Ohio Valley Banc (OVBC) 8-K Ohio Valley Banc Corp. Reports Higher 3rd Quarter Earnings

EXHIBIT 99.1

October 25, 2012 - For immediate release

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

Ohio Valley Banc Corp. Reports Higher 3rd Quarter Earnings

GALLIPOLIS, Ohio - Ohio Valley Banc Corp. [Nasdaq: OVBC] (the “Company”) reported consolidated net income for the quarter ended September 30, 2012, of $1,107,000, an increase of 24.9 percent from the $886,000 earned for the third quarter of 2011.   Earnings per share for the third quarter of 2012 were $.27, up 22.7 percent from the prior year third quarter.  For the nine months ended September 30, 2012, net income totaled $5,448,000, a 21.8 percent increase from net income of $4,474,000 for the nine months ended September 30, 2011.  Earnings per share were $1.35 for the first nine months of 2012 versus $1.12 for the first nine months of 2011, an increase of 20.5 percent.  Return on average assets and return on average equity was .87 percent and 9.89 percent, respectively, for the nine months ended September 30, 2012, compared to .68 percent and 8.60 percent, respectively, for the same period in the prior year.

“We are extremely pleased with the 24.9 percent increase in third quarter consolidated net income, as compared to the same period a year ago,” stated Thomas E. Wiseman, President and CEO.  “The increase can be attributable to the vigilance with which our employees have executed the objectives outlined in our 2012 strategic plan. We continue to focus our efforts on asset quality, increasing core capital, maintaining profitable relationships, and utilizing technology, all to benefit our customers and shareholders.  Ohio Valley Bank is celebrating 140 years of service and while the current business and banking environment is extremely challenging, we maintain a strong resolve to work with and support the communities we serve.”

For the third quarter of 2012, net interest income decreased $317,000, or 3.9 percent, from the same period last year.  For the nine months ended September 30, 2012, net interest income decreased $709,000, or 2.8 percent.  Contributing to the lower net interest income was the decline in average earning assets.  For the nine months ended September 30, 2012, average earning assets decreased $44 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 nine months ended September 30, 2012, the net interest margin increased to 4.30 percent, from 4.18 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 nine months of 2012 decreased $561,000 from the same period in 2011.

For the three months ended September 30, 2012, management provided $1,183,000 to the allowance for loan losses, an increase of $31,000 from the same period last year.  For the nine months ended September 30, 2012, management provided $3,023,000 to the allowance for loan losses, a decrease of $1,832,000 from the same period last year.  The decrease in provision expense for the nine month period was related to the significant decrease in net charge-offs.  For the nine months ended September 30, 2012 net charge-offs decreased $5,548,000 from the same period 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 1.27 percent at September 30, 2012 compared to .52 percent at December 31, 2011 and .93 percent at September 30, 2011.  Based on the evaluation of the adequacy of the allowance for loan losses, management believes that the allowance for loan losses at September 30, 2012 was adequate and reflects probable incurred losses in the portfolio.  The allowance for loan losses was 1.46 percent of total loans at September 30, 2012, compared to 1.23 percent at December 31, 2011 and 1.06 percent at September 30, 2011.

For the three months ended September 30, 2012, noninterest income totaled $1,674,000, an increase of $616,000 from 2011’s third quarter.  Noninterest income totaled $7,127,000 for the nine months ended September 30, 2012, as compared to $6,404,000 for the same period last year, an increase of $723,000, or 11.3 percent.  The increase in noninterest income was primarily related to a reduction in losses recognized on foreclosed property.  As a result, gain on sale of other real estate owned for the third quarter of 2012 increased $504,000 and for the nine months ended September 30, 2012, increased $645,000 from their respective time periods in 2011.  Also contributing to higher noninterest income was the increase in interchange income and mortgage banking income.  By offering incentives to customers to utilize the bank’s debit and credit card for purchases, interchange income increased $227,000, or 22.5 percent, compared to the first nine months of 2011.  During 2012, the level of interest rates offered on fixed-rate mortgages by the secondary market has remained low and recently moved even lower, leading to an increase in borrowers refinancing their mortgage.  As a result, mortgage banking income has increased $164,000, or 70.1 percent, from the first nine months of 2011.  Included in noninterest income is tax processing fees received from a tax software provider.  For the nine months ended September 30, 2012, tax processing fees totaled $2,279,000, a decrease of $254,000 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 nearly 32 percent of our year-to-date noninterest income.

For the three months ended September 30, 2012, noninterest expense totaled $6,957,000, a decrease of $44,000 from the same period last year.  For the nine months ended September 30, 2012, noninterest expense totaled $21,451,000, an increase of $371,000, or 1.8 percent, from the same period last year.  Salaries and employee benefits, the Company’s largest noninterest expense, was limited to an increase of $299,000, or 2.4 percent, for the first nine 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.  For the nine months ended September 30, 2012, foreclosure costs increased $158,000 from the same period last year.  Comparing the first nine months of 2012 to the first nine months of 2011, all remaining noninterest expenses decreased $86,000, which helped limit the growth in total noninterest expense to less than two 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						Nine months ended
	September 30,						September 30,
	2012			2011			2012			2011
PER SHARE DATA
Earnings per share	$	0.27		$	0.22		$	1.35		$	1.12
Dividends per share	$	0.21		$	0.21		$	0.67		$	0.63
Book value per share	$	18.77		$	17.77		$	18.77		$	17.77
Dividend payout ratio (a)		76.44	%		94.83	%		49.54	%		56.33	%
Weighted average shares outstanding		4,029,439			4,000,056			4,028,944			4,000,056
PERFORMANCE RATIOS
Return on average equity		5.89	%		4.98	%		9.89	%		8.60	%
Return on average assets		0.55	%		0.42	%		0.87	%		0.68	%
Net interest margin (b)		4.23	%		4.21	%		4.30	%		4.18	%
Efficiency ratio (c)		72.02	%		74.89	%		66.42	%		65.34	%
Average earning assets (in 000's)	$	751,393		$	780,592		$	782,491		$	826,227
(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						Nine months ended
(in $000's)	September 30,						September 30,
		2012			2011			2012			2011
Interest income:
Interest and fees on loans	$	8,781		$	10,011		$	27,678		$	31,400
Interest and dividends on securities		624			682			2,049			2,135
Total interest income		9,405			10,693			29,727			33,535
Interest expense:
Deposits		1,235			2,079			3,911			6,662
Borrowings		303			430			984			1,332
Total interest expense		1,538			2,509			4,895			7,994
Net interest income		7,867			8,184			24,832			25,541
Provision for loan losses		1,183			1,152			3,023			4,855
Noninterest income:
Service charges on deposit accounts		471			578			1,381			1,671
Trust fees		51			52			151			167
Income from bank owned life insurance
and annuity assets		198			184			592			545
Mortgage banking income		166			97			398			234
Electronic refund check / deposit fees		15			0			2,279			2,533
Debit / credit card interchange income		422			367			1,238			1,011
Gain (loss) on sale of other real estate owned		30			(474	)		181			(464	)
Other		321			254			907			707
Total noninterest income		1,674			1,058			7,127			6,404
Noninterest expense:
Salaries and employee benefits		4,118			4,165			12,571			12,272
Occupancy		397			394			1,182			1,198
Furniture and equipment		238			282			710			844
FDIC insurance		63			181			629			793
Data processing		278			278			786			729
Foreclosed assets, net		69			29			244			86
Other		1,794			1,672			5,329			5,158
Total noninterest expense		6,957			7,001			21,451			21,080
Income before income taxes		1,401			1,089			7,485			6,010
Income taxes		294			203			2,037			1,536
NET INCOME	$	1,107		$	886		$	5,448		$	4,474

OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except share data)	September 30,			December 31,
	2012			2011
ASSETS
Cash and noninterest-bearing deposits with banks	$	10,140		$	8,914
Interest-bearing deposits with banks		51,707			42,716
Total cash and cash equivalents		61,847			51,630
Securities available for sale		103,489			85,670
Securities held to maturity
(estimated fair value:  2012 - $24,311; 2011 - $22,847)		23,678			22,848
Federal Home Loan Bank stock		6,281			6,281
Total loans		562,535			598,308
Less:  Allowance for loan losses		(8,185	)		(7,344	)
Net loans		554,350			590,964
Premises and equipment, net		8,836			9,216
Other real estate owned		3,234			4,256
Accrued income receivable		2,396			2,872
Goodwill		1,267			1,267
Bank owned life insurance and annuity assets		24,958			23,097
Prepaid FDIC insurance		1,034			1,609
Other assets		4,584			4,467
Total assets	$	795,954		$	804,177
LIABILITIES
Noninterest-bearing deposits	$	138,192		$	138,143
Interest-bearing deposits		538,507			549,743
Total deposits		676,699			687,886
Other borrowed funds		20,098			20,296
Subordinated debentures		13,500			13,500
Accrued liabilities		10,019			10,652
Total liabilities		720,316			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		51,184			48,435
Accumulated other comprehensive income		1,952			961
Treasury stock, at cost (659,739 shares)		(15,712	)		(15,712	)
Total shareholders' equity		75,638			71,843
Total liabilities and shareholders' equity	$	795,954		$	804,177