 5.13% from 6.08%, a decrease of 95 basis points, during the third quarter of 2003 compared to the third quarter of 2002. This decline was partially offset by a decrease of 68 basis points in the cost of
interest-bearing liabilities to 2.10% from 2.78%. The declines in yields on earning assets and the cost of funds reflect the precipitous drop in interest rates since 2001. Most notably since the beginning of 2001 the targeted federal funds rate set
established by the FOMC fell from 6.50% to 1.00% by June 2003, and the prime-lending rate declined from 9.50% to 4.00%.



Net interest income on a taxable equivalent basis decreased by $251,000 for the first nine months of 2003 compared to the same period last year as average
earning assets increased $7.7 million to $292 million for the first nine months of 2003. The yield on earning assets decreased from 6.07% to 5.35%, and the cost of interest bearing liabilities decreased from 2.91% to 2.31%. The taxable equivalent
net interest margin declined to 3.41% for the first nine months of 2003 compared to 3.60% for the same period in 2002.



14



---

##### Table of Contents

OTHER OPERATING INCOME



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



|                                                         |  | Three months ended September 30, |     |      | Nine months ended September 30, |         
|-------------------------------------------------------- |  | -------------------------------- | --- | ---- | ------------------------------- | --------
|(Expressed in thousands)                                 |  | 2003                             |     | 2002 |                                 | % Change
|Trust fees                                               |  | $                                | 128 |      | $                               | 109     
|Service charges on deposits                              |  |                                  | 424 |      |                                 | 232     
|Legal settlements                                        |  |                                  | 0   |      |                                 | 0       
|Gain on sale of loans held for sale                      |  |                                  | 171 |      |                                 | 38      
|Other income (individually less than 1% of total income) |  |                                  | 111 |      |                                 | 170     
|                                                         |  |                                  |     |      |                                 |         
|Subtotal                                                 |  |                                  | 834 |      |                                 | 549     
|Securities gains                                         |  |                                  | 105 |      |                                 | 121     
|                                                         |  |                                  |     |      |                                 |         
|Total                                                    |  | $                                | 939 |      | $                               | 670     
|                                                         |  |                                  |     |      |                                 |         



Trust fees increased
8.1% to $388,000 for the first nine months of 2003 compared to $359,000 for the comparative period in 2002. For the third quarter of 2003, trust fees increased to $128,000 compared to $109,000 in 2002. The improvement in revenue was the result of a
fee increase on trust accounts.



Service charges on deposits
increased 52.6% from $677,000 to $1,033,000 during the nine months ended September 30, 2003, compared to the same period in 2002, principally due to the introduction during the second quarter of 2003 of a new product and the implementation of a new
service charge. Since these changes were introduced during the second quarter of 2003, the percentage increase in service charges on deposits is larger for the quarter than for the year-to-date period; service charges increased 82.8% in the quarter
to quarter comparison.



Operating results during 2002 were
impacted by a comprehensive legal settlement as more fully described in the Companys Annual Report to Shareholders on Form 10-K for the year ended December 31, 2002. During the first six months of 2002, the Company received at total of $6.3
million in payments related to the settlement.



Gains on sales
of loans and loans held for sale increased from $143,000 for the first nine months of 2002 to $464,000 for same period of 2003. Capitalized mortgage servicing rights of $207,000 were included in gains on sales of loans held for sale for the nine
months ended September 30, 2003 compared to $90,000 for the comparable period of 2002. The total outstanding balance of mortgage loans sold without recourse and with servicing rights retained increased to $73.4 million at September 30, 2003 from
$65.9 million at December 31, 2002. Gains on sales of loans also included $13,000 for gains realized on the sale of the Banks credit card portfolio during 2002. Management expects that as mortgage interest rates increase, mortgage refinancing
volume will subside and gains related to mortgage loan activities will decline.



Other income includes, among other miscellaneous items, commissions and fees unrelated to loan origination, brokerage fees, loan documentation preparation fees, rental income, earnings on bank-owned life insurance
policies, gains or losses on sale of other real estate owned, mortgage servicing income, and check printing charges. Other income decreased $59,000, or 34.7%, to $111,000 for the three months ended September 30, 2003 and decreased $15,000, or 2.9%,
to $507,000 for the nine months ended September 30, 2003. This decrease was primarily related to a loss on the sale of other real estate owned totaling $60,000 recorded during the third quarter of 2003. Excluding this loss, other income increased
$45,000, or 8.6%. This increase was largely the result of higher revenues for mortgage servicing fees, loan processing fees and brokerage fees.



15



---

##### Table of Contents

Securities gains for the nine months ended September 30, 2003 totaled $348,000 and included $142,000 in
gains on sales of equity securities.



OPERATING EXPENSES



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



|                                                  |  | Three months ended September 30, |       |      | Nine months ended September 30, |         
|------------------------------------------------- |  | -------------------------------- | ----- | ---- | ------------------------------- | --------
|(Expressed in thousands)                          |  | 2003                             |       | 2002 |                                 | % Change
|Salaries and wages                                |  | $                                | 1,114 |      | $                               | 908     
|Employee benefits                                 |  |                                  | 262   |      |                                 | 228     
|Occupancy expense                                 |  |                                  | 215   |      |                                 | 220     
|Furniture and equipment expense                   |  |                                  | 206   |      |                                 | 230     
|Legal fees                                        |  |                                  | 47    |      |                                 | 153     
|Legal settlements                                 |  |                                  |      |      |                                 | 12      
|Insurance, including federal deposit insurance    |  |                                  | 39    |      |                                 | 141     
|Examinations and audits                           |  |                                  | 95    |      |                                 | 100     
|Telecommunication expense                         |  |                                  | 40    |      |                                 | 38      
|Taxes other than payroll and real estate          |  |                                  | 84    |      |                                 | 53      
|Supplies and printing                             |  |                                  | 54    |      |                                 | 50      
|Amortization of mortgage servicing rights         |  |                                  | 36    |      |                                 | 151     
|Advertising                                       |  |                                  | 64    |      |                                 | 62      
|Other (individually less than 1% of total income) |  |                                  | 455   |      |                                 | 336     
|                                                  |  |                                  |       |      |                                 |         
|Total                                             |  | $                                | 2,711 |      | $                               | 2,682   
|                                                  |  |                                  |       |      |                                 |         



The employee count at
the end of September 2003 was 135 full time equivalent employees (FTEs). The average number of FTEs for 2003 through September was 131 versus 132 for the same period during 2002. The increases in salaries and wages for the periods
presented were principally the result of incentive compensation paid during 2003 and merit increases. Compensation costs associated with the grant of stock options were $13,000 and $25,000 for the first nine months of 2003 and 2002, respectively.



Employee benefit costs presented for the 2003 periods were
higher than the comparative periods of 2002 due to higher payroll taxes and health insurance benefits. Health insurance costs increased 3.7% for the first nine months of 2003 compared to 2002.



Furniture and equipment expense incurred for the 2003 periods were lower than
the comparative periods of 2002 largely as the result of the Banks mainframe computer and wide-area network costs being fully depreciated during the fourth quarter of 2002. As the Company upgrades its data processing systems, management
expects these costs will increase.



Legal fees and legal
settlements expense were down significantly during 2003 compared to 2002 resulting from the settlement of the derivative action in late 2001 with settlement distributions concluding during the first six months of 2002. Legal settlements expense
incurred during the first half of 2003 totaled $103,000 and represents the conclusion of all material litigation previously confronting the Company.



Insurance costs includes the expense associated with FDIC deposit insurance. The Company realized large savings in FDIC costs during 2003 compared to 2002
because of improvements to the Companys regulatory risk profile which became effective with the assessment period beginning January 1, 2003. Likewise, the regulatory risk profile also impacts examination cost assessed by the Banks
regulator. Examination and audit costs were down approximately 5.0% for the comparative quarter and 23.7% for the nine months ended September 30, 2003.



16



---

##### Table of Contents

Other taxes increased 57.3% to $269,000 for the first nine months of 2003 compared to the first nine
months of 2002. This increase reflects higher state corporate franchise tax expense and is directly related to a larger capital base at year-end 2002 compared to year-end 2001 because the Companys current year state franchise tax is assessed
based on a tax rate applied to its capital base as of December 31 of the prior year.



Amortization of mortgage servicing rights totaled $112,000 for the nine months ended September 30, 2003 compared to $227,000 for the comparable period last year. For 2002, amortization expense included $109,000 for
the third quarter to establish a valuation allowance to reduce the carrying amount of mortgage servicing rights to its estimated fair value at September 30, 2002. During the first nine months of 2003, the valuation allowance was reduced by $28,000;
this was recorded as a reduction to amortization expense. The mortgage servicing rights, net of the remaining valuation allowance, are valued at $404,000 at September 30, 2003, and represents a 55 basis point capitalization rate on a mortgage
servicing portfolio of approximately $73.4 million.



Other
expense increased $224,000, or 23.6%, to $1,172,000 for the first nine months of 2003. This increase is principally related to the resumption of payment of director fees, other real estate owned and collection expenses, consulting and other expenses
related to fee income enhancements, and loan-related expenses.



SECURITIES



The estimated fair
value of securities available for sale at September 30, 2003 and December 31, 2002 are detailed in Note 2 of the quarterly financial statements.



At September 30, 2003, the Company did not own any investments of a single issuer, the value of which exceeded 10% of total shareholders equity, or
$3,500,000 except for stock in the Federal Home Loan Bank of Cincinnati with a book value and estimated fair value of $3,558,000.



PROVISION AND ALLOWANCE FOR LOAN LOSSES



The Company provides as an expense an amount that reflects the change in probable loan losses. This provision is based on several factors including the
growth of the loan portfolio and on historical loss experience. The expense is called the provision for loan losses in the Consolidated Statements of Income. Actual losses on loans are charged against the allowance established on the Consolidated
Balance Sheets through the provision for loan losses.



Details
of the activity in the Allowance for Loan Losses for the third quarter and year-to-date comparative periods are included in Note 3 of the quarterly financial statements. No loan loss provision was recorded during the third quarter of 2003 because
the Company had an appropriate balance in the allowance based on its analysis of loan quality. During the second quarter of 2003, the Company recorded a negative loan loss provision in the amount of $1,350,000 based on loan loss recoveries and
improvements to its loan asset quality. This contributed $891,000 or $0.08 per common share (basic and diluted) after income taxes, to the Companys operating results during the second quarter. If the Company continues to experience either low
net charge-offs or net recoveries in future periods, and continues to experience improvements in its loan loss rates, it is possible that the Company will record additional reductions to its allowance for loan loss through negative loan loss
provisions in forthcoming periods. The following table depicts various loan and loan-related statistics.



17



---

##### Table of Contents

|                                                         |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|-------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|(Expressed in thousands)                                 |  | 2003                            |         |   | 2002                           |  
|Loans outstanding                                        |  | $                               | 146,340 |   |                                | $
|Average loans                                            |  | $                               | 142,413 |   |                                | $
|Annualized net charge offs (recoveries) as a percent of: |  |                                 |         |   |                                |  
|Average loans                                            |  |                                 | -0.27   | % |                                |  
|Allowance for loan losses                                |  |                                 | -9.42   | % |                                |  
|Allowance for loan losses to:                            |  |                                 |         |   |                                |  
|Total loans at end of period                             |  |                                 | 2.76    | % |                                |  
|Non-performing assets                                    |  |                                 | 143.39  | % |                                |  



NON-PERFORMING ASSETS



Non-performing assets consist
of (1) non-accrual loans, leases and debt securities for which the ultimate collectibility of the full amount of interest is uncertain, (2) loans and leases past due ninety days or more as to principal or interest (unless management determines that,
based on specific circumstances, interest should continue to accrue on such loans) and (3) other real estate owned. A loan is placed on non-accrual status when payment of the full amount of principal and interest is not expected, or when principal
or interest has been in default for a period of ninety days or more unless the loan is well secured and in the process of collection. A summary of non-performing assets follows:



|Non-performing assets (Expressed in thousands)        |  | September 30, 2003 |       |   | December 31, 2002 |  
|----------------------------------------------------- |  | ------------------ | ----- | - | ----------------- | -
|Non-accrual loans                                     |  | $                  | 2,690 |   |                   | $
|Loans 90 days or more past due but accruing incterest |  |                    | 4     |   |                   |  
|Other real estate owned                               |  |                    | 120   |   |                   |  
|                                                      |  |                    |       |   |                   |  
|Total                                                 |  | $                  | 2,814 |   |                   | $
|                                                      |  |                    |       |   |                   |  
|Non-performing assets as a percent of total assets    |  |                    | 0.95  | % |                   |  



Details of impaired
loans and related information are included in Note 3 of the quarterly financial statements.



In addition to the schedule of non-performing assets, management prepares a watch list consisting of loans, which they have determined require closer monitoring to further protect the Company against loss. The balance
of loans classified by management as substandard due to delinquency, a change in financial position, or other factors and not included as non-performing assets totaled $8,119,000 at September 30, 2003, $11,419,000 at December 31, 2002, and
$14,052,000 at September 30, 2002. Of these loans, none were classified as doubtful.



18



---

##### Table of Contents

LOAN CONCENTRATIONS



The Company uses the Standard Industry Code (SIC) system to determine concentrations of credit risk by industry. Management
monitors concentrations of credit as measured by an industrys total available and outstanding credit balance expressed as a percent of Tier 1 capital. Loan concentrations exceeding 25% of the Banks Tier 1 capital are detailed in the
following tables.



|                                                     |  | (Expressed in thousands) |       
|---------------------------------------------------- |  | ------------------------ | ------
|Industry                                             |  | September 30, 2003       |       
|Real estate  operators of nonresidential buildings: |  |                          |       
|Loan balance and available credit                    |  | $                        | 11,938
|Percent of tier 1 capital                            |  |                          | 43.2  
|                                                     |  |                         
|Real estate - apartment buildings:                   |  |                          |       
|Loan balance and available credit                    |  | $                        | 7,618 
|Percent of tier 1 capital                            |  |                          | 27.6  



DEFERRED FEDERAL TAX ASSETS



Deferred federal tax
assets totaled $4.7 million at September 30, 2003. The deferred federal tax assets include significant balances related to tax loss carryforwards and tax credits. It also includes the tax effect of recording securities available for sale at
estimated fair value. At September 30, 2003, management believes no deferred tax valuation allowance is needed as future estimated taxable income will be sufficient to realize the net deferred tax assets.



OTHER ASSETS



Other assets includes among other miscellaneous balances, prepaid expenses,
accounts receivable, other real estate owned, and mortgage servicing rights. Other assets increased to $3.7 million at September 30, 2003 from $2.1 million at December 31, 2002, principally due to an increase in accounts receivable for securities
sold but not settled.



LONG-TERM BORROWINGS



During the third quarter of 2003, the Company borrowed $4.2
million in advances of varying maturities ranging from one to six years from the Federal Home Loan Bank of Cincinnati. The purpose of these borrowings was to lock in low rate funding costs. All advances had fixed interest rates ranging from 1.60% to
4.29%.



OTHER LIABILITIES



Other liabilities increased to $2.4 million at September 30, 2003 compared
to $1.7 million at December 31, 2002. Other liabilities include amounts for various accrued expenses, accounts payable, funds owed for securities traded but not yet settled, and obligations related to compensation plans.



CAPITAL RESOURCES



The following table depicts the capital ratios for the Bank and for the
Company on a consolidated basis as of September 30, 2003. In addition, the table depicts the regulatory requirements for classification as adequately capitalized under the regulatory guidelines for Prompt Corrective Action. Tier 1
capital consists principally of shareholders equity less goodwill and deferred tax assets, while Tier 2 capital consists of certain debt instruments and a portion of the allowance for loan losses. Total capital consists of Tier 1 and Tier 2
capital.



19



---

##### Table of Contents

|                                                  |  | Actual |        |       | Minimum Required ForCapitalAdequacyPurposes |   |        | MinimumRequired To BeWell CapitalizedUnder PromptCorrective ActionRegulations |       
|------------------------------------------------- |  | ------ | ------ | ----- | ------------------------------------------- | - | ------ | ----------------------------------------------------------------------------- | ------
|As of September 30, 2003                          |  | Amount |        | Ratio |                                             |   | Amount |                                                                               | Ratio 
|Total risk based capital to risk weighted assets: |  |        |        |       |                                             |   |        |                                                                               |       
|Consolidated                                      |  | $      | 31,162 |       | 17.3                                        | % |        | $                                                                             | 14,400
|Bank                                              |  |        | 29,914 |       | 16.4                                        | % |        |                                                                               | 14,613
|Tier 1 capital to risk weighted assets:           |  |        |        |       |                                             |   |        |                                                                               |       
|Consolidated                                      |  |        | 28,890 |       | 16.1                                        | % |        |                                                                               | 7,200 
|Bank                                              |  |        | 27,609 |       | 15.1                                        | % |        |                                                                               | 7,307 
|Tier 1 capital to average assets:                 |  |        |        |       |                                             |   |        |                                                                               |       
|Consolidated                                      |  |        | 28,890 |       | 10.0                                        | % |        |                                                                               | 11,582
|Bank                                              |  |        | 27,609 |       | 9.6                                         | % |        |                                                                               | 11,555



LIQUIDITY AND CAPITAL RESOURCES



Effective liquidity
management involves ensuring that the cash flow requirements of depositors and borrowers, as well as the operating needs of the Company, are met. Funds are available through the operation of the Banks branch banking network that gathers demand
and retail time deposits. The Bank also acquires funds through repurchase agreements and overnight federal funds that provide additional sources of liquidity. Total deposits increased $2.5 million, or 1.1%, from December 31, 2002 to September 30,
2003. The Banks federal funds sold at September 30, 2003 totaled $3.6 million, down from $13.6 million at December 31, 2002.



Cash flows from the securities portfolio are also a source of liquidity. Proceeds from principal repayments, sales, calls and maturities of investment
securities totaled $43.4 million during the nine months ended September 30, 2003. At September 30, 2003, securities available for sale was relatively unchanged from year-end 2002 at $123 million.



The Bank has an available line of credit with a correspondent bank totaling
$4,100,000 that may be used as an alternative funding source. The Bank also has an unused credit line with the Federal Home Loan Bank for $20 million. All borrowings at the Federal Home Loan Bank are subject to eligible collateral requirements; at
September 30, 2003, the Bank had sufficient eligible collateral to utilize the credit line.



The main source of liquidity for the parent company is dividends from the Bank. At September 30, 2003, the parent had cash and marketable securities with an estimated fair value of $1.2 million. The parent company
does not have any debt to third parties. Management believes sufficient liquidity is currently available to meet estimated short-term and long-term funding needs for the Bank and the parent company.



ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The information required by Item 3 has been disclosed in Item 7A of the Companys Annual Report to Shareholders on Form 10-K for the year ended December 31, 2002. There has been no material change in the
disclosure regarding market risk.



ITEM 4. CONTROLS AND PROCEDURES



The
Companys Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this quarterly report, that the Companys disclosure controls and procedures are effective for
the timely recording, processing, summarizing and reporting of the information required to be disclosed in reports filed under the Securities and Exchange Act of 1934.



20



---

##### Table of Contents

There have been no significant changes in the Companys internal controls or in other factors that
could significantly affect those controls subsequent to the date of their evaluation.



PART II - OTHER INFORMATION



Item 1. Legal proceedings



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



Item 2. Changes in securities and use of proceeds



None



Item 3. Defaults upon senior securities



None



Item 4. Submission of matters to a vote of security shareholders



None



Item 5. Other information



None



Item 6. Exhibits and Reports on Form 8-K



(a) Exhibits



|3.1  |  | Articles of Incorporation (1)                                                                                                                                        
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.2  |  | Amendment regarding Series A Preferred Stock (2)                                                                                                                     
|     | 
|3.3  |  | Amendment regarding number of directors (3)                                                                                                                          
|     | 
|3.4  |  | Code of Regulations (4)                                                                                                                                              
|     | 
|10.1 |  | Employment Agreement dated December 15, 1999 between Wilbur R. Roat, Belmont Bancorp. and Belmont National Bank (5)                                                  
|     | 
|10.2 |  | Employment Agreement dated April 16, 2001 between Michael Baylor, Belmont Bancorp. and Belmont National Bank (6)                                                     
|     | 
|10.3 |  | Belmont Bancorp. 2001 Stock Option Plan (7)                                                                                                                          
|     | 
|31.1 |  | Certification under Section 302 of the Sarbanes-Oxley Act of 2002 of Quarterly Report on Form 10-Q of Belmont Bancorp. for the quarter ended September 30, 2003      
|     | 
|31.2 |  | Certification under Section 302 of the Sarbanes-Oxley Act of 2002 of Quarterly Report on Form 10-Q of Belmont Bancorp. for the quarter ended September 30, 2003      
|     | 
|32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Quarterly Report on Form 10-Q of Belmont Bancorp. for the quarter ended September 30,
2003
|     | 
|32.2 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Quarterly Report on Form 10-Q of Belmont Bancorp. for the quarter ended September 30,
2003



21



---

##### Table of Contents

|1. | Filed as an exhibit to the Companys Registration Statement on Form S-2 filed with the Securities and Exchange Commission on November 16, 1999, and incorporated herein by
reference.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Filed as an exhibit to Amendment No. 3 to the Companys Registration Statement on Form S-2 filed with the Securities and Exchange Commission (Registration No. 333-91035) on
February 3, 2000 and incorporated herein by reference.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
|-- | ----------------------------------------------------------------------------------------------------------------

|4. | Filed as an exhibit to the Companys Registration Statement on Form S-2 filed with the Securities and Exchange Commission on November 16, 1999, and incorporated herein by
reference.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Filed as an exhibit to the Companys Annual Report and Form 10-K for the year ended December 31, 1999 (Registration No. 0-12724) and incorporated herein by reference.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Filed as an exhibit to the Companys Annual Report and Form 10-K for the year ended December 31, 2001 (Registration No. 0-12724) and incorporated herein by reference.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Filed as an exhibit to the Companys Annual Report and Form 10-K for the year ended December 31, 2000 (Registration No. 0-12724) and incorporated herein by reference.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



(b) Reports on Form 8-K



On July 18, 2003, Belmont Bancorp. issued a news release announcing its
earnings for the three month period ending June 30, 2003.



On
August 19, 2003, Belmont Bancorp. issued a news release announcing a special cash dividend payable on September 15, 2003 to shareholders of record as of August 29, 2003.



On September 16, 2003, Belmont Bancorp. issued a news release announcing a regular cash dividend payable on October 10, 2003
to shareholders of record as of September 26, 2003.



22



---

##### Table of Contents

SIGNATURE



Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Belmont Bancorp.(Registrant)/s/ Wilbur RoatBy: Wilbur RoatPresident & CEO/s/ Jane R. MarshBy: Jane R. MarshSecretary & Chief Financial Officer




November 7, 2003



23