##### Table of Contents

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United States

Securities and Exchange Commission

Washington, D.C. 20549



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FORM 10-Q



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|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended June 30, 2004



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



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Belmont Bancorp.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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 ̈No  x



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



Common Stock, $0.25 par value,

11,111,278 shares outstanding

as of August 9, 2004



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##### Table of Contents

BELMONT BANCORP

Quarter Ended June 30, 2004



INDEX



|                                                                                                                                |  |   
|------------------------------------------------------------------------------------------------------------------------------- |  | --
|Part I.
FINANCIAL INFORMATION                                                                                                   |  |   
|                                                                                                                                | 
|Item 1.
Financial Statements                                                                                                    |  |   
|                                                                                                                                | 
|Consolidated Balance Sheets  June 30, 2004 and December 31, 2003                                                               |  | 3 
|                                                                                                                                | 
|Consolidated Statements of Income-Three Months Ended June 30, 2004 and June 30, 2003                                            |  | 4 
|                                                                                                                                | 
|Consolidated Statements of Income-Six Months Ended June 30, 2004 and June 30, 2003                                              |  | 5 
|                                                                                                                                | 
|Condensed Consolidated Statements of Changes in Shareholders Equity Three and Six Months Ended June 30, 2004 and June 30, 2003 |  | 6 
|                                                                                                                                | 
|Condensed Consolidated Statements of Cash Flows-Six Months Ended June 30, 2004 and June 30, 2003                                |  | 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                                                               |  | 21
|                                                                                                                                | 
|Item 4.
Controls and Procedures                                                                                                 |  | 21
|                                                                                                                                | 
|Part II 
OTHER INFORMATION                                                                                                     |  |   
|                                                                                                                                | 
|Item 1.
Legal Proceedings                                                                                                       |  | 21
|                                                                                                                                | 
|Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                                        |  | 21
|                                                                                                                                | 
|Item 3.
Defaults upon Senior Securities                                                                                         |  | 21
|                                                                                                                                | 
|Item 4.
Submission of Matters to a Vote of Security Holders                                                                     |  | 21
|                                                                                                                                | 
|Item 5.
Other Information                                                                                                       |  | 22
|                                                                                                                                | 
|Item 6.
Exhibits and Reports on Form 8-K                                                                                        |  | 22
|                                                                                                                                | 
|Signature page                                                                                                                  |  | 24
|                                                                                                                                | 
|Certifications                                                                                                                  |  |   



2



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##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Balance Sheets

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



|                                                                                              |  |               |         |   |                  |   |         |  
|--------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                              |  | June 30, 2004 |         |   | December 31,2003 |  
|Assets                                                                                        |  |               |         |   |                  |   |         |  
|Cash and due from banks                                                                       |  | $             | 10,038  |   |                  | $ | 10,722  |  
|Interest-bearing deposits in other banks                                                      |  |               | 22      |   |                  |   | 14      |  
|Federal funds sold                                                                            |  |               | 3,725   |   |                  |   | 2,300   |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                                                     |  |               | 13,785  |   |                  |   | 13,036  |  
|Loans held for sale                                                                           |  |               | 43      |   |                  |   | 255     |  
|Securities available for sale at fair value                                                   |  |               | 97,505  |   |                  |   | 112,145 |  
|Securities held to maturity (estimated fair value of $263 in 2004 and $273 in 2003)           |  |               | 250     |   |                  |   | 250     |  
|Federal Home Loan Bank stock, at cost                                                         |  |               | 3,666   |   |                  |   | 3,594   |  
|Federal Reserve Bank stock, at cost                                                           |  |               | 517     |   |                  |   | 517     |  
|Loans                                                                                         |  |               | 172,947 |   |                  |   | 157,528 |  
|Less allowance for loan losses                                                                |  |               | (3,177  | ) |                  |   | (3,300  | )
|                                                                                              |  |               |         |   |                  |   |         |  
|Net loans                                                                                     |  |               | 169,770 |   |                  |   | 154,228 |  
|Premises and equipment, net                                                                   |  |               | 6,504   |   |                  |   | 6,111   |  
|Deferred federal tax assets                                                                   |  |               | 4,551   |   |                  |   | 4,538   |  
|Cash surrender value of life insurance                                                        |  |               | 1,362   |   |                  |   | 1,339   |  
|Accrued income receivable                                                                     |  |               | 1,201   |   |                  |   | 1,366   |  
|Other assets                                                                                  |  |               | 1,981   |   |                  |   | 2,096   |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Total assets                                                                                  |  | $             | 301,135 |   |                  | $ | 299,475 |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Liabilities and Shareholders Equity                                                          |  |               |         |   |                  |   |         |  
|Liabilities                                                                                   |  |               |         |   |                  |   |         |  
|Non-interest bearing deposits:                                                                |  |               |         |   |                  |   |         |  
|Demand                                                                                        |  | $             | 29,896  |   |                  | $ | 30,632  |  
|Interest-bearing deposits:                                                                    |  |               |         |   |                  |   |         |  
|Demand                                                                                        |  |               | 30,811  |   |                  |   | 30,357  |  
|Savings                                                                                       |  |               | 98,084  |   |                  |   | 100,034 |  
|Time                                                                                          |  |               | 72,759  |   |                  |   | 74,016  |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Total deposits                                                                                |  |               | 231,550 |   |                  |   | 235,039 |  
|Securities sold under repurchase agreements                                                   |  |               | 1,286   |   |                  |   | 1,403   |  
|Long-term Federal Home Loan Bank advances                                                     |  |               | 35,560  |   |                  |   | 25,269  |  
|Accrued interest on deposits and other borrowings                                             |  |               | 282     |   |                  |   | 312     |  
|Other liabilities                                                                             |  |               | 1,727   |   |                  |   | 1,930   |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Total liabilities                                                                             |  |               | 270,405 |   |                  |   | 263,953 |  
|                                                                                              |  |               |         |   |                  |   |         |  
|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   |   |                  |   | 2,788   |  
|Additional paid-in capital                                                                    |  |               | 17,564  |   |                  |   | 17,556  |  
|Retained earnings                                                                             |  |               | 11,377  |   |                  |   | 15,285  |  
|Treasury stock at cost (41,917 shares at 6/30/04; 44,292 shares at 12/31/03)                  |  |               | (944    | ) |                  |   | (997    | )
|Accumulated other comprehensive income (loss)                                                 |  |               | (55     | ) |                  |   | 890     |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Total shareholders equity                                                                    |  |               | 30,730  |   |                  |   | 35,522  |  
|                                                                                              |  |               |         |   |                  |   |         |  
|Total liabilities and shareholders equity                                                    |  | $             | 301,135 |   |                  | $ | 299,475 |  
|                                                                                              |  |               |         |   |                  |   |         |  



See the Notes to the Consolidated
Financial Statements.



3



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##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Statements of Income

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



|                                                              |  |                            |       |   |      |   |        |  
|------------------------------------------------------------- |  | -------------------------- | ----- | - | ---- | - | ------ | -
|                                                              |  | For the Three Months Ended |      
|                                                              |  | June 30,                   |      
|                                                              |  | 2004                       |       |   | 2003 |  
|Interest and Dividend Income                                  |  |                            |       |   |      |   |        |  
|Loans:                                                        |  |                            |       |   |      |   |        |  
|Taxable                                                       |  | $                          | 2,494 |   |      | $ | 2,287  |  
|Tax-exempt                                                    |  |                            | 39    |   |      |   | 38     |  
|Securities:                                                   |  |                            |       |   |      |   |        |  
|Taxable                                                       |  |                            | 1,012 |   |      |   | 1,151  |  
|Tax-exempt                                                    |  |                            | 17    |   |      |   | 20     |  
|Dividends                                                     |  |                            | 44    |   |      |   | 44     |  
|Interest on federal funds sold                                |  |                            | 15    |   |      |   | 34     |  
|                                                              |  |                            |       |   |      |   |        |  
|Total interest and dividend income                            |  |                            | 3,621 |   |      |   | 3,574  |  
|                                                              |  |                            |       |   |      |   |        |  
|Interest Expense                                              |  |                            |       |   |      |   |        |  
|Deposits                                                      |  |                            | 763   |   |      |   | 1,079  |  
|Borrowings                                                    |  |                            | 355   |   |      |   | 246    |  
|                                                              |  |                            |       |   |      |   |        |  
|Total interest expense                                        |  |                            | 1,118 |   |      |   | 1,325  |  
|                                                              |  |                            |       |   |      |   |        |  
|Net interest income                                           |  |                            | 2,503 |   |      |   | 2,249  |  
|Provision (Benefit) for loan losses                           |  |                            | (175  | ) |      |   | (1,350 | )
|                                                              |  |                            |       |   |      |   |        |  
|Net interest income after provision (benefit) for loan losses |  |                            | 2,678 |   |      |   | 3,599  |  
|                                                              |  |                            |       |   |      |   |        |  
|Noninterest Income                                            |  |                            |       |   |      |   |        |  
|Trust fees                                                    |  |                            | 138   |   |      |   | 135    |  
|Service charges on deposits                                   |  |                            | 333   |   |      |   | 356    |  
|Mortgage servicing fees                                       |  |                            | 46    |   |      |   | 44     |  
|Other operating income                                        |  |                            | 114   |   |      |   | 144    |  
|Securities gains                                              |  |                            | 82    |   |      |   | 75     |  
|Gains on sale of loans held for sale                          |  |                            | 27    |   |      |   | 156    |  
|                                                              |  |                            |       |   |      |   |        |  
|Total noninterest income                                      |  |                            | 740   |   |      |   | 910    |  
|                                                              |  |                            |       |   |      |   |        |  
|Noninterest Expense                                           |  |                            |       |   |      |   |        |  
|Salary and employee benefits                                  |  |                            | 1,235 |   |      |   | 1,262  |  
|Net occupancy expense                                         |  |                            | 234   |   |      |   | 218    |  
|Equipment expense                                             |  |                            | 198   |   |      |   | 195    |  
|Legal fees                                                    |  |                            | 46    |   |      |   | 29     |  
|Legal settlements expense                                     |  |                            |      |   |      |   | 50     |  
|Other operating expenses                                      |  |                            | 796   |   |      |   | 796    |  
|                                                              |  |                            |       |   |      |   |        |  
|Total noninterest expense                                     |  |                            | 2,509 |   |      |   | 2,550  |  
|                                                              |  |                            |       |   |      |   |        |  
|Income before income taxes                                    |  |                            | 909   |   |      |   | 1,959  |  
|Income Tax Expense                                            |  |                            | 239   |   |      |   | 599    |  
|                                                              |  |                            |       |   |      |   |        |  
|Net Income                                                    |  | $                          | 670   |   |      | $ | 1,360  |  
|                                                              |  |                            |       |   |      |   |        |  
|Basic and Diluted Earnings per Common Share                   |  | $                          | 0.06  |   |      | $ | 0.12   |  
|                                                              |  |                            |       |   |      |   |        |  



See the Notes to the Consolidated
Financial Statements.



4



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##### Table of Contents

Belmont Bancorp. and Subsidiaries

Consolidated Statements of Income

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



|                                                              |  |                                   |       |   |      |   |        |  
|------------------------------------------------------------- |  | --------------------------------- | ----- | - | ---- | - | ------ | -
|                                                              |  | For the Six Months Ended June 30, |      
|                                                              |  | 2004                              |       |   | 2003 |  
|Interest and Dividend Income                                  |  |                                   |       |   |      |   |        |  
|Loans:                                                        |  |                                   |       |   |      |   |        |  
|Taxable                                                       |  |                                   | 4,946 |   |      | $ | 4,493  |  
|Tax-exempt                                                    |  |                                   | 76    |   |      |   | 77     |  
|Securities:                                                   |  |                                   |       |   |      |   |        |  
|Taxable                                                       |  |                                   | 2,190 |   |      |   | 2,344  |  
|Tax-exempt                                                    |  |                                   | 35    |   |      |   | 67     |  
|Dividends                                                     |  |                                   | 88    |   |      |   | 89     |  
|Interest on federal funds sold                                |  |                                   | 20    |   |      |   | 75     |  
|                                                              |  |                                   |       |   |      |   |        |  
|Total interest and dividend income                            |  |                                   | 7,355 |   |      |   | 7,145  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Interest Expense                                              |  |                                   |       |   |      |   |        |  
|Deposits                                                      |  |                                   | 1,543 |   |      |   | 2,196  |  
|Borrowings                                                    |  |                                   | 686   |   |      |   | 490    |  
|                                                              |  |                                   |       |   |      |   |        |  
|Total interest expense                                        |  |                                   | 2,229 |   |      |   | 2,686  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Net interest income                                           |  |                                   | 5,126 |   |      |   | 4,459  |  
|Provision (Benefit) for loan losses                           |  |                                   | (175  | ) |      |   | (1,350 | )
|                                                              |  |                                   |       |   |      |   |        |  
|Net interest income after provision (benefit) for loan losses |  |                                   | 5,301 |   |      |   | 5,809  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Noninterest Income                                            |  |                                   |       |   |      |   |        |  
|Trust fees                                                    |  |                                   | 304   |   |      |   | 260    |  
|Service charges on deposits                                   |  |                                   | 656   |   |      |   | 609    |  
|Mortgage servicing fees                                       |  |                                   | 92    |   |      |   | 88     |  
|Other operating income                                        |  |                                   | 314   |   |      |   | 308    |  
|Securities gains                                              |  |                                   | 104   |   |      |   | 243    |  
|Gains on sale of loans held for sale                          |  |                                   | 56    |   |      |   | 293    |  
|                                                              |  |                                   |       |   |      |   |        |  
|Total noninterest income                                      |  |                                   | 1,526 |   |      |   | 1,801  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Noninterest Expense                                           |  |                                   |       |   |      |   |        |  
|Salary and employee benefits                                  |  |                                   | 2,493 |   |      |   | 2,516  |  
|Net occupancy expense                                         |  |                                   | 477   |   |      |   | 456    |  
|Equipment expense                                             |  |                                   | 403   |   |      |   | 391    |  
|Legal fees                                                    |  |                                   | 84    |   |      |   | 60     |  
|Legal settlements expense                                     |  |                                   |      |   |      |   | 103    |  
|Other operating expenses                                      |  |                                   | 1,514 |   |      |   | 1,533  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Total noninterest expense                                     |  |                                   | 4,971 |   |      |   | 5,059  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Income before income taxes                                    |  |                                   | 1,856 |   |      |   | 2,551  |  
|Income Tax Expense                                            |  |                                   | 499   |   |      |   | 721    |  
|                                                              |  |                                   |       |   |      |   |        |  
|Net Income                                                    |  | $                                 | 1,357 |   |      | $ | 1,830  |  
|                                                              |  |                                   |       |   |      |   |        |  
|Basic and Diluted Earnings per Common Share                   |  | $                                 | 0.12  |   |      | $ | 0.16   |  
|                                                              |  |                                   |       |   |      |   |        |  



See the Notes to the Consolidated
Financial Statements.



5



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##### Table of Contents

Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders Equity

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



|                                                                                                               |  |                             |        |   |      |   |       
|-------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------
|                                                                                                               |  | Three Months Ended June 30,
|                                                                                                               |  | 2004                        |        |   | 2003
|Balance, beginning of period                                                                                   |  | $                           | 36,067 |   |      | $ | 35,037
|Comprehensive income:                                                                                          |  |                             |        |   |      |   |       
|Net income                                                                                                     |  |                             | 670    |   |      |   | 1,360 
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |                             | (1,134 | ) |      |   | 270   
|                                                                                                               |  |                             |        |   |      |   |       
|Total comprehensive income                                                                                     |  |                             | (464   | ) |      |   | 1,630 
|Cash dividends ($0.44 in 2004)                                                                                 |  |                             | (4,889 | ) |      |   |      
|Stock options exercised (2,375 shares in 2004; 500 shares in 2003)                                             |  |                             | 10     |   |      |   | 2     
|Common stock options granted/vested                                                                            |  |                             | 6      |   |      |   | 5     
|                                                                                                               |  |                             |        |   |      |   |       
|Balance, end of period                                                                                         |  | $                           | 30,730 |   |      | $ | 36,674
|                                                                                                               |  |                             |        |   |      |   |       
|                                                                                                               | 
|                                                                                                               |  | Six Months Ended June 30,  
|                                                                                                               |  | 2004                        |        |   | 2003
|Balance, beginning of period                                                                                   |  | $                           | 35,522 |   |      | $ | 34,757
|Comprehensive income:                                                                                          |  |                             |        |   |      |   |       
|Net income                                                                                                     |  |                             | 1,357  |   |      |   | 1,830 
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification and tax effects |  |                             | (945   | ) |      |   | 76    
|                                                                                                               |  |                             |        |   |      |   |       
|Total comprehensive income                                                                                     |  |                             | 412    |   |      |   | 1,906 
|Cash dividends ($0.47 in 2004)                                                                                 |  |                             | (5,222 | ) |      |   |      
|Stock options exercised (2,375 shares in 2004; 500 shares in 2003)                                             |  |                             | 10     |   |      |   | 2     
|Common stock options granted/vested                                                                            |  |                             | 8      |   |      |   | 9     
|                                                                                                               |  |                             |        |   |      |   |       
|Balance, end of period                                                                                         |  | $                           | 30,730 |   |      | $ | 36,674
|                                                                                                               |  |                             |        |   |      |   |       



See the Notes to the Consolidated
Financial Statements.



6



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##### Table of Contents

Belmont Bancorp. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2004 and 2003

(Unaudited) ($000s)



|                                                                           |  |      |         |   |      |   |         |  
|-------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                           |  | 2004 |         |   | 2003 |  
|Cash from Operating Activities                                             |  | $    | 2,656   |   |      | $ | 2,595   |  
|                                                                           |  |     
|Investing Activities                                                       |  |      |         |   |      |   |         |  
|                                                                           |  |     
|Proceeds from:                                                             |  |      |         |   |      |   |         |  
|Maturities and calls of securities                                         |  |      | 11,170  |   |      |   | 9,671   |  
|Sales of securities available for sale                                     |  |      | 7,804   |   |      |   | 4,586   |  
|Principal collected on mortgage-backed securities                          |  |      | 11,979  |   |      |   | 13,853  |  
|Sale of loans from portfolio                                               |  |      | 90      |   |      |   |        |  
|Sales of other real estate owned                                           |  |      | 3       |   |      |   | 124     |  
|Purchases of:                                                              |  |      |         |   |      |   |         |  
|Securities held to maturity                                                |  |      |        |   |      |   | (250    | )
|Mortgage-backed securities available for sale                              |  |      | (12,357 | ) |      |   | (27,487 | )
|Other securities available for sale                                        |  |      | (5,934  | ) |      |   | (5,294  | )
|Loans                                                                      |  |      | (7,096  | ) |      |   |        |  
|Premises and equipment                                                     |  |      | (678    | ) |      |   | (191    | )
|Changes in:                                                                |  |      |         |   |      |   |         |  
|Loans, net                                                                 |  |      | (8,361  | ) |      |   | (6,170  | )
|                                                                           |  |      |         |   |      |   |         |  
|Cash from investing activities                                             |  |      | (3,380  | ) |      |   | (11,158 | )
|                                                                           |  |      |         |   |      |   |         |  
|Financing Activities                                                       |  |      |         |   |      |   |         |  
|Proceeds from:                                                             |  |      |         |   |      |   |         |  
|Advances on long-term debt                                                 |  |      | 10,300  |   |      |   |        |  
|Payments on long term debt                                                 |  |      | (9      | ) |      |   | (8      | )
|Dividends paid on common stock                                             |  |      | (5,222  | ) |      |   |        |  
|Stock options exercised                                                    |  |      | 10      |   |      |   | 2       |  
|Changes in:                                                                |  |      |         |   |      |   |         |  
|Deposits                                                                   |  |      | (3,489  | ) |      |   | 1,646   |  
|Repurchase agreements                                                      |  |      | (117    | ) |      |   | 38      |  
|                                                                           |  |      |         |   |      |   |         |  
|Cash from financing activities                                             |  |      | 1,473   |   |      |   | 1,678   |  
|                                                                           |  |      |         |   |      |   |         |  
|Increase (Decrease) in Cash and Cash Equivalents                           |  |      | 749     |   |      |   | (6,885  | )
|Cash and Cash Equivalents, Beginning of Year                               |  |      | 13,036  |   |      |   | 23,040  |  
|                                                                           |  |      |         |   |      |   |         |  
|Cash and Cash Equivalents at June 30                                       |  | $    | 13,785  |   |      | $ | 16,155  |  
|                                                                           |  |      |         |   |      |   |         |  
|Cash payments for interest                                                 |  | $    | 2,259   |   |      | $ | 2,720   |  
|Cash payments for income taxes                                             |  |      | 25      |   |      |   | 11      |  
|Non-cash transfers from loans to other real estate owned and repossessions |  |      |        |   |      |   | 1,020   |  



See the Notes to the Consolidated
Financial Statements.



7



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##### Table of Contents

PART I - FINANCIAL INFORMATION



ITEM 1FINANCIAL STATEMENTS



BASIS OF PRESENTATION



The
consolidated financial statements include the accounts of Belmont Bancorp. (the Company) 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, 2003.



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         |  | 2004       |  | 2003       |  | 2004       |  | 2003      
|For the three months ended June 30 |  | 11,110,174 |  | 11,108,584 |  | 11,220,049 |  | 11,187,358
|For the six months ended June 30   |  | 11,109,538 |  | 11,108,494 |  | 11,216,691 |  | 11,181,882



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



|                                                            |  |                           |        |   |      |   |      |  
|----------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ---- | -
|                                                            |  | Six months ended June 30, |       
|(Expressed in thousands)                                    |  | 2004                      |        |   | 2003 |  
|Unrealized holding gains (losses) arising during the period |  | $                         | (1,327 | ) |      | $ | 358  |  
|Reclassification adjustment                                 |  |                           | (104   | ) |      |   | (243 | )
|                                                            |  |                           |        |   |      |   |      |  
|Net gains (losses) arising during the period                |  |                           | (1,431 | ) |      |   | 115  |  
|Tax effect                                                  |  |                           | (486   | ) |      |   | 39   |  
|                                                            |  |                           |        |   |      |   |      |  
|Other comprehensive income (loss)                           |  | $                         | (945   | ) |      | $ | 76   |  
|                                                            |  |                           |        |   |      |   |      |  



8



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##### 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 June 30, |      |   | For the Six Months Ended June 30, |  
|(Expressed in thousands except per share amounts)                                     |  | 2004                                |      |   | 2003                              |   |       | 2004 |  |   | 2003  |  
|Net income as reported                                                                |  | $                                   | 670  |   |                                   | $ | 1,360 |      |  | $ | 1,357 |   |  | $ | 1,830 |  
|Add: Expense, net of tax, included in net income for options granted below fair value |  |                                     | 4    |   |                                   |   | 3     |      |  |   | 5     |   |  |   | 6     |  
|Deduct: Stock-based compensation expense determined under fair value based method     |  |                                     | (55  | ) |                                   |   | (40   | )    |  |   | (94   | ) |  |   | (81   | )
|                                                                                      |  |                                     |      |   |                                   |   |       |      |  |   |       |   |  |   |       |  
|Pro forma net income                                                                  |  | $                                   | 619  |   |                                   | $ | 1,323 |      |  | $ | 1,268 |   |  | $ | 1,755 |  
|                                                                                      |  |                                     |      |   |                                   |   |       |      |  |   |       |   |  |   |       |  
|Basic earnings per share as reported                                                  |  | $                                   | 0.06 |   |                                   | $ | 0.12  |      |  | $ | 0.12  |   |  | $ | 0.16  |  
|Pro forma basic earnings per share                                                    |  |                                     | 0.06 |   |                                   |   | 0.12  |      |  |   | 0.11  |   |  |   | 0.16  |  
|                                                                                      |  |                                     |      |  
|Diluted earnings per share as reported                                                |  | $                                   | 0.06 |   |                                   | $ | 0.12  |      |  | $ | 0.12  |   |  | $ | 0.16  |  
|Pro forma diluted earnings per share                                                  |  |                                     | 0.06 |   |                                   | $ | 0.12  |      |  |   | 0.11  |   |  | $ | 0.16  |  



2. Securities



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



|                                                                                      |  |                      |        |                        |   |                         |  |   |        |  
|------------------------------------------------------------------------------------- |  | -------------------- | ------ | ---------------------- | - | ----------------------- |  | - | ------ | -
|                                                                                      |  | June 30, 2004        |       
|(Expressed in thousands)                                                              |  | Estimated Fair Value |        | Gross Unrealized Gains |   | Gross Unrealized Losses | 
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 16,164 |                        | $ | 84                      |  | $ | (35    | )
|Tax-exempt obligations of states and political subdivisions                           |  |                      | 1,192  |                        |   | 103                     |  |   |       |  
|Taxable obligations of states and political subdivisions                              |  |                      | 17,765 |                        |   | 266                     |  |   | (3     | )
|Mortgage-backed securities                                                            |  |                      | 45,003 |                        |   | 453                     |  |   | (635   | )
|Collateralized mortgage obligations                                                   |  |                      | 7,949  |                        |   | 213                     |  |   | (125   | )
|Corporate debt                                                                        |  |                      | 6,253  |                        |   | 43                      |  |   | (422   | )
|Asset-backed securities                                                               |  |                      | 201    |                        |   |                        |  |   |       |  
|                                                                                      |  |                      |        |                        |   |                         |  |   |        |  
|Total debt securities                                                                 |  |                      | 94,527 |                        |   | 1,162                   |  |   | (1,220 | )
|Marketable equity securities                                                          |  |                      | 2,978  |                        |   | 11                      |  |   | (36    | )
|                                                                                      |  |                      |        |                        |   |                         |  |   |        |  
|Total available for sale                                                              |  | $                    | 97,505 |                        | $ | 1,173                   |  | $ | (1,256 | )
|                                                                                      |  |                      |        |                        |   |                         |  |   |        |  



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##### Table of Contents

|                                                                                      |  |                      |         |                        |   |                         |  |   |      |  
|------------------------------------------------------------------------------------- |  | -------------------- | ------- | ---------------------- | - | ----------------------- |  | - | ---- | -
|                                                                                      |  | December 31, 2003    |        
|(Expressed in thousands)                                                              |  | Estimated Fair Value |         | Gross Unrealized Gains |   | Gross Unrealized Losses | 
|U.S. Treasury securities and obligations of U.S. Government corporations and agencies |  | $                    | 22,688  |                        | $ | 291                     |  | $ | (4   | )
|Tax-exempt obligations of states and political subdivisions                           |  |                      | 1,788   |                        |   | 152                     |  |   |     |  
|Taxable obligations of states and political subdivisions                              |  |                      | 19,426  |                        |   | 539                     |  |   |     |  
|Mortgage-backed securities                                                            |  |                      | 41,521  |                        |   | 670                     |  |   | (249 | )
|Collateralized mortgage obligations                                                   |  |                      | 13,247  |                        |   | 237                     |  |   | (51  | )
|Corporate debt                                                                        |  |                      | 9,949   |                        |   | 161                     |  |   | (431 | )
|Asset-backed securities                                                               |  |                      | 466     |                        |   | 2                       |  |   |     |  
|                                                                                      |  |                      |         |                        |   |                         |  |   |      |  
|Total debt securities                                                                 |  |                      | 109,085 |                        |   | 2,052                   |  |   | (735 | )
|Marketable equity securities                                                          |  |                      | 3,060   |                        |   | 49                      |  |   | (18  | )
|                                                                                      |  |                      |         |                        |   |                         |  |   |      |  
|Total available for sale                                                              |  | $                    | 112,145 |                        | $ | 2,101                   |  | $ | (753 | )
|                                                                                      |  |                      |         |                        |   |                         |  |   |      |  



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



|                         |  |                   |     |                        |   |                         |  |                      |  |   |    
|------------------------ |  | ----------------- | --- | ---------------------- | - | ----------------------- |  | -------------------- |  | - | ---
|                         |  | June 30, 2004    
|(Expressed in thousands) |  | Carrying Amount   |     | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Estimated Fair Value
|Corporate debt           |  | $                 | 250 |                        | $ | 13                      |  |                     |  | $ | 263
|                         | 
|                         |  | December 31, 2003
|(Expressed in thousands) |  | Carrying Amount   |     | Gross Unrealized Gains |   | Gross Unrealized Losses |  | Estimated Fair Value
|Corporate debt           |  | $                 | 250 |                        | $ | 23                      |  |                     |  | $ | 273



3. Loans and Allowance
for Loan Losses



Loans outstanding are as follows:



|                                                        |  |               |         |                   |   |        
|------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | -------
|(Expressed in thousands)                                |  | June 30, 2004 |         | December 31, 2003
|Real estate-construction                                |  | $             | 6,306   |                   | $ | 5,679  
|Real estate-mortgage                                    |  |               | 60,031  |                   |   | 57,213 
|Real estate-secured by nonfarm, nonresidential property |  |               | 85,299  |                   |   | 65,380 
|Commercial, financial and agricultural                  |  |               | 14,090  |                   |   | 24,018 
|Obligations of political subdivisions in the U.S.       |  |               | 2,059   |                   |   | 2,236  
|Installment loans and loans to individuals              |  |               | 5,162   |                   |   | 3,002  
|                                                        |  |               |         |                   |   |        
|Loans receivable                                        |  | $             | 172,947 |                   | $ | 157,528
|                                                        |  |               |         |                   |   |        



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Non-accruing loans amounted to $1,864,000 at June 30, 2004 and $1,808,000 at December 31, 2003. Loans
past due 90 days and still accruing interest were $18,000 at June 30, 2004 and $3,000 at December 31, 2003. Most non-accruing loans are also identified as impaired loans in the table below.



Impaired loans were as follows:



|                                                           |  |               |       |                   |   |      
|---------------------------------------------------------- |  | ------------- | ----- | ----------------- | - | -----
|(Expressed in thousands)                                   |  | June 30, 2004 |       | December 31, 2003
|Impaired loans with no allocated allowance for loan losses |  | $             | 7     |                   | $ | 58   
|Impaired loans with allocated allowance for loan losses    |  |               | 1,676 |                   |   | 1,673
|                                                           |  |               |       |                   |   |      
|Total (1)                                                  |  | $             | 1,683 |                   | $ | 1,731
|                                                           |  |               |       |                   |   |      
|Amount of the allowance for loan losses allocated          |  | $             | 453   |                   | $ | 524  

---

|(1) | Balances are net of nonaccrual interest paid
|--- | --------------------------------------------



|                                             |  |                           |       |      |   |      
|-------------------------------------------- |  | ------------------------- | ----- | ---- | - | -----
|                                             |  | Six Months Ended June 30,
|(Expressed in thousands)                     |  | 2004                      |       | 2003
|Average impaired loans                       |  | $                         | 1,694 |      | $ | 3,169
|Interest income recognized during impairment |  |                           | 0     |      |   | 0    
|Cash-basis interest income recognized        |  |                           | 0     |      |   | 0    



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



|                                           |  |                             |       |   |                           |   |        |      |  |   |       |   |  |   |        |  
|------------------------------------------ |  | --------------------------- | ----- | - | ------------------------- | - | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|                                           |  | Three months ended June 30, |       |   | Six months ended June 30, |  
|(Expressed in thousands)                   |  | 2004                        |       |   | 2003                      |   |        | 2004 |  |   | 2003  |  
|Balance, beginning of period               |  | $                           | 3,317 |   |                           | $ | 4,337  |      |  | $ | 3,300 |   |  | $ | 4,287  |  
|                                           |  |                             |       |  
|Provision for loan losses                  |  |                             | (175  | ) |                           |   | (1,350 | )    |  |   | (175  | ) |  |   | (1,350 | )
|                                           |  |                             |       |  
|Loans charged-off                          |  |                             | (21   | ) |                           |   | (3     | )    |  |   | (94   | ) |  |   | (21    | )
|Recoveries on loans previously charged-off |  |                             | 56    |   |                           |   | 956    |      |  |   | 146   |   |  |   | 1,024  |  
|                                           |  |                             |       |   |                           |   |        |      |  |   |       |   |  |   |        |  
|Net (charge-offs) recoveries               |  |                             | 35    |   |                           |   | 953    |      |  |   | 52    |   |  |   | 1,003  |  
|                                           |  |                             |       |   |                           |   |        |      |  |   |       |   |  |   |        |  
|Balance, end of period                     |  | $                           | 3,177 |   |                           | $ | 3,940  |      |  | $ | 3,177 |   |  | $ | 3,940  |  
|                                           |  |                             |       |   |                           |   |        |      |  |   |       |   |  |   |        |  



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.



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##### Table of Contents

The following is a summary of the activity in the Plan for the six months ended June 30, 2004:



|                           |  |                     |  |                     |   |  |                                 |     
|-------------------------- |  | ------------------- |  | ------------------- | - |  | ------------------------------- | ----
|                           |  | Available for Grant |  | Options Outstanding |   |  | Weighted Average Exercise Price
|Balance at January 1, 2004 |  | 624,500             |  | 368,000             |   |  | $                               | 4.12
|Exercised                  |  |                    |  | (2,375              | ) |  |                                 | 4.41
|Forfeitures                |  | 36,125              |  | (36,125             | ) |  |                                 | 4.66
|                           |  |                     |  |                     |   |  |                                 |     
|Balance at June 30, 2004   |  | 660,625             |  | 329,500             |   |  | $                               | 4.06
|                           |  |                     |  |                     |   |  |                                 |     



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.



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##### 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 press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, statements regarding the likelihood of meeting the Companys goals for 2004. Forward-looking statements are statements other than statements of
historical fact, including statements regarding the Companys expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as may,
will, expects, should, believes, plans, anticipates, estimates, predicts, potential, continue, or other words of similar meaning.
Readers should not place undue reliance on forward-looking statements, which reflect managements opinion only as of the date on which they were made and, due to many factors, are subject to risks and uncertainties that could cause actual
results to differ materially from those discussed in, or implied by, the forward looking statements. These factors include general economic conditions which could increase loan losses above loan loss reserves, competition from other banking
institutions, financial institutions and nonbank or non-regulated companies or firms that engage in similar activities with significantly greater resources, credit, market, operational, liquidity and interest rate risks, fiscal and monetary policies
and legislation impacting future operations and performance and adverse business conditions. 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 these and other 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 is an appropriate loan loss allowance, 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. (the Company) reported net income of $670,000, or $0.06 per common share, for the three months ended June 30, 2004, compared
to $1,360,000, or $0.12 per common share, for the three months ended June 30, 2003. For the six months ended June 30, 2004, the Company earned $1,357,000, or $0.12 per common share, compared to $1,830,000, or $0.16 per common share for the six
months ended June 30, 2003. During each period, the Company recorded a benefit related to its allowance for loan loss due to improvements in asset quality and loan loss recoveries. This benefit had a larger impact on earnings during the three months
and six months ending June 30, 2003, when the Company recorded a loan loss benefit of $1,350,000 compared to a loan loss benefit of $175,000 for the three months and six months ending June 30, 2004.



13



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##### Table of Contents

Total assets at June 30, 2004, were $301.1 million compared to $299.5 million at year-end 2003. Total
loans increased to $172.9 million at June 30, 2004, up from $157.5 million at December 31, 2003. Average assets were $306.8 million for the second quarter of 2004, compared to $291.0 million for the second quarter of 2003. Average assets for the six
months ended June 30, 2004 were $305.6 million compared to $289.5 million for the comparable period last year.



Total shareholders equity decreased to $30.7 million at June 30, 2004 compared to $35.5 million at year-end 2003 following the payment in June 2004
of a special dividend to shareholders totaling $4.4 million. The Companys consolidated Tier One capital leverage ratio was 8.7% at June 30, 2004.



NET INTEREST INCOME



Interest rates across the maturity horizon remained low relative to historical levels during the periods covered by this Report. The Federal Open Market
Committee (the FOMC) has maintained a very accommodative stance to aid economic recovery. Since the beginning of 2001, the targeted federal funds rate was reduced from 6.50% to 1.00% by June 2003 where it remained until the FOMC
increased the target to 1.25% at its June 2004 meeting and to 1.50% at its August 2004 meeting. Further federal funds rate increases are anticipated. By late July 2004, interest rates on the 10 year U.S. Treasury note, an indicator of the trend in
mortgage interest rates, had increased by approximately 0.70% since the end of March 2004 to 4.58%. 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. The Company has significantly
reduced it cost of funds since 2001; there is little room for further reductions. To increase and retain deposits, competitive pressures may prompt the Company to offer deposit products that result in a migration of its funds to different products
paying a higher rate of interest.



Net interest income on a
taxable equivalent basis increased $253,000 for the second quarter of 2004 compared to the second quarter of 2003. Average earning assets increased to $285 million during the second quarter of 2004 from $268 million for the second quarter of 2003.
The taxable equivalent net interest margin was 3.56% and 3.41% for the three months ended June 30, 2004 and 2003, respectively. The net interest rate spread (the difference between the average yields on earning assets and interest bearing
liabilities) was 3.25% for the second quarter of 2004 compared to 3.02% for the comparable period of 2003. The taxable equivalent yield on earning assets declined to 5.13% from 5.39%, a decrease of 26 basis points, during the second quarter of 2004
compared to the second quarter of 2003. This decline was offset by a decrease of 49 basis points in the cost of interest-bearing liabilities to 1.87% from 2.36%.



Net interest income on a taxable equivalent basis increased $650,000 for the first six months of 2004 compared to the same
period last year while average earning assets increased $17.1 million to $283.6 million for the first six months of 2004. The yield on earning assets decreased from 5.46% to 5.27%, and the cost of interest bearing liabilities decreased from 2.42% to
1.89%. The taxable equivalent net interest margin improved to 3.68% for the first six months of 2004 compared to 3.43% for the same period in 2003.



14



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##### Table of Contents

OTHER OPERATING INCOME



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



|                                                         |  |                             |     |      |                           |          |  |       |      |  |      |       |          |   |       |  |       |  
|-------------------------------------------------------- |  | --------------------------- | --- | ---- | ------------------------- | -------- |  | ----- | ---- |  | ---- | ----- | -------- | - | ----- |  | ----- | -
|                                                         |  | Three months ended June 30, |     |      | Six months ended June 30, |         
|(Expressed in thousands)                                 |  | 2004                        |     | 2003 |                           | % Change |  |       | 2004 |  | 2003 |       | % Change |  
|Trust fees                                               |  | $                           | 138 |      | $                         | 135      |  | 2.2   | %    |  | $    | 304   |          | $ | 260   |  | 16.9  | %
|Service charges on deposits                              |  |                             | 333 |      |                           | 356      |  | -6.5  | %    |  |      | 656   |          |   | 609   |  | 7.7   | %
|Mortgage servicing fees                                  |  |                             | 46  |      |                           | 44       |  | 4.5   | %    |  |      | 92    |          |   | 88    |  | 4.5   | %
|Other income (individually less than 1% of total income) |  |                             | 114 |      |                           | 144      |  | -20.8 | %    |  |      | 314   |          |   | 308   |  | 1.9   | %
|                                                         |  |                             |     |      |                           |          |  |       |      |  |      |       |          |   |       |  |       |  
|Subtotal                                                 |  |                             | 631 |      |                           | 679      |  | -7.1  | %    |  |      | 1,366 |          |   | 1,265 |  | 8.0   | %
|Gain on sale of loans held for sale                      |  |                             | 27  |      |                           | 156      |  | -82.7 | %    |  |      | 56    |          |   | 293   |  | -80.9 | %
|Securities gains                                         |  |                             | 82  |      |                           | 75       |  | 9.3   | %    |  |      | 104   |          |   | 243   |  | -57.2 | %
|                                                         |  |                             |     |      |                           |          |  |       |      |  |      |       |          |   |       |  |       |  
|Total                                                    |  | $                           | 740 |      | $                         | 910      |  | -18.7 | %    |  | $    | 1,526 |          | $ | 1,801 |  | -15.3 | %
|                                                         |  |                             |     |      |                           |          |  |       |      |  |      |       |          |   |       |  |       |  



Trust fees increased
16.9% to $304,000 for the first six months of 2004 compared to $260,000 for the comparative period in 2003. For the second quarter of 2004, trust fees increased to $138,000 compared to $135,000 in 2003. The improvement in revenue was the result of a
fee increase on trust accounts.



Service charges on deposits
increased 7.7% from $609,000 to $656,000 during the six months ended June 30, 2004, compared to the same period in 2003, principally due to the introduction during the second quarter of 2003 of a new product and the implementation of a new service
charge. For the second quarter of 2004, service charges on deposits declined 6.5% from $356,000 to $333,000 largely as a result of lower monthly maintenance fees on checking accounts.



Other income increased modestly to $314,000 for the first six months of 2004 compared to $308,000 for the comparative period
of 2003. For the second quarter of 2004, other income declined $30,000, or 20.8%, principally due to lower mortgage loan-related fee income.



Mortgage lending volumes declined during the first half of 2004 compared to the same period of 2003 reflecting the cyclical nature of the mortgage lending
business. A component of gains on sale of loans held for sale includes capitalized mortgage servicing rights (MSR). This right represents the value associated with servicing loans sold in the secondary market. Capitalization of mortgage
servicing rights declined to $36,000 for the first six months of 2004 compared to $114,000 for the first six months of 2003 because the volume of loans sold in the secondary market declined. Total gains on sales of loans (including the component for
capitalized mortgage servicing rights) decreased 80.9% to $56,000 for the half of 2004 compared to $293,000 for the same period of 2003. Declines in the quarterly comparison were also volume driven. Activity associated with MSR, amortization of MSR
and reductions to a valuation allowance established during 2002 to reduce the carrying value of MSR to estimated fair vale is summarized in the following table.



|                                                            |  |                             |     |   |                           |   |     |      |  |   |      |   |  |   |     |  
|----------------------------------------------------------- |  | --------------------------- | --- | - | ------------------------- | - | --- | ---- |  | - | ---- | - |  | - | --- | -
|                                                            |  | Three Months Ended June 30, |     |   | Six Months Ended June 30, |  
|(Expressed in thousands)                                    |  | 2004                        |     |   | 2003                      |   |     | 2004 |  |   | 2003 |  
|Servicing rights:                                           |  |                             |     |   |                           |   |     |      |  |   |      |   |  |   |     |  
|Beginning of the period                                     |  | $                           | 407 |   |                           | $ | 436 |      |  | $ | 433  |   |  | $ | 418 |  
|Additions (included in gain on sale of loans held for sale) |  |                             | 17  |   |                           |   | 55  |      |  |   | 36   |   |  |   | 114 |  
|Amortized to expense                                        |  |                             | (47 | ) |                           |   | (47 | )    |  |   | (92  | ) |  |   | (88 | )
|                                                            |  |                             |     |   |                           |   |     |      |  |   |      |   |  |   |     |  
|End of period balance                                       |  | $                           | 377 |   |                           | $ | 444 |      |  | $ | 377  |   |  | $ | 444 |  
|                                                            |  |                             |     |   |                           |   |     |      |  |   |      |   |  |   |     |  



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##### Table of Contents

|                               |  |                             |     |                           |      |   |      |  |   |      |   |  |   |     |  
|------------------------------ |  | --------------------------- | --- | ------------------------- | ---- | - | ---- |  | - | ---- | - |  | - | --- | -
|                               |  | Three Months Ended June 30, |     | Six Months Ended June 30, |     
|(Expressed in thousands)       |  | 2004                        |     |                           | 2003 |   | 2004 |  |   | 2003 |  
|Valuation allowance:           |  |                             |     |                           |      |   |      |  |   |      |   |  |   |     |  
|Beginning of the period        |  | $                           | 55  |                           |      | $ | 97   |  | $ | 59   |   |  | $ | 109 |  
|Additions expensed             |  |                             |    |                           |      |   |     |  |   |     |   |  |   |    |  
|Reductions credited to expense |  |                             | (13 | )                         |      |   |     |  |   | (17  | ) |  |   | (12 | )
|Direct write-downs             |  |                             |    |                           |      |   |     |  |   |     |   |  |   |    |  
|                               |  |                             |     |                           |      |   |      |  |   |      |   |  |   |     |  
|End of period balance          |  | $                           | 42  |                           |      | $ | 97   |  | $ | 42   |   |  | $ | 97  |  
|                               |  |                             |     |                           |      |   |      |  |   |      |   |  |   |     |  



The total outstanding
balance of mortgage loans sold without recourse to the Federal Home Loan Mortgage Corporation and with servicing rights retained totaled $70.6 million at June 30, 2004, $72.6 million at December 31, 2003, and $69.6 million at June 30, 2003.



Securities gains for the six months ended June 30, 2004
totaled $104,000 and included $43,000 in gains on sales of equity securities. Securities gains for the six months ended June 30, 2003 totaled $243,000 and included $92,000 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 June 30, |       |      | Six months ended June 30, |         
|(Expressed in thousands)                          |  | 2004                        |       | 2003 |                           | % Change |  |        | 2004 |  | 2003 |       | % change |  
|Salaries and wages                                |  | $                           | 1,008 |      | $                         | 1,020    |  | -1.2   | %    |  | $    | 2,001 |          | $ | 2,016 |  | -0.7   | %
|Employee benefits                                 |  |                             | 227   |      |                           | 242      |  | -6.2   | %    |  |      | 492   |          |   | 500   |  | -1.6   | %
|Occupancy expense                                 |  |                             | 234   |      |                           | 218      |  | 7.3    | %    |  |      | 477   |          |   | 456   |  | 4.6    | %
|Furniture and equipment expense                   |  |                             | 198   |      |                           | 195      |  | 1.5    | %    |  |      | 403   |          |   | 391   |  | 3.1    | %
|Legal fees                                        |  |                             | 46    |      |                           | 29       |  | 58.6   | %    |  |      | 84    |          |   | 60    |  | 40.0   | %
|Legal settlements                                 |  |                             |      |      |                           | 50       |  | -100.0 | %    |  |      | 0     |          |   | 103   |  | -100.0 | %
|Insurance, including federal deposit insurance    |  |                             | 42    |      |                           | 52       |  | -19.2  | %    |  |      | 83    |          |   | 104   |  | -20.2  | %
|Examinations and audits                           |  |                             | 61    |      |                           | 88       |  | -30.7  | %    |  |      | 122   |          |   | 175   |  | -30.3  | %
|Directors fees                                   |  |                             | 59    |      |                           | 42       |  | 40.5   | %    |  |      | 116   |          |   | 82    |  | 41.5   | %
|Taxes other than payroll and real estate          |  |                             | 98    |      |                           | 94       |  | 4.3    | %    |  |      | 193   |          |   | 185   |  | 4.3    | %
|Supplies and printing                             |  |                             | 62    |      |                           | 63       |  | -1.6   | %    |  |      | 99    |          |   | 108   |  | -8.3   | %
|Data processing                                   |  |                             | 54    |      |                           | 35       |  | 54.3   | %    |  |      | 106   |          |   | 92    |  | 15.2   | %
|Advertising                                       |  |                             | 68    |      |                           | 68       |  | 0.0    | %    |  |      | 106   |          |   | 89    |  | 19.1   | %
|Amortization of mortgage servicing rights, net    |  |                             | 33    |      |                           | 47       |  | -29.8  | %    |  |      | 74    |          |   | 76    |  | -2.6   | %
|Other (individually less than 1% of total income) |  |                             | 319   |      |                           | 307      |  | 3.9    | %    |  |      | 615   |          |   | 622   |  | -1.1   | %
|                                                  |  |                             |       |      |                           |          |  |        |      |  |      |       |          |   |       |  |        |  
|Total                                             |  | $                           | 2,509 |      | $                         | 2,550    |  | -1.6   | %    |  | $    | 4,971 |          | $ | 5,059 |  | -1.7   | %
|                                                  |  |                             |       |      |                           |          |  |        |      |  |      |       |          |   |       |  |        |  



At June 30, 2004, the
Company employed 134 full time equivalent employees. Salaries and wage expense was down slightly for the quarter and six months ended June 30, 2004 compared to the same periods of 2003. Incentive compensation paid for mortgage lending activity was
less during 2004 compared to 2003.



Increases in occupancy
costs for the periods presented for 2004 compared to 2003 were due to the opening of a loan production office in McMurray, Pennsylvania during 2003, the renewal of a branch office lease, and higher costs for utilities and occupancy insurance.



16



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##### Table of Contents

Legal fees incurred by the Company are principally for fees associated with loan collection efforts,
securities matters and general business operations.



Insurance
expense included costs for federal deposit insurance premiums, directors and officers liability insurance, and fidelity bond insurance. Insurance costs decreased 19.2% to $42,000 for the second quarter of 2004 from $52,000 for the same
period of 2003. For the six months ended June 30, 2004, this cost decreased 20.2% to $83,000 from $104,000 for the first half of 2003. The decrease was principally related to lower costs associated with directors and officers liability
insurance.



Examination and audit costs decreased 30.7% to
$61,000 for the second quarter of 2004 from $88,000 for the same period of 2003. Similar percentage reductions for this expense were realized during the first half of 2004. Beginning in 2004, the Companys staff performed the internal audit and
loan review functions that had previously been outsourced to third party vendors. Consequently, some costs related to examinations and audit expenses are reflected in compensation cost for 2004.



Directors fees increased 40.5% to $59,000 for the second quarter of
2004 compared to the $42,000 for the same quarter of 2003. Similar percentage increases for this cost were realized for the first half of 2004. Retainer and attendance fees for directors were increased beginning in 2004.



Data processing expenses increased to $54,000 for the second quarter of 2004
compared to the same quarter of 2003. For the first six months of 2004, data processing expense increased to $106,000 from $92,000 in 2003. The increase in cost was related to telecommunication bandwidth expansion to several of the Companys
branch locations.



SECURITIES



The estimated fair value of securities available for sale at June 30, 2004
and December 31, 2003 are detailed in Note 2 of the quarterly financial statements.



At June 30, 2004, the Company did not own any investments of a single issuer (other than the U.S. Government, its agencies and its sponsored corporations), the value of which exceeded 10% of total shareholders
equity, or $3,073,000, except for stock in the Federal Home Loan Bank of Cincinnati. The carrying value of this stock was $3,666,000 at June 30, 2004.



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 are included in Note 3 of the quarterly financial statements. During the second quarter of 2003, the Company recorded benefit for loan loss (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 $0.08 per common share (basic and diluted) after income taxes, to the Companys operating results for the period. Similarly during the second quarter of
2004, the Company recorded a loan loss benefit of $175,000. If the Company continues to experience either low net charge-offs or net recoveries in future periods, improvements in its loan loss rates, and payoffs or significant principal reductions
to its classified loans, it is possible that the Company will record additional reductions to its allowance for loan loss through negative loan loss provisions in forthcoming periods. However, there is no assurance that this will occur.



17



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##### Table of Contents

The following table depicts various loan and loan-related statistics.



|                                                         |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                         |  | Three months ended June 30, |         |   | Six months ended June 30, |  
|(Expressed in thousands)                                 |  | 2004                        |         |   | 2003                      |   |         | 2004 |  |   | 2003    |  
|Loans outstanding                                        |  | $                           | 172,947 |   |                           | $ | 137,091 |      |  | $ | 172,947 |   |  | $ | 137,091 |  
|Average loans                                            |  | $                           | 169,303 |   |                           | $ | 136,906 |      |  | $ | 164,637 |   |  | $ | 134,520 |  
|Annualized net (charge offs) recoveries as a percent of: |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Average loans                                            |  |                             | 0.08    | % |                           |   | 2.78    | %    |  |   | 0.06    | % |  |   | 1.49    | %
|Allowance for loan losses                                |  |                             | 4.41    | % |                           |   | 96.75   | %    |  |   | 3.27    | % |  |   | 50.91   | %
|Allowance for loan losses to:                            |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total loans at end of period                             |  |                             | 1.84    | % |                           |   | 2.87    | %    |  |   | 1.84    | % |  |   | 2.87    | %
|Non-performing assets                                    |  |                             | 158.69  | % |                           |   | 104.62  | %    |  |   | 158.69  | % |  |   | 104.62  | %



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)       |  | June 30, 2004 |       |   | Dec. 31, 2003 |  
|Non-accrual loans and leases                         |  | $             | 1,864 |   |               | $ | 1,808 |  
|Loans 90 days or more past due but accruing interest |  |               | 18    |   |               |   | 3     |  
|Other real estate owned                              |  |               | 120   |   |               |   | 120   |  
|                                                     |  |               |       |   |               |   |       |  
|Total                                                |  | $             | 2,002 |   |               | $ | 1,931 |  
|                                                     |  |               |       |   |               |   |       |  
|Non-performing assets as a percent of total assets   |  |               | 0.66  | % |               |   | 0.64  | %



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 $7,481,000 at June 30, 2004 and $8,214,000 at December 31, 2003; no loans were
classified as doubtful.



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 table.



18



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##### Table of Contents

|                                                     |  |                          |        |   |                   |   |        |  
|---------------------------------------------------- |  | ------------------------ | ------ | - | ----------------- | - | ------ | -
|                                                     |  | (Expressed in thousands) |       
|Industry                                             |  | June 30, 2004            |        |   | December 31, 2003 |  
|Real estate - operators of nonresidential buildings: |  |                          |        |   |                   |   |        |  
|Loan balance and available credit                    |  | $                        | 14,747 |   |                   | $ | 13,588 |  
|Percent of tier 1 capital                            |  |                          | 58.8   | % |                   |   | 47.9   | %
|                                                     |  |                         
|Real estate - apartment buildings:                   |  |                          |        |   |                   |   |        |  
|Loan balance and available credit                    |  | $                        | 9,488  |   |                   | $ | 9,281  |  
|Percent of tier 1 capital                            |  |                          | 37.8   | % |                   |   | 32.7   | %
|                                                     |  |                         
|Services - motel, hotel:                             |  |                          |        |   |                   |   |        |  
|Loan balance and available credit                    |  | $                        | 8,661  |   |                   | $ | 7,653  |  
|Percent of tier 1 capital                            |  |                          | 34.5   | % |                   |   | 27.0   | %



The Banks Tier 1
capital at June 30, 2004 was $25.1 million, down from $28.4 million at December 31, 2003 following the payment of a special cash dividend of $4.4 million during June 2004. As a consequence, loan concentration percentages were affected by both a
dollar increase in loan balances as well as lower Tier 1 capital.



DEFERRED FEDERAL TAX ASSETS



Deferred federal tax assets totaled $4.6 million at June 30, 2004. The deferred federal tax assets include significant balances related to tax loss carryforwards and tax credits. At June 30, 2004, management believes no deferred tax
valuation allowance is needed as future estimated taxable income will be sufficient to realize the net deferred tax assets.



LONG-TERM FEDERAL HOME LOAN BANK ADVANCES



Long-term advances at June 30, 2004 from the Federal Home Loan Bank of Cincinnati are summarized in the following table.



|                                                                                                                                                                              |  |              |       
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------
|(Expressed in thousands)                                                                                                                                                      |  | June 30,2004
|Fixed rate advances with balances due at maturity, maturities ranging from September 2004 through July 2010 and fixed rates ranging from 1.60%
to 4.29%, averaging 2.93%      |  | $            | 9,535 
|Fixed rate advances with quarterly FHLB option to convert to floating rate tied to LIBOR maturing in 2008 and rates ranging from 4.53% to
4.78%, averaging 4.66%              |  |              | 20,000
|Fixed rate advance with quarterly FHLB option to convert to floating rate tied to LIBOR in 2005 and maturing in 2009 with rate of 3.16% and a
conversion strike rate of 7.50% |  |              | 5,000 
|Amortizing balloon advance maturing in 2017 with fixed rate of 4.654%                                                                                                         |  |              | 1,025 
|                                                                                                                                                                              |  |              |       
|Total long-term FHLB advances                                                                                                                                                 |  | $            | 35,560
|                                                                                                                                                                              |  |              |       
|(LIBOR is the 3 month London Interbank Offered Rate)                                                                                                                          |  |              |       



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##### Table of Contents

CAPITAL RESOURCES



The table below depicts the capital ratios for the Bank and for the Company on a consolidated basis as of June 30, 2004. In
addition, the table depicts the regulatory requirements for classification as adequately capitalized and well 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.



|                                                  |  |        |        |       |                                              |   |        |                                                                                 |        |  |     |        |  |       |        |  |      |  
|------------------------------------------------- |  | ------ | ------ | ----- | -------------------------------------------- | - | ------ | ------------------------------------------------------------------------------- | ------ |  | --- | ------ |  | ----- | ------ |  | ---- | -
|                                                  |  | Actual |        |       | Minimum RequiredFor CapitalAdequacy Purposes |   |        | Minimum RequiredTo Be Well CapitalizedUnder Prompt CorrectiveAction Regulations |       
|(Expressed in thousands)                          |  | Amount |        | Ratio |                                              |   | Amount |                                                                                 | Ratio  |  |     | Amount |  | Ratio |       
|Total risk based capital to risk weighted assets: |  |        |        |       |                                              |   |        |                                                                                 |        |  |     |        |  |       |        |  |      |  
|Consolidated                                      |  | $      | 28,719 |       | 14.4                                         | % |        | $                                                                               | 15,988 |  | 8.0 | %      |  | $     | 19,985 |  | 10.0 | %
|Bank                                              |  |        | 27,596 |       | 13.7                                         | % |        |                                                                                 | 16,122 |  | 8.0 | %      |  |       | 20,152 |  | 10.0 | %
|Tier 1 capital to risk weighted assets:           |  |        |        |       |                                              |   |        |                                                                                 |        |  |     |        |  |       |        |  |      |  
|Consolidated                                      |  |        | 26,212 |       | 13.1                                         | % |        |                                                                                 | 7,994  |  | 4.0 | %      |  |       | 11,991 |  | 6.0  | %
|Bank                                              |  |        | 25,069 |       | 12.4                                         | % |        |                                                                                 | 8,061  |  | 4.0 | %      |  |       | 12,091 |  | 6.0  | %
|Tier 1 capital to average assets:                 |  |        |        |       |                                              |   |        |                                                                                 |        |  |     |        |  |       |        |  |      |  
|Consolidated                                      |  |        | 26,212 |       | 8.7                                          | % |        |                                                                                 | 12,091 |  | 4.0 | %      |  |       | 15,114 |  | 5.0  | %
|Bank                                              |  |        | 25,069 |       | 8.3                                          | % |        |                                                                                 | 12,057 |  | 4.0 | %      |  |       | 15,072 |  | 5.0  | %



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 decreased $3.5 million, or 1.5%, from December 31, 2003 to June 30, 2004.
The Banks federal funds sold at June 30, 2004 totaled $3.7 million, up from $2.3 million at December 31, 2003.



Cash flows from the securities portfolio are also a source of liquidity. Proceeds from principal repayments, sales, calls and maturities of investment
securities totaled $31 million during the six months ended June 30, 2004. Securities available for sale decreased from $112 million at December 31, 2003 to $98 million at June 30, 2004.



The Bank has an available line of credit with a correspondent bank totaling $4.1million 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 June 30, 2004, 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 June 30, 2004, the parent had cash and marketable securities with an estimated fair value of $754,000. 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.



20



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##### Table of Contents

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, 2003. 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.



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, use of proceeds and Issuer purchases of equity securities



None



Item 3. Defaults upon senior securities



None



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



The annual meeting of shareholders was held on May 17, 2004. Of the 11,108,902 shares entitled to vote at the meeting, 9,433,853 shares were voted. The results were as follows:



Proposal number 1  Election of directors



(Term expiring in the Year 2007):



|                    |  |           |  |         
|------------------- |  | --------- |  | --------
|                    |  | For       |  | Withhold
|John H. Goodman, II |  | 9,376,072 |  | 57,781  
|James R. Miller     |  | 9,382,589 |  | 51,264  
|Brian L. Schambach  |  | 9,399,473 |  | 34,380  
|Keith A. Sommer     |  | 9,378,914 |  | 54,939  



Proposal number 2
 To ratify the appointment of Crowe Chizek and Company LLC as independent auditors for the year ending December 31, 2004:



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|9,373,086 |  | 45,619  |  | 15,147 



21



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##### Table of Contents

The following directors continued in office:



Directors with terms ending in 2005:



Jay A. Beck

David B. Kelley (1)

Tillio P. Petrozzi

Charles A. Wilson, Jr.



(1) Mr. Kelley resigned effective June 19, 2004.



Directors with terms ending in 2006:



David R. Giffin

Terrence A. Lee

Wilbur R. Roat



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 June 30, 2004      
|     | 
|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 June 30, 2004      
|     | 
|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 June 30, 2004
|     | 
|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 June 30, 2004

---

|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.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|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 April 21, 2004, Belmont Bancorp. furnished a report on Form 8-K under Item 12 reporting the issuance of a press release on April 20, 2004, announcing a
regular cash dividend payable on May 14, 2004 to shareholders of record as of April 30, 2004 and earnings for the first quarter of 2004.



On May 18, 2004, Belmont Bancorp. filed a report on Form 8-K under Item 5 reporting the issuance of a press release announcing a special cash dividend of
$0.40 per common share payable on June 14, 2004 to shareholders of record as of May 28, 2004.



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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 MarshBy:

Jane MarshSecretary & Chief Financial Officer




August 13, 2004



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