Oak Hill Financial 8-K Oak Hill Financial Reports 2006 and 4th Quarter Results

EXHIBIT 99

For Immediate Release

Thursday, January 11, 2007

Contact:	David G. Ratz, Executive Vice President
	(740) 286-3283

Oak Hill Financial Reports 2006 and 4^th Quarter Results

Jackson, Ohio -- Oak Hill Financial, Inc. (Nasdaq GS: OAKF) today reported net earnings of $9,582,000, or $1.74 per diluted share, as compared to the $11,379,000, or $1.97 per diluted share, in net earnings for 2005. For the three months ended December 31, 2006, Oak Hill Financial recorded a net loss of $86,000, or $0.02 per share. The fourth quarter 2006 results compare to the $3,579,000, or $0.63 per diluted share, in net earnings that the company recorded for the quarter ended December 31, 2005. 

The net earnings for the fourth quarter and full-year 2005 include non-recurring tax savings of $261,000 and $1.0 million, respectively. Also, the 2005 earnings include $44,000 and $546,000 of merger-related charges for the fourth quarter and full year, respectively, and $205,000 of gains on the sales of branch locations for the full year, all resulting primarily from the company’s acquisition of Lawrence Financial Holdings, Inc. on April 1, 2005. Excluding the non-recurring items, the company’s net income from continuing operations in 2005 was $3,438,000 or $0.60 per diluted share, for the fourth quarter and $10,923,000, or $1.89 per diluted share, for the full year. A reconciliation of the company’s non-GAAP results to GAAP results is included in the tables that accompany this release.

The company’s total assets at year-end 2006 were $1.28 billion, as compared to the $1.24 billion in total assets recorded at December 31, 2005. Net loans at December 31, 2006 were $1.02 billion, which was essentially unchanged from December 31, 2005.

Discussing Oak Hill Financial’s performance, President and CEO R. E. Coffman, Jr. cited the previously announced increase in the provision for loan loss expense as the principal cause of the company’s fourth quarter results. The increase in provision for loan loss expense, which Oak Hill Financial announced on December 21, resulted from the sale or charge-off of various non-performing and adversely classified loans during the fourth quarter.

“The actions we took during the quarter to clean up the loan portfolio set the stage long-term for continued improvement in asset quality and overall performance,” said Coffman. “We believe that we have cleared the major hurdles in the loan area, but we still have more work to do. While we don’t anticipate further large losses, we will continue to aggressively pursue resolution of our remaining credit issues.”

Coffman reiterated Oak Hill Financial’s goal of reducing the non-performing assets/total assets and nonperforming loans/total loans ratios to below 1.00% by the end of 2007. “We have a strong plan in place for workout of the remaining nonperforming loans and for the sale of our other nonperforming assets. While these objectives will likely take several months to achieve, we believe that we can hit our targets on both ratios by year-end.”

Key Issue Review and Outlook

Net Interest Margin - Oak Hill Financial’s net interest margin for the fourth quarter was 3.27%, as compared to the 3.60% posted in the fourth quarter of 2005 and the 3.34% recorded for the third quarter of 2006. While the company has remained disciplined in its loan and deposit pricing, aggressive competitor pricing and a high volume of time deposits repricing upward during the fourth quarter impacted the net interest margin. Margin pressure is expected to continue in the first quarter, although the company has fewer low-cost liabilities repricing in the next few months, which should provide some support to the margin.

Operating Expenses - Non-interest expenses from continuing operations were 2.90% of average assets for the fourth quarter of 2006, which compares to 2.60% for the fourth quarter of 2005 and 2.66% for the third quarter of 2006. On a linked-quarter basis, operating expenses increased 9.2%. During the fourth quarter, compensation and benefits expense increased due primarily to discretionary bonus compensation for staff employees and a reduction in deferred loan origination costs, while depreciation and other occupancy expenses increased as a result of the opening of new branch and administrative facilities. Operating expenses for the year 2006 increased 8.4% over 2005, which resulted from increases in salaries and wages, depreciation and other occupancy expenses, credit and collections expense, and various other expense categories. The company’s efficiency ratio from operations for the fourth quarter of 2006 was 69.5%, as compared to 58.7% in the prior year’s quarter and 61.9% in the third quarter of 2006.

Non-Interest Income - Non-interest income, including gain on sale of loans, was $3.0 million in the fourth quarter, as compared to $3.1 million in the fourth quarter of 2005 and $3.3 million in the third quarter of 2006. The linked-quarter change resulted from decreases in commissions income, gain on sale of loans and deposit service charges. Non-interest income for the year 2006 was $13.1 million, an increase of 12.8% over the $11.6 million in non-interest income for 2005. The year-over-year increase was fueled by growth in deposit service charges, investment and insurance commissions, ATM fee income, income from bank-owned life insurance, and mortgage origination income.

Asset Quality - At December 31, 2006, the nonperforming loans/total loans and nonperforming assets/total assets ratios were 1.31% and 1.48%, respectively, as compared to the 1.33% and 1.31%, respectively, recorded at September 30, 2006, and the 2.35% and 2.01%, respectively posted at March 31, 2006, which represented the peak reported levels for these ratios.

The fourth quarter change in the nonperforming assets ratio reflects a $2.6 million increase in other real estate owned during the quarter. The increase was primarily the result of the company acquiring a $3.0 million commercial property that had previously secured a nonperforming commercial real estate loan in that amount.

While the change in the nonperforming loans ratio during the quarter was nominal, there was movement within the nonperforming loans category as the $3.0 million commercial real estate loan referenced above came off the nonperforming loan list and other non-performing loans were sold or charged-off. These reductions in nonperforming loans were offset by the addition of two commercial real estate loans with a remaining balance of $5.0 million following the charge-off of $2.0 million on these credits. 

The company’s provision for loan loss expense in the fourth quarter was $4.0 million, which resulted from the sale or charge-off of various non-performing and adversely classified loans. In addition to the above charge-off, the sale of several other

nonperforming and adversely classified loans resulted in charge-offs totaling $474,000. The remaining charge-offs taken in the fourth quarter involved various commercial real estate, residential real estate, and consumer loans, with the largest of these being a $400,000 charge-off on a $1.0 million commercial real estate loan that is currently in foreclosure.

Consistent with generally accepted accounting principles and regulatory guidelines, the company uses various formulas to determine its ALLL. The methodology takes into consideration charge-offs as well as the rated quality of the company’s loans based on loan review grades and the types and amounts of loans comprising the portfolio, while allowing some discretion by management to make adjustments based on near-term economic conditions. Using this methodology, most of the loans involved in the fourth quarter charge-offs had previously been allocated specific amounts for expected losses in the ALLL. As a result, management’s most recent analysis indicated that an ALLL/total loans ratio of 1.25% was appropriate at December 31, 2006.

Asset/Loan Growth - On a linked-quarter basis, Oak Hill Financial’s total assets increased at a 6.5% annualized rate during the fourth quarter, while net loans grew at a 1.8% annual pace. The linked-quarter loan growth was impacted by the sale and charge-off of nonperforming and classified loans and continued soft loan demand in the company’s market areas. In addition, management has maintained conservative underwriting standards and a disciplined approach to loan pricing.

On a linked-quarter basis, total deposits decreased at an annualized rate of 8.5% as the company maintained a conservative approach to pricing interest-bearing deposits and substituted lower-cost borrowings for non-core deposits.

Expansion - During the fourth quarter, the company’s Oak Hill Banks subsidiary opened a full-service banking office in Kettering, Ohio, a suburb of Dayton. The bank intends to establish a branch in suburban Columbus to complement its existing branch and loan production office in that area.

Stock Buyback - On February 21, 2006, the company announced that its board of directors authorized the repurchase of 278,000 shares, or approximately 5.0 percent, of its outstanding common stock. During the fourth quarter, 63,700 shares were repurchased, which completed the 2006 buyback program.

Oak Hill Financial is a financial holding company headquartered in Jackson, Ohio. Its subsidiary, Oak Hill Banks, operates 37 full-service banking offices and one bank loan production office in 16 counties across southern and central Ohio. A second subsidiary, Oak Hill Financial Insurance Agency, provides group health plans, benefits administration, and other insurance services to business and public-sector organizations throughout the same region. The company also holds 49% of Oak Hill Title Agency, LLC, which provides title services for commercial and residential real estate transactions. Additional information about Oak Hill Financial can be found on the company’s website at www.oakf.com.

Forward-Looking Statements Disclosure

This release contains certain forward-looking statements related to the future performance and condition of Oak Hill Financial, Inc. These statements, which are subject to numerous risks and uncertainties, are presented in good faith based on the company’s current condition and management’s understanding, expectations, and assumptions regarding its future prospects as of the date of this release. Actual results could differ materially from those projected or implied by the statements contained herein. The factors that could affect the company’s future results are set forth in the periodic reports and registration statements filed by the company with the Securities and Exchange Commission.

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	At December 31,
(In thousands)	2006		2005
SUMMARY OF FINANCIAL CONDITION
Total assets	$	1,275,967	$	1,241,058
Interest-bearing deposits and federal funds sold		2,292		2,983
Investment securities		155,570		134,812
Loans receivable - net		1,021,361		1,015,083
Deposits		942,960		978,396
Federal Home Loan Bank advances and other borrowings		236,925		164,382
Stockholders’ equity		91,089		94,081

The Company discloses net earnings, diluted earnings per share and certain performance ratios adjusted for non-recurring items. Management believes that presenting this information is an additional measure of performance that investors can use to compare operating results between reporting periods. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). In accordance with Securities and Exchange Commission Regulation G, reconciliation of the Company’s U.S. GAAP information to its operating information is presented in the table below.

	For the						For the
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except share data)	2006			2005			2006		2005
RECONCILIATION OF NON-GAAP NET EARNINGS,
DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE MEASURES
Net earnings (loss) (U.S. GAAP)	$	(86	)	$	3,579		$	9,582	$	11,379
Non-recurring items, net of tax:
Gain on sale of branch locations and other fixed assets		—			—			—		(133	)
Merger-related expenses		—			28			—		355
Reduction in tax expense		—			(169	)		—		(678	)
Net earnings (loss) from operations	$	(86	)	$	3,438		$	9,582	$	10,923
Diluted earnings per share (U.S. GAAP)		N/A		$	0.63		$	1.74	$	1.97
Non-recurring items, net of tax:
Gain on sale of branch locations and other fixed assets		—			—			—		(0.02	)
Merger-related expenses		—			—			—		0.06
Reduction in tax expense		—			(0.03	)		—		(0.12	)
Diluted earnings per share from operations		N/A		$	0.60		$	1.74	$	1.89

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	For the						For the
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except share data)	2006			2005			2006			2005
RECONCILIATION OF NON-GAAP NET EARNINGS,
DILUTED EARNINGS PER SHARE AND OTHER PERFORMANCE MEASURES (continued)
Non-interest income (U.S. GAAP)	$	3,021		$	3,082		$	13,131		$	11,638
Non-recurring items:
Gain on sale of branch locations and other fixed assets		—			—			—			(205	)
Non-interest income from operations	$	3,021		$	3,082		$	13,131		$	11,433
Non-interest expense (U.S. GAAP)	$	9,235		$	8,107		$	34,206		$	31,045
Non-recurring items:
Merger-related expenses		—			(44	)		—			(546	)
Reduction in tax expense		—			261			—			1,044
Non-interest expense from operations	$	9,235		$	8,324		$	34,206		$	31,543
SUMMARY OF OPERATIONS (1)(2)(3)
Interest income	$	20,643		$	18,674		$	79,743		$	69,720
Interest expense		11,158			8,481			41,411			29,436
Net interest income		9,485			10,193			38,332			40,284
Provision for losses on loans		3,962			670			5,691			6,341
Net interest income after provision for losses on loans		5,523			9,523			32,641			33,943
Gain on sale of loans		107			216			849			1,085
Commissions income		747			710			3,331			2,781
Other non-interest income		2,167			2,156			8,951			7,567
General, administrative and other expense		9,235			8,324			34,206			31,543
Earnings (loss) before federal income tax (benefit)		(691	)		4,281			11,566			13,833
Federal income tax (benefit)		(355	)		1,218			2,984			3,910
Federal new markets tax credit		(250	)		(375	)		(1,000	)		(1,000	)
Net earnings (loss) from operations	$	(86	)	$	3,438		$	9,582		$	10,923
SELECTED PERFORMANCE RATIOS FROM OPERATIONS (1)(2)(3)(5)(6)
Diluted earnings per share		N/A		$	0.60		$	1.74		$	1.89
Return on average assets		-0.03	%		1.10	%		0.76	%		0.92	%
Return on average equity		-0.36	%		14.54	%		10.28	%		11.89	%
Non-interest expense to average assets		2.90	%		2.67	%		2.73	%		2.66	%
Efficiency ratio		69.53	%		58.65	%		62.78	%		57.93	%

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	At or For the						At or For the
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except share data)	2006			2005			2006			2005
PER SHARE INFORMATION (U.S. GAAP)
Basic earnings per share (4)	$	(0.02	)	$	0.64		$	1.76		$	2.01
Diluted earnings per share (5)		N/A		$	0.63		$	1.74		$	1.97
Dividends per share	$	0.21		$	0.19		$	0.78		$	0.70
Book value per share							$	17.16		$	16.79
OTHER STATISTICAL AND OPERATING DATA (U.S. GAAP) (6)
Return on average assets		-0.03	%		1.15	%		0.76	%		0.96	%
Return on average equity		-0.36	%		15.14	%		10.28	%		12.39	%
Non-interest expense to average assets		2.90	%		2.60	%		2.73	%		2.62	%
Net interest margin (fully-taxable equivalent)		3.27	%		3.60	%		3.36	%		3.70	%
Total allowance for losses on loans to non-performing loans								95.16	%		77.25	%
Total allowance for losses on loans to total loans								1.25	%		1.33	%
Non-performing loans to total loans								1.31	%		1.72	%
Non-performing assets to total assets								1.48	%		1.45	%
Net charge-offs to average loans (actual for the period)		0.45	%		0.03	%		0.62	%		0.50	%
Net charge-offs to average loans (annualized)		1.79	%		0.12	%		0.62	%		0.50	%
Equity to assets at period end								7.14	%		7.58	%
Efficiency ratio		69.53	%		57.06	%		62.78	%		56.98	%

⁽¹⁾  Excludes $261,000 and $1,044,000 reduction in tax expense for the three and twelve months ended December 31, 2005 resulting from a tax savings of $1.0 million for 2005.

⁽²⁾  Does not include $44,000 and $546,000 of merger-related charges for the three and twelve months ended December 31, 2005.

⁽³⁾  Does not include $205,000 of gains on the sale of branch locations and other assets for the twelve months ended December 31, 2005.

⁽⁴⁾  Based on 5,335,528, 5,616,138, 5,434,221 and 5,546,680 weighted-average shares outstanding for the three and twelve months ended December 31, 2006 and 2005, respectively.

⁽⁵⁾  Based on 5,412,182, 5,719,294, 5,520,423 and 5,685,557 weighted-average shares outstanding for the three and twelve months ended December 31, 2006 and 2005, respectively.

⁽⁶⁾  Annualized where appropriate.

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	At December 31,
(In thousands, except share data)	2006		2005
SUPPLEMENTAL DETAIL
BALANCE SHEET - ASSETS
Cash and cash equivalents		23,247		26,400
Trading account securities		—		—
Securities available for sale		153,011		131,193
Securities held to maturity		2,559		3,619
Other securities		8,078		7,626
Total securities		163,648		142,438
Total cash and securities		186,895		168,838
Loans and leases held for investment (1)		1,030,907		1,024,998
Loans and leases held for sale (1)		90		410
Total loans and leases (1)		1,030,997		1,025,408
Allowance for losses on loans		12,924		13,653
Goodwill		7,935		7,935
Other intangible assets		3,111		4,068
Total intangible assets		11,046		12,003
Mortgage servicing rights		3,288		3,328
Purchased credit card relationships		—		—
Other real estate owned		5,258		376
Bank owned life insurance		13,454		12,948
Other assets		37,953		31,810
Total assets		1,275,967		1,241,058
BALANCE SHEET - LIABILITIES
Deposits		942,960		978,396
Borrowings		213,925		141,382
Other liabilities		4,985		4,191
Total liabilities		1,161,870		1,123,969
Redeemable preferred stock		—		—
Trust preferred securities		23,000		23,000
Minority interests		8		8
Other mezzanine level items		—		—
Total mezzanine level items		23,008		23,008
Total liabilities and mezzanine level items		1,184,878		1,146,977
BALANCE SHEET - EQUITY
Preferred equit		—		—
Common equity		91,089		94,081
MEMO ITEM: Net unrealized gain (loss) on securities
available for sale, net of tax		32		(341	)
End of period shares outstanding (2)		5,308,975		5,604,214
Options outstanding		434,383		484,233
Treasury shares held by the Company		565,659		270,420

⁽¹⁾  Data is net of unearned interest, gross of allowance for losses on loans

⁽²⁾  Excludes treasury shares

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	At or For the						At or For the
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except share data)	2006			2005			2006			2005
SUPPLEMENTAL DETAIL (continued)
Repurchase plan announced?		No			No			Yes			Yes
Number of shares to be repurchased in plan(1)		N/A			N/A			278,000			290,000
Number of shares repurchased during the period(1)		63,700			55,400			330,055			269,945
Average price of shares repurchased(1)	$	27.38		$	30.43		$	28.59		$	28.97
INCOME STATEMENT
Interest income		20,643			18,674			79,743			69,720
Interest expense		11,158			8,481			41,411			29,436
Net interest income		9,485			10,193			38,332			40,284
Net interest income (fully-taxable equivalent)		9,843			10,572			39,812			41,557
Provision for losses on loans		3,962			670			5,691			6,341
Non-recurring expense:
Merger-related expenses		—			44			—			546
Non-recurring income:
Gain on sale of branch locations and other fixed assets		—			—			—			205
Trading account income		—			—			—			—
Foreign exchange income		—			—			—			—
Trust income		—			—			—			—
Commissions income		747			710			3,331			2,781
Service charges on deposits		1,385			1,322			5,392			4,508
Gain on sale of loans		107			216			849			1,085
Gain on investment securities transactions		42			(10	)		187			498
Other non-interest income		740			844			3,372			2,561
Total non-interest income		3,021			3,082			13,131			11,433
Employee compensation and benefits		4,767			4,095			17,518			16,107
Occupancy and equipment expense		1,104			977			4,147			4,067
Foreclosed property expense		—			—			—			—
Amortization of intangibles		216			283			957			953
Other general, administrative and other expense		3,148			2,708			11,584			9,372
Total non-interest expenses		9,235			8,063			34,206			30,499
Net income (loss) before tax (benefit)		(691	)		4,498			11,566			14,536
Federal income tax (benefit)		(355	)		1,294			2,984			4,157
Federal new markets tax credit		(250	)		(375	)		(1,000	)		(1,000	)
Net income (loss) before extraordinary items		(86	)		3,579			9,582			11,379
Extraordinary items		—			—			—			—
Net income (loss)		(86	)		3,579			9,582			11,379
CHARGE-OFFS
Loan charge-offs		5,032			839			8,720			7,747
Recoveries on loans		364			541			2,301			2,755
Net loan charge-offs		4,668			298			6,419			4,992
AVERAGE BALANCE SHEET
Average loans and leases		1,033,164			1,022,153			1,032,104			993,976
Average other earning assets		161,783			141,576			154,116			129,309

(1) There were 52,055 shares repurchased at an average price of $32.40 under the plan announced on May 26, 2005. These shares completed the plan, and a new plan was announced on February 21, 2006. There were 63,700 and 278,000 shares repurchased at an average price of $27.38 and $27.87 for the three and twelve months ended December 31, 2006 under the new plan.

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	For the				At or For the
	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
(In thousands, except share data)	2006		2005		2006			2005
SUPPLEMENTAL DETAIL (continued)
AVERAGE BALANCE SHEET (continued)
Average total earning assets		1,194,947		1,163,729		1,186,220			1,123,285
Average total assets		1,265,464		1,235,698		1,254,590			1,186,236
Average non-interest bearing deposits		91,148		100,077		91,768			91,315
Average total time deposits		532,405		589,104		550,096			585,114
Average other interest-bearing deposits		331,462		299,984		327,040			267,404
Average total interest-bearing deposits		863,867		889,088		877,136			852,518
Average borrowings		211,162		146,016		187,757			144,445
Average interest-bearing liabilities		1,075,029		1,035,104		1,064,893			996,963
Average preferred equity		—		—		—			—
Average common equity		93,516		93,800		93,235			91,853
ASSET QUALITY AND OTHER DATA
Non-accrual loans						13,413			16,695
Renegotiated loans						—			—
Loans 90+ days past due and still accruing						168			979
Total non-performing loans						13,581			17,674
Other real estate owned						5,258			376
Total non-performing assets						18,839			18,050
ADDITIONAL DATA
1 - 4 family mortgage loans serviced for others						233,794			246,200
Proprietary mutual fund balances						—			—
Fair value of securities held to maturity						2,712			3,851
Full-time equivalent employees						440			422
Total number of full-service banking offices						37			34
Total number of bank and thrift subsidiaries						1			1
Total number of ATMs						42			40
LOANS RECEIVABLE
1 - 4 family residential						229,020			237,138
Home equity						40,819			42,967
Multi-family residential						35,796			37,241
Commercial real estate						405,805			381,966
Construction and land development						53,493			52,612
Commercial and other						155,949			164,527
Consumer						107,765			106,775
Credit cards						2,350			2,183
Loans receivable - gross						1,030,997			1,025,409
Unearned interest						—			(1	)
Loans receivable - net of unearned interest						1,030,997			1,025,408
Allowance for losses on loans						(12,924	)		(13,653	)
Loans receivable - net (1)						1,018,073			1,011,755

(1) Does not include mortgage servicing rights.

Oak Hill Financial, Inc.

SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

January 11, 2007 Press Release

	For the						At or For the
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except share data)	2006			2005			2006			2005
SUPPLEMENTAL DETAIL (continued)
DEPOSITS
Transaction accounts
Non-interest bearing								94,256			97,575
Interest-bearing								70,369			79,329
Savings accounts								48,859			64,128
Money market deposit accounts								213,341			159,060
Other core interest-bearing								377,994			427,647
Total core deposit accounts								804,819			827,739
Brokered deposits								39,549			80,510
Other non-core interest-bearing accounts								98,592			70,147
Total deposits								942,960			978,396
Yield/average earning assets (fully-taxable equivalent)		6.97	%		6.49	%		6.85	%		6.32	%
Cost/average earning assets		3.70	%		2.89	%		3.49	%		2.62	%
Net interest income (fully-taxable equivalent)		3.27	%		3.60	%		3.36	%		3.70	%
NEW MARKETS TAX CREDIT
Qualified equity investment in Oak Hill Banks Community Development Corp.								20,000			10,000

	Aggregate
	QEI		New Markets Tax Credit
Year	Amount		2006		2007		2008		2009		2010		2011
2004		10,000		500		600		600		600		600		—
2005		10,000		500		500		600		600		600		600
Totals		20,000		1,000		1,100		1,200		1,200		1,200		600