Ohio Valley Banc (OVBC) 8-K Ohio Valley Banc Corp. Reports Higher 2nd Quarter Earnings

EXHIBIT 99.1

July 27, 2012 - For immediate release

Contact:  Scott Shockey, CFO (740) 446-2631

Ohio Valley Banc Corp. Reports Higher 2nd Quarter Earnings

GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended June 30, 2012, of $1,719,000, an increase of 10.5 percent from the $1,555,000 earned for the second quarter of 2011.   Earnings per share for the second quarter of 2012 were $.43, up 10.3 percent from the prior year second quarter.  For the six months ended June 30, 2012, net income totaled $4,341,000, a 21.0 percent increase from net income of $3,588,000 for the six months ended June 30, 2011.  Earnings per share were $1.08 for the first six months of 2012 versus $.90 for the first six months of 2011, an increase of 20.0 percent.  Return on average assets and return on average equity was 1.03 percent and 11.97 percent, respectively, for the first half of 2012, compared to .81 percent and 10.49 percent, respectively, for the same period in the prior year.

“It’s a credit to the 292 Ohio Valley Banc Corp. employees whose tireless efforts make it possible to report a 10.5 percent increase in second quarter consolidated net income as compared to the same period one year ago. I’m extremely pleased with the effort put forth by these men and women on behalf of our 2,133 shareholders,” stated Thomas E. Wiseman, President and CEO.

For the second quarter of 2012, net interest income decreased $101,000, or 1.2 percent, from the same period last year.  For the six months ended June 30, 2012, net interest income decreased $392,000, or 2.3 percent.  Contributing to the lower net interest income was the decline in average earning assets.  For the six months end June 30, 2012, average earning assets decreased $51 million from the same period last year, which occurred primarily in loans.  A portion of the decline in average loan balances was due to a targeted reduction in certain underperforming loans or loans with less than desirable interest rate characteristics, such as fixed rate mortgages.  However, the Company’s net interest margin remains strong, and for the six months ended June 30, 2012, the net interest margin increased to 4.33 percent, from 4.17 percent for the same period the prior year.  The improvement in net interest margin was attributable to a decrease in our funding costs aided by a continued composition shift to lower costing transaction accounts from certificates of deposit and increased tax refund deposits held in noninterest-bearing accounts.  Also impacting net interest income in 2012 was the decrease in loan fees associated with refund anticipation loans.  After the 2011 tax season, the Bank ceased funding refund anticipation loans as recommended by the FDIC.  As a result, refund anticipation loan fees earned during the first half of 2012 decreased $561,000 from the first half of 2011.

For the three months ended June 30, 2012, management provided $524,000 to the allowance for loan losses, a decrease of $235,000 from the same period last year.  For the six months ended June 30, 2012, management provided $1,840,000 to the allowance for loan losses, a decrease of $1,863,000 from the same period last year.  The decrease in provision expense was related to the significant decrease in net charge-offs.  For the three months ended June 30 2012, net charge-offs decreased $2,487,000, and for the six months ended June 30, 2012 net charge-offs decreased $4,953,000 from the same respective periods in 2011.  The elevated net charge-offs experienced in 2011 were associated with the deterioration of collateral values on select impaired loans.  The ratio of nonperforming loans to total loans was .95 percent at June 30, 2012 compared to .52 percent at December 31, 2011 and .93 percent at June 30, 2011.  Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at June 30, 2012 was adequate and reflects probable incurred losses in the portfolio.  The allowance for loan losses was 1.33 percent of total loans at June 30, 2012, compared to 1.23 percent at December 31, 2011 and 1.04 percent at June 30, 2011.

For the three months ended June 30, 2012, noninterest income totaled $1,974,000, an increase of $287,000, or 17.0 percent, from 2011’s second quarter.  Noninterest income totaled $5,453,000 for the six months ended June 30, 2012, as compared to $5,346,000 for the same period last year, an increase of $107,000, or 2.0 percent.  Contributing to higher noninterest income was the increase in interchange income, mortgage banking income and the gain on sale of foreclosed properties.  By offering incentives to customers to utilize the bank’s debit and credit card for purchases, interchange income increased $172,000, or 26.7 percent, compared to the first half of 2011.  During 2012, the level of interest rates offered on fixed rate mortgages by the secondary market has generally improved, leading to an increase in borrowers refinancing their mortgage.  As a result, mortgage banking income has increased $95,000 from the first six months of 2011.  Primarily during the second quarter, the Company was able to liquidate a group of foreclosed properties at an amount above management’s estimated value at time of foreclosure, which contributed to a $141,000 increase in year-to-date income.  Included in noninterest income is tax processing fees received from a tax software provider.  For the six months ended June 30, 2012, tax processing fees totaled $2,264,000, a decrease of $269,000 from the same period the prior year.  For the 2012 tax season, the number of tax refund items processed has increased; however, the per item fee was reduced from the prior year leading to lower tax processing fees.  Although tax processing fees are down, management was pleased with the significant contribution from this revenue source, which accounted for over 41 percent of our year-to-date noninterest income.

For the three months ended June 30, 2012, noninterest expense totaled $7,162,000, an increase of $181,000, or 2.6 percent, from the same period last year.  For the six months ended June 30, 2012, noninterest expense totaled $14,494,000, an increase of $415,000 from the same period last year.  Salaries and employee benefits, the Company’s largest noninterest expense, increased $346,000, or 4.3 percent, for the first six months of 2012, as compared to the same period in 2011.  The increase was primarily related to higher healthcare and retirement benefit costs, while salary expense has remained relatively stable.  Also contributing to higher noninterest expense was the increase in foreclosure costs associated with bank owned properties.  During the first half of 2012, foreclosure costs increased $118,000 from the same period last year.  Comparing the first half of 2012 to the first half of 2011, all remaining noninterest expenses decreased $49,000, which helped limit the growth in total noninterest expense to less than three percent.

Ohio Valley Banc Corp. common stock is traded on the NASDAQ Global Market under the symbol OVBC.  The holding company owns Ohio Valley Bank, with 15 offices in Ohio and West Virginia, and Loan Central, with seven consumer finance offices in Ohio.  Learn more about Ohio Valley Banc Corp. at www.ovbc.com.

Forward-Looking Information

Certain statements contained in this earnings release which are not  statements  of  historical fact constitute  forward-looking  statements  within  the  meaning  of  the  Private  Securities Litigation Reform Act of 1995.  Words such as “believes,” “anticipates,” “expects,” “appears,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.  Forward-looking statements involve risks and uncertainties.  Actual results may differ materially from those predicted by the forward-looking statements because of various factors and possible events, including: (i) changes in political, economic or other factors such as inflation rates, recessionary or expansive trends, and taxes; (ii) competitive pressures;  (iii) fluctuations in interest rates; (iv) the level of defaults and prepayment on loans made by the Company; (v) unanticipated litigation, claims, or assessments; (vi) fluctuations in the cost of obtaining funds to make loans; and (vii) regulatory changes.  Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made to reflect unanticipated events.  See Item 1.A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, for further discussion of the risks affecting the business of the Company and the value of an investment in its shares.

OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
PER SHARE DATA
Earnings per share	$	0.43		$	0.39		$	1.08		$	0.90
Dividends per share	$	0.25		$	0.21		$	0.46		$	0.42
Book value per share	$	18.57		$	17.70		$	18.57		$	17.70
Dividend payout ratio (a)		58.61	%		54.01	%		42.68	%		46.83	%
Weighted average shares outstanding		4,029,439			4,000,056			4,028,694			4,000,056
PERFORMANCE RATIOS
Return on average equity		9.38	%		9.00	%		11.97	%		10.49	%
Return on average assets		0.84	%		0.73	%		1.03	%		0.81	%
Net interest margin (b)		4.25	%		4.08	%		4.33	%		4.17	%
Efficiency ratio (c)		70.65	%		70.20	%		64.03	%		61.45	%
Average earning assets (in 000's)	$	773,152		$	811,926		$	798,212		$	849,422
(a) Total dividends paid as a percentage of net income.
(b) Fully tax-equivalent net interest income as a percentage of average earning assets.
(c) Noninterest expense as a percentage of fully tax-equivalent net interest income plus noninterest income.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
	Three months ended						Six months ended
(in $000's)	June 30,						June 30,
		2012			2011			2012			2011
Interest income:
Interest and fees on loans	$	8,933		$	10,090		$	18,897		$	21,389
Interest and dividends on securities		724			727			1,425			1,453
Total interest income		9,657			10,817			20,322			22,842
Interest expense:
Deposits		1,302			2,227			2,676			4,583
Borrowings		302			436			681			902
Total interest expense		1,604			2,663			3,357			5,485
Net interest income		8,053			8,154			16,965			17,357
Provision for loan losses		524			759			1,840			3,703
Noninterest income:
Service charges on deposit accounts		460			553			910			1,093
Trust fees		51			56			100			115
Income from bank owned life insurance
and annuity assets		200			182			394			361
Mortgage banking income		135			60			232			137
Electronic refund check / deposit fees		226			265			2,264			2,533
Debit / credit card interchange income		421			344			816			644
Gain on sale of other real estate owned		143			5			151			10
Other		338			222			586			453
Total noninterest income		1,974			1,687			5,453			5,346
Noninterest expense:
Salaries and employee benefits		4,185			4,084			8,453			8,107
Occupancy		383			378			785			804
Furniture and equipment		235			282			472			562
FDIC insurance		275			285			566			612
Data processing		229			215			508			451
Foreclosed assets, net		65			31			175			57
Other		1,790			1,706			3,535			3,486
Total noninterest expense		7,162			6,981			14,494			14,079
Income before income taxes		2,341			2,101			6,084			4,921
Income taxes		622			546			1,743			1,333
NET INCOME	$	1,719		$	1,555		$	4,341		$	3,588

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data)	June 30,			December 31,
	2012			2011
ASSETS
Cash and noninterest-bearing deposits with banks	$	9,807		$	8,914
Interest-bearing deposits with banks		63,916			42,716
Total cash and cash equivalents		73,723			51,630
Securities available for sale		93,758			85,670
Securities held to maturity
(estimated fair value:  2012 - $24,815; 2011 - $22,847)		24,269			22,848
Federal Home Loan Bank stock		6,281			6,281
Total loans		564,074			598,308
Less:  Allowance for loan losses		(7,527	)		(7,344	)
Net loans		556,547			590,964
Premises and equipment, net		8,919			9,216
Other real estate owned		3,292			4,256
Accrued income receivable		2,371			2,872
Goodwill		1,267			1,267
Bank owned life insurance and annuity assets		24,762			23,097
Prepaid FDIC insurance		1,079			1,609
Other assets		5,104			4,467
Total assets	$	801,372		$	804,177
LIABILITIES
Noninterest-bearing deposits	$	141,620		$	138,143
Interest-bearing deposits		541,559			549,743
Total deposits		683,179			687,886
Other borrowed funds		20,089			20,296
Subordinated debentures		13,500			13,500
Accrued liabilities		9,793			10,652
Total liabilities		726,561			732,334
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value per share, 10,000,000 shares authorized;
2012 - 4,689,178 shares issued; 2011 - 4,686,295 shares issued)		4,689			4,686
Additional paid-in capital		33,525			33,473
Retained earnings		50,923			48,435
Accumulated other comprehensive income		1,386			961
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		74,811			71,843
Total liabilities and shareholders' equity	$	801,372		$	804,177