Too Much of a Good Thing For Mountaineer of W. Va.

Too much capital is the kind of problem banks seldom encounter these days, but Mountaineer Bancshares of West Virginia, Martinsburg, is an exception.

The banking company said Monday that it is planning to buy back 2% of its shares in the next year.

The announcement, in effect, extends a share repurchase program begun in May 1990. Mountaineer has bought back 2% of its shares since then and required permission of the Securities and Exchange Commission to buy more.

Stock Below Book Value

Company president Brent Robinson said management decided to continue the program because Mountaineer has more capital than necessary to achieve its growth targets. Meanwhile, the stock is trading below book value.

As a result, Mr. Robinson said, it made sense to keep buying stock, reduce the number of shares with a claim on earnings, and hope the company's stock price rises.

The stock was trading at $16.50 a share Monday. Book value is slightly more than $19 a share, he said.

Capital Ratio to Decline

Mr. Robinson said the company's equity-to-asset ratio, now at 8.27%, would decline to 8.1% if all the targeted shares are purchased. He said he doesn't expect more than 50,000 shares to be bought back.

Purchases will be made in open-market transactions, block trades, and privately negotiated purchases.

The bank, which has 2.6 million common shares outstanding, said it expects to report earnings of 46 cents a share for the second quarter and about $1.75 a share for the year.

Mountaineer, the state's eighth-largest banking company, has $604 million in assets.

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