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Allegheny Bancshares, Inc. Announces Fourth Quarter 2013 Financial Results  | Allegheny Bancshares, Inc. Announces Third Quarter 2013 Financial Results  | Allegheny Bancshares, Inc. Announces Second Quarter 2013 Financial Results  | Allegheny Bancshares, Inc. Announces 2012 Earnings  | Corporate Reorganization of Pendleton Community Bank Stock  | SEC Information  | Audit Committee Charter 


Allegheny Bancshares, Inc. Announces Fourth Quarter 2013 Financial Results
Allegheny Bancshares, Inc. (Allegheny), the parent company of Pendleton Community Bank, is pleased to announce its results of operations for the 4th quarter and year ending December 31, 2013.

Allegheny’s net income for 2013 was $2,716,464 or $3.16 per share. This represents a 3.05% increase in net income over 2012’s level of $2,636,181. It also represents a 4.29% increase in earnings per share over 2012 earnings per share of $3.03. The 4th quarter of 2013 net income was $713,464 up $30,283 (4.43%) over the same period in 2012.

Net interest income shrank from $9,999,000 in 2012 to $9,844,000 in 2013. While assets grew slightly for 2013, loans decreased by $5.3 million. This decrease in loans put pressure on interest income. Deposit balances stayed relatively level through 2013, so the additional liquidity was used to purchase securities and other investments yielding less than the loan portfolio. Asset increased by $154,000 which represents an increase of 0.06% for 2013. Loans decreased by $5,3 million and investment securities increased by $2.1 million in addition the bank increased its investment in Bank Owned Life Insurance by $2.3 million. Total loan loss provision for 2013 was $900,000 compared to $1,200,000 in 2012 and 4th quarter provision totaled $150,000 in 2013 as compared to $300,000 for 4th quarter 2012.

Allegheny’s key financial performance indicators continued to be strong considering the economic environment and compare favorably with local peer group data. Allegheny produced a return on average assets (ROAA) of 1.04% and a return on average equity (ROAE) of 8.72%. These 2013 ratios compare to Allegheny’s 2012 ROAA of 1.01% and 2012 ROAE of 8.62%.

W.A. (Bill) Loving, President and CEO, indicated he was pleased with 2013’s performance. According to Loving, “Despite the continuance of the historically low interest rate environment, 2013 was an exceptional year, both in terms of industry comparison and actual performance. Reported net income of $2.7 million is record profits for Allegheny Bancshares and continues the year over year increases we’ve enjoyed for the past few years.”

The national economy continues to show slow improvement; however, locally we have not experienced these same results, thus we continue to feel the impact a lower level of loan demand can have on the balance sheet. This fact, coupled with the low interest rate environment, continues to place pressure on our net interest margin, and we believe it will continue to do so well into, if not through, 2014. However, we have been able to offset compression in our interest margin through continued focus on expense management and a reduction in allocation to the loan loss reserve, a reduction we believe is supported by the improvement in our overall delinquencies. While margin compression will continue to place pressure on earnings, we believe the extent of the compression transpired in 2013 and should level off or only decrease slightly in 2014.

As we look to 2014 and beyond, we are optimistic that we can continue to build upon our strengths and traditional banking services, while continuing to offer state of the art products and services. Once such product, “text alerts” will be offered in the first quarter of 2014. With the increased threat of data security, we are excited we can offer a service that gives our customers peace of mind and immediate notification of a debit card transaction. The timeliness of this notification helps to ward off fraudulent transactions and reflects yet another way we strive to “facilitate financial success of our customers- a main ingredient of our Mission Statement.

This press release includes forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. Accordingly, actual results may differ materially from anticipated results.

Pendleton Community Bank, an independent community bank since 1925, currently has five full-service financial centers located in the West Virginia communities of Franklin, Moorefield, Marlinton, Petersburg, and in the Virginia community of Harrisonburg. Allegheny Mortgage Company, a division of Pendleton Community Bank, originates residential mortgage loans and is headquartered in Franklin.

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Allegheny Bancshares, Inc. Announces Third Quarter 2013 Financial Results
Allegheny Bancshares, Inc., the parent company of Pendleton Community Bank, is pleased to announce third quarter 2013 net income of $763,000 or $0.89 per share. This represents a 12.7% increase from third quarter 2012 income of $677,000 or $0.78 per share.

For the first nine months of 2013, Allegheny had net income of $2,003,000, which is a 3.6% increase from the net income of $1,953,000 earned the first nine months of 2012. Earnings per share for the same period increased from $2.24 to $2.33 and Return on Average Assets (ROAA) for the first 9 months was 1.02% and the Return on Average Equity (ROAE) was 8.60%. This compares to a ROAA of 1.01% and a ROAE of 8.58% for the same period of 2012.

Assets increased 1.57% from December 31, 2012 to September 30, 2013 and on that date, totaled $266,351,000. Shareholders’ Equity at the end of the quarter totaled $31,456,000.

W.A. (Bill) Loving, President and CEO, indicated he was pleased with the first nine month’s performance. According to Loving, “We are continuing to see improvement in the economy; and, as a result, a slight improvement in loan demand in the various sectors. This is a welcomed event, as this new business opportunity, has allowed us to better offset normal principal pay downs and the ever present competitive factor, thus allowing us to maintain a healthy net interest margin. The continued improvement in the economy and our continued focus on credit quality has also set the stage for stabilization in loan quality. Consequently, we have decreased the amount of expense previously set aside as a reserve for loan loss. We believe that the current level of monthly allocation to the loan loss reserve is adequate for the remainder of 2013; and, as we look into 2014, we will be evaluating our portfolio, in relationship to current economic conditions, to determine the appropriate allocation.

The combination of a strong net interest margin, lower reserves, and continued operating efficiencies is the driver of the improvement in quarter over quarter and year to date 2013 earnings.

We appreciate the ongoing support of our customers and shareholders, as we continue to navigate the present economy which continues to be rattled by slow growth, despite the historic low interest environment designed to stimulate growth in the economy. We look forward to 2014 and beyond, as we strive to be the preferred provider of community based final products in the markets we serve. We will also continue to invest in the future of banking to ensure we provide the products tomorrow’s customers desire, while keeping grounded to the preferences of today’s customers.”

This press release includes forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. Accordingly, actual results may differ materially from anticipated results.

Pendleton Community Bank, an independent community bank since 1925, currently has five full-service financial centers located in the West Virginia communities of Franklin, Moorefield, Marlinton, Petersburg, and in the Virginia community of Harrisonburg. Allegheny Mortgage Company, a division of Pendleton Community Bank, originates residential mortgage loans and is headquartered in Franklin.

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Allegheny Bancshares, Inc. Announces Second Quarter 2013 Financial Results
Allegheny Bancshares, Inc., the parent company of Pendleton Community Bank, is pleased to announce second quarter 2013 net income of $661,000 or $0.77 per share. This represents a 2.6% increase over second quarter 2012 income of $644,000 or $0.74 per share.

For the first half of 2013, Allegheny had net income of $1,240,000, which is a slight decrease of 2.8% from the net income of $1,276,000 earned the first half of 2012 and decreasing earnings per share $.02 to $1.44 for the first 6 months of 2013 Return on Average Assets (ROAA) for the first 6 months was 0.95% and the Return on Average Equity (ROAE) was 8.02%. This compares to a ROAA of 1.00% and a ROAE of 8.51% for the same period of 2012.

Assets decreased 0.25% from June 30, 2012 to June 30, 2013 and on that date, totaled $260,445,395. Shareholders’ Equity at the end of the second quarter totaled $30,903,458.

W.A. (Bill) Loving, President and CEO, indicated he was pleased with the first six month’s performance. According to Loving, “Although we experienced a slight decrease in assets and earnings for the period ending June 30, 2013, this does not depict the whole story. We continue to operate in a very challenging interest rate environment. With rates sitting at record lows and the extended time we have experienced this environment, our net interest margin continues to feel downward pressures, first from the inherent rate movement in our balance sheet, and secondly from heightened competition from institutions looking to grow loans at a time of soft loan demand. This phenomenon has resulted in a slight decline in our net interest margin; however, still at a very healthy and stable level. We have been able to accomplish this through prudent management of our balance sheet and related pricing decisions. This strategy has enabled us to essentially maintain our asset levels and profitability at previous levels, while better positioning us for further movements in interest rates, beyond the increase we have seen during the 2nd quarter of 2013. This fact is further articulated when reviewing 2nd quarter 2013 earnings with that of 2012 and a 1st quarter analysis for the same periods. After a slight decline in first quarter earnings for 2013, our second quarter income shows strength compared to same quarter in 2012. We are starting to see improved loan demand in some of our markets and our excellent capital level and strong liquidity level positions us well for further improvement in loan demand and potentially higher interest rates. We will continue focusing on our customer relationships and relationship banking and play out our “tag line” every day…We “want to be your bank”. As we look to the remainder of 2013, we look forward to continued growth in our core deposits, increasing customer relationships, and adding a new way to access “your bank” with the introduction of “Consumer Remote Deposit” or simply put, making a deposit on your smart phone, during the 3rd quarter of this year.

I am very confident that we are well positioned to serve our existing and new customers as our economy begins to grow again.

This press release includes forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. Accordingly, actual results may differ materially from anticipated results.

Pendleton Community Bank, an independent community bank since 1925, currently has five full-service financial centers located in the West Virginia communities of Franklin, Moorefield, Marlinton, Petersburg, and in the Virginia community of Harrisonburg. Allegheny Mortgage Company, a division of Pendleton Community Bank, originates residential mortgage loans and is headquartered in our main office in Franklin.

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Allegheny Bancshares, Inc. Announces 2012 Earnings
Allegheny Bancshares, Inc. (Allegheny), the parent company of Pendleton Community Bank, is pleased to announce its results of operations for the 4th quarter and year ending December 31, 2012.

Allegheny’s net income for 2012 was $2,636,181 or $3.03 per share. This represents a 19.23% increase in net income over 2011’s level of $2,211,062. It also represents a 19.29% increase in earnings per share over 2011 earnings per share of $2.54. The 4th quarter of 2012 net income was $683,181 up $83,000 (13.83%) over the same period in 2011.

Net interest income grew from $9,796,000 in 2011 to $9,999,000 in 2012, but the increase came as the bank was able to increase its average balances of deposits and earning assets. Assets have increased by $8.7 million dollars which represents an increase of 3.44%. This increase in assets was funded primarily by an $8.5 million dollar increase in customer deposits. Loans decreased by $2.5 million and investment securities increased by $8.2 million and interest bearing deposits in banks held, as investments, increased by $2.7 million. Total loan loss provision for 2011 was $1,750,000 compared to $1,200,000 in 2012 and 4th quarter provision totaled $477,000 in 2011 as compared to $300,000 for 4th quarter 2012.

Allegheny’s key financial performance indicators continued to be strong considering the economic environment, producing a return on average assets (ROAA) of 1.01% and a return on average equity (ROAE) of 8.62%. These 2012 ratios compare to Allegheny’s 2011 ROAA of 0.87% and 2011 ROAE of 7.54%. Allegheny’s key financial performance indicators continue to be strong and compare favorably with local peer group data. W.A. (Bill) Loving, President and CEO, indicated he was pleased with 2012’s performance. According to Loving, “During this year in which the economy seems to lack a clear direction on which way it wants to move, we have record net income and a substantial 19.23% increase over last year . This was achieved in the face of many challenges, yet possible because of the support of our customers, dedicated staff, and continuing to focus on our community bank model. One specific challenge is we are continuing to experience a decline in loan demand and have actually seen loan volume drop during 2012. Past due loans continue to be a concern, but the bulk of our delinquencies are concentrated in a few credits and we continue to make progress as we work with our customers to help them get through these trying economic times. In the face of this, however, we have managed to maintain a strong net interest margin and low operating expenses to produce very solid results in this economic environment.

As we look to 2013 and beyond, we are cautiously optimistic that we can continue to build upon our strengths; and, with our infrastructure of electronic banking products, as well as our traditional banking services, we can continue to meet our consumer’s expectations. We are confident that our strength allows us to provide the services that only a strong community bank can offer. We are committed and ready to help our communities grow and get beyond the slow economic times we have experienced in the past few years.

This press release includes forward-looking statements, which are not historical facts and pertain to future operating results. These forward-looking statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond our control. Accordingly, actual results may differ materially from anticipated results.

Pendleton Community Bank, an independent community bank since 1925, currently has five full-service financial centers located in the West Virginia communities of Franklin, Moorefield, Marlinton, Petersburg, and in the Virginia community of Harrisonburg. Allegheny Mortgage Company, a division of Pendleton Community Bank, originates residential mortgage loans and is headquartered in Franklin.

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Corporate Reorganization of Pendleton Community Bank Stock
The Board of Directors of Allegheny Bancshares, Inc. (the “Company”) is announcing that it has approved a corporate reorganization that will cause those Company shareholders who hold, in the aggregate, less than 1,100, but more than 99 Common Stock shares to exchange their existing Common Stock shares for newly created Class A Common Stock shares and cause those Company shareholders who hold, in the aggregate, 99 or less shares of Common Stock to exchange their existing Common Stock shares for newly created Class B Common Shares. Those Company shareholders who hold, in the aggregate, 1,100 or more Common Stock shares will continue to hold their existing Common Stock. This reorganization, which is known as a “going private” transaction, will result in the Company having less than 300 shareholders owning the Company’s existing Common Stock less than 500 shareholders owning the newly created Class A Common Stock and less than 500 shareholders owning newly created Class B Common Stock. As a result of this going private transaction, the Company will be able to terminate and suspend its SEC reporting obligations, which will allow the Company to save approximately $92,000 in 2011 and $103,510 in subsequent years.

CLICK HERE to view the complete proxy statement.

CLICK HERE view the Howe Barnes Fairness Report.

CLICK HERE to view the Howe Barnes Fairness Letter.

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SEC Information
You may view information on Allegheny Bancshares by visiting the Securities and Exchange Commission (SEC)

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Audit Committee Charter
Allegheny Bancshares, Inc. Audit Committee Charter

I. Role

The committee’s role is to act on behalf of the board of directors and oversee all material aspects of the company’s financial reporting, control and audit functions, except those specifically related to the responsibilities of another standing committee of the board. The audit committee’s role includes a particular focus on the qualitative aspects of financial reporting to shareholders and on company processes for the management of business/financial risk and for compliance with significant applicable legal, ethical and regulatory requirements.

The role also includes coordination with other board committees and maintenance of strong, positive working relationships with management, external and internal auditors, counsel and other committee advisors.

II. Membership

The committee shall consist of at least three, and no more than six, independent, non-executive board members. Committee members shall have: (1) knowledge of the primary industries in which the company operates; (2) the ability to read and understand fundamental financial statements, including a company’s balance sheet, income statement, statement of cash flows and key performance indicators; and (3) the ability to understand key business and financial risks and related controls and control processes. The committee shall have access to its own counsel and other advisors at the committee’s sole discretion.

At least one member, preferably the chair, should be literate in business and financial reporting and control, including knowledge of the regulatory requirements, and should have past employment experience in finance or accounting or other comparable experience or background. Committee appointments shall be approved annually by the full board. The committee chairperson shall be selected by the committee members.

III. Operating Principles

The committee shall fulfill its responsibilities within the context of the following overriding principles:

1. Communications: The chair and others on the committee shall, to the extent appropriate, maintain an open avenue of contact throughout the year with senior management, other committee chairs and other key committee advisors (external and internal auditors, etc.), as applicable, to strengthen the committee’s knowledge of relevant current and prospective business issues.

2. Education/Orientation: The committee, with management, shall develop and participate in a process for review of important financial and operating topics that present potential significant risk to the company. Additionally, individual committee members are encouraged to participate in relevant and appropriate self-study education to ensure understanding of the business and environment in which the company operates.

3. Annual Plan: The committee, with input from management and other key committee advisors, shall develop an annual plan responsive to the “primary committee responsibilities” detailed herein. The annual plan shall be reviewed and approved by the full board.

4. Meeting Agenda: Committee meeting agendas shall be the responsibility of the committee chair, with input from committee members. It is expected that the chair would also ask for management and key committee advisors, and perhaps others, to participate in this process.

5. Expectations and Information Needs: The committee shall communicate committee expectations and the nature, timing and extent of committee information needs to management, internal auditors and external parties, including external auditors. Written materials, including key performance indicators and measures related to key business and financial risks, shall be received from management, auditors and others materials in sufficient depth to participate in committee/board dialogue.

6. External Resources: The committee shall be authorized to access internal and external resources, as the committee requires, to carry out its responsibilities.

7. Meeting Attendees: The committee shall request members of management, counsel, internal and external auditors, as applicable, to participate in committee meetings, as necessary, to carry out the committee’s responsibilities. Periodically and at least annually, the committee shall meet in private session with only the committee members. It shall be understood that either internal or external auditors, or counsel, may, at any time, request a meeting with the audit committee or committee chair with or without management’s attendance. In any case, the committee shall meet in executive session separately with internal and external auditors, at least annually.

8. Meeting Frequency: The committee shall meet at least quarterly. Additional meetings shall be scheduled as considered necessary by the committee or chair.

9. Reporting to the Board of Directors: The committee, through the committee chair, shall report periodically, as deemed necessary, but at least annually, to the full board. In addition, summarized minutes from committee meetings, separately identifying monitoring activities from approvals, shall be available to each board member .

10. Self-Assessment: The committee shall review, discuss and assess its own performance as well as its role and responsibilities, seeking input from senior management, the full board and others. Changes in role and/or responsibilities, if any, shall be recommended to the full board for approval.

IV. Responsibilities

Financial Reporting:

1. Review and assess the annual and interim financial statements before they are released to the public or filed with the SEC.

2. Review and assess the key financial statement issues and risks, their impact or potential effect on reported financial information, the processes used by management to address such matters, related auditors’ views, and the basis for audit conclusions.

3. Approve changes in important accounting principles and the application thereof in both interim and annual financial reports.

4. Advise financial management and the external auditors that they are expected to provide a timely analysis of significant current financial reporting issues and practices.

Risks and Controls:

1. Review and assess the company’s business and financial risk management process, including the adequacy of the overall control environment and controls in selected areas representing significant risk.

2. Review and assess the company’s system of internal controls for detecting accounting and financial reporting errors, fraud and defalcations, and legal violations. In that regard, review the related findings and recommendations of the external and internal auditors, together with management’s responses.

3. Review with legal counsel any regulatory matters that may have a material impact on the financial statements.

4. Review the results of the annual audits of directors’ and officers’ expense accounts and management perquisites prepared by the internal auditors.

External and Internal Audits:

1. Recommend the selection of the external auditors for approval by the board of directors.

2. Instruct the external auditors that they are responsible to the board of directors and the audit committee as representatives of the shareholders. In that regard, confirm that the external auditors will report all relevant issues to the committee in response to agreed-upon expectations.

3. Review the performance of the external and internal auditors.

4. Obtain a formal written statement from the external auditors consistent with standards set by the Independence Standards Board. Additionally, discuss with the auditors any relationships or non-audit services that may affect their objectivity or independence.

5. Consider, in consultation with the external and internal auditors, their audit scopes and plans to ensure completeness of coverage, reduction of redundant efforts and the effective use of audit resources.

6. Review and approve requests for any consulting services to be performed by the external auditors, and be advised of any other study undertaken at the request of management that is beyond the scope of the audit engagement letter.

7. Review with management and the external auditors the results of the annual audits and related comments in consultation with other committees as deemed appropriate, including any difficulties or disputes with management, any significant changes in the audit plans, the rationale behind adoptions and changes in accounting principles, and accounting estimates requiring significant judgments.

8. Provide a medium for the external auditors to discuss with the audit committee their judgments about the quality, not just the acceptability, of accounting principles and financial disclosure practices used or proposed to be adopted by the company.

9. Approve changes in the directors of the internal audit function.

10. Instruct the internal auditors that they are responsible to the board of directors through the committee.

11. Review with the internal auditors any changes in the scope of their plans.

12. Review with the internal auditors the results of their monitoring of compliance with the code of conduct.

Other:

1. Review and update the committee’s charter.

2. Review and approve significant conflicts of interest and related party transactions.

3. Conduct and authorize investigations into any matters within the committee’s scope of responsibilities. The committee will be empowered to retain independent counsel and other professionals to assist in conducting any investigation.

4. Oversee Compliance Department. (See Statement of Policy for Compliance Department).

V. Documentation of Meetings

Minutes of all meetings of the Audit & Compliance Review Committee will fully document topics of discussion. Such minutes are considered official only when they bear the signature of the chairman of the Committee. Due to the nature of such meetings, minutes of Audit & Compliance Review Committee meetings are retained by the Corporate Secretary. These minutes are available upon request to external auditors, regulatory agencies and any outside member of the Board of Directors. All records, reports or such documents created by this Committee are confidential. The minutes of the Audit & Compliance Review Committee will be reviewed with the Board of Directors.

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