UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period
ended:
MARCH 31, 2001
Commission file number: 0-20914
Ohio Valley Banc Corp
----------------------
(Exact name of Registrant as specified in its charter)
Ohio
(State or other jurisdiction of incorporation or organization)
31-1359191
----------
(I.R.S. Employer Identification Number)
420 Third Avenue. Gallipolis, Ohio 45631
----------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (740) 446-2631
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes
No
Indicate the number of shares outstanding of the issuers classes of common
stock, as of the latest practicable date.
Common stock, $1.00 stated value Outstanding at April 30, 2001
3,467,282 common shares
OHIO VALLEY BANC CORP
FORM 10-Q
QUARTER ENDED MARCH 31, 2001
================================================================================
Part I - Financial Information
Item 1 - Financial Statements
Interim financial information required by Regulation 210.10-01 of Regulation S-X
is included in this Form 10Q as referenced below:
Consolidated Balance Sheets..................................... 1
Consolidated Statements of Income............................... 2
Condensed Consolidated Statements of Changes in
Shareholders' Equity......................................... 3
Condensed Consolidated Statements of Cash Flows................. 4
Notes to the Consolidated Financial Statements.................. 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 10
Item 3 - Quantitative and Qualitative Disclosure About
Market Risk......................................... 14
Part II - Other Information
Other Information and Signatures................................ 15
OHIO VALLEY BANC CORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
================================================================================
March 31, December 31,
2001 2000
------------ ------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 13,480 $ 14,569
Federal funds sold 13,300
------------ ------------
Total cash and cash equivalent 26,780 14,569
Interest-bearing balances with banks 868 816
Securities available-for-sale 53,415 59,819
Securities held-to-maturity (estimated fair
value: 2001 - $16,047 , 2000 - $16,111) 15,463 15,767
Total loans 451,049 448,303
Less: Allowance for loan losses (5,410) (5,385)
------------ ------------
Net loans 445,639 442,918
Premises and equipment, net 9,229 9,285
Accrued income receivable 3,419 4,104
Intangible assets, net 1,364 1,396
Bank owned life insurance 10,058 9,408
Other assets 4,315 3,576
------------ ------------
Total assets $ 570,550 $ 561,658
============ ============
LIABILITIES
Noninterest-bearing deposits $ 46,992 $ 47,661
Interest-bearing deposits 390,572 384,710
------------ ------------
Total deposits 437,564 432,371
Securities sold under agreements to repurchase 12,125 18,345
Other borrowed funds 62,083 53,622
Obligated mandatorily redeemable capital securities
of subsidiary trust 5,000 5,000
Accrued liabilities 8,821 7,828
----------- ------------
Total liabilities 525,593 517,166
----------- ------------
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2001 - 3,559,771 shares
issued, 2000 - 3,559,770 shares issued) 3,560 3,560
Additional paid-in capital 28,760 28,760
Retained earnings 14,401 13,817
Accumulated other comprehensive income 822 436
Treasury stock at cost (2001 - 92,489 shares,
2000 - 72,489 shares) (2,586) (2,081)
----------- ------------
Total shareholders' equity 44,957 44,492
----------- ------------
Total liabilities and
shareholders' equity $ 570,550 $ 561,658
=========== ============
================================================================================
See notes to the consolidated financial statements.
1
OHIO VALLEY BANC CORP
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
================================================================================
Three months ended
March 31,
2001 2000
------------- -------------
Interest and dividend income:
Loans, including fees $ 10,389 $ 9,495
Securities:
Taxable 810 808
Tax exempt 193 193
Dividends 80 72
Other Interest 51 84
------------- -------------
11,523 10,652
Interest expense:
Deposits 5,256 4,631
Repurchase agreements 175 150
Other borrowed funds 790 599
Obligated mandatorily redeemable capital
securities of subsidiary trust 133
------------- -------------
6,354 5,380
------------- -------------
Net interest income 5,169 5,272
Provision for loan losses 427 302
------------- -------------
Net interest income after provision
for loan losses 4,742 4,970
Noninterest income:
Service charges on deposit accounts 698 333
Trust fees 55 53
Income from bank owned insurance 138 113
Other 275 263
------------- -------------
1,166 762
Noninterest expense:
Salaries and employee benefits 2,363 2,371
Occupancy expense 316 325
Furniture and equipment expense 273 294
Data processing expense 107 70
Other 1,320 1,213
------------- -------------
4,379 4,273
------------- -------------
Income before income taxes 1,529 1,459
Provision for income taxes 422 407
------------- -------------
NET INCOME $ 1,107 $ 1,052
============= =============
Earnings per share $ 0.32 $ 0.30
============= =============
================================================================================
See notes to the consolidated financial statements.
2
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY (UNAUDITED)
(dollars in thousands)
================================================================================
Three months ended March 31,
2001 2000
------------ ------------
Balance at beginning of period $ 44,492 $ 42,708
Comprehensive income:
Net income 1,107 1,052
Net change in unrealized gain on available-
for-sale securities 386 (247)
------------ ------------
Total comprehensive income 1,493 805
Proceeds from issuance of common
stock through dividend reinvestment
plan, (2001 - 1 share, 2000 - 4 shares)
Cash dividends (2001 - $.15 per share,
2000 - $.14 per share) (523) (496)
Shares acquired for treasury (2001 - 20,000
shares, 2000 - 5,300 shares) (505) (167)
------------ ------------
Balance at end of period $ 44,957 $ 42,850
============ ============
================================================================================
See notes to the consolidated financial statements.
3
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands, except per share data)
================================================================================
Three months ended March 31,
2001 2000
------------ ------------
Net cash provided by operating activities $ 2,418 $ 1,623
Investing activities
Proceeds from maturities of
securities available-for-sale 9,067 1,545
Purchases of securities available-
for-sale (2,000) (2,982)
Proceeds from maturities of
securities held-to-maturity 291 856
Purchases of securities held-to-maturity (223)
Change in interest-bearing deposits
in other banks (52) 263
Net increase in loans (3,148) (10,490)
Purchases of premises and equipment, net (241) (601)
Purchases of insurance contracts, net (530) (500)
------------ ------------
Net cash used in investing activities 3,387 (12,132)
Financing activities
Change in deposits 5,193 24,448
Cash dividends (523) (496)
Purchases of treasury stock (505) (167)
Change in securities sold under
agreements to repurchase (6,220) (2,497)
Proceeds from long-term borrowings 15,025 1,250
Repayment of long-term borrowings (5,395) (2,401)
Change in other short-term borrowings (1,169) (2,415)
------------ ------------
Net cash from financing activities 6,406 17,722
------------ ------------
Change in cash and cash equivalents 12,211 7,213
Cash and cash equivalents at beginning of year 14,569 19,000
------------ ------------
Cash and cash equivalents at March 31, $ 26,780 $ 26,213
============ ============
================================================================================
See notes to the consolidated financial statements.
4
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of Ohio
Valley Banc Corp. and its wholly owned subsidiaries The Ohio Valley Bank Company
and Loan Central, Inc. All material intercompany accounts and transactions have
been eliminated in consolidation.
These interim financial statements are prepared without audit and reflect all
adjustments of a normal recurring nature which, in the opinion of Management,
are necessary to present fairly the consolidated financial position of Ohio
Valley Banc Corp. at March 31, 2001, and its results of operations and cash
flows for the periods presented. The accompanying consolidated financial
statements do not purport to contain all the necessary financial disclosures
required by generally accepted accounting principles that might otherwise be
necessary in the circumstances. The Annual Report for Ohio Valley Banc Corp. for
the year ended December 31, 2000, contains consolidated financial statements and
related notes which should be read in conjunction with the accompanying
consolidated financial statements.
The provision for income taxes is based upon the effective income tax rate
expected to be applicable for the entire year.
For consolidated financial statement classification and cash flow reporting
purposes, cash and cash equivalents include cash on hand, noninterest-bearing
deposits with banks and federal funds sold. For the three months ended March 31,
2001 and 2000, Ohio Valley Banc Corp. paid interest in the amount of $6,256 and
$4,466, respectively. For the three months ended March 31, 2001, Ohio Valley
Banc Corp. paid income taxes of $402 as compared to no income taxes that were
paid during the same period in 2000.
Earnings per share is computed based on the weighted average shares outstanding
during the period. For the three months ended March 31, 2001 and 2000, weighted
average shares outstanding were 3,480,615 and 3,541,471, respectively.
The majority of the Company's income is derived from commercial and retail
business lending activities. Management considers the Company to operate in one
segment, banking.
================================================================================
(Continued)
5
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 2 - SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair values
of the securities, as presented in the consolidated balance sheet are as
follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
March 31, 2001 ---------- ----------- ------------ ---------
Securities Available-for-Sale
- -----------------------------
U.S. Treasury securities $ 2,000 $ 8 $ 2,008
U.S. Government agency
securities 43,625 1,237 $ (2) 44,860
Mortgage-backed securities 1,998 4 (2) 2,000
Equity securities 4,547 4,547
---------- ----------- ------------ ---------
Total securities $ 52,170 $ 1,249 $ (4) $ 53,415
========== =========== ============ =========
Securities Held-to-Maturity
- ---------------------------
Obligations of state and
political subdivisions $ 15,211 $ 609 $ (16) $ 15,804
Mortgage-backed securities 252 1 (10) 243
---------- ----------- ------------ ---------
Total securities $ 15,463 $ 610 $ (26) $ 16,047
========== =========== ============ =========
December 31, 2000
Securities Available-for-Sale
- -----------------------------
U.S. Treasury securities $ 2,499 $ 9 $ 2,508
U.S. Government agency
securities 50,127 711 $ (42) 50,796
Mortgage-backed securities 2,065 1 (18) 2,048
Equity securities 4,467 4,467
----------- ------------ ------------ ---------
Total securities $ 59,158 $ 721 $ (60) $ 59,819
=========== ============ ============ =========
Securities Held-to-Maturity
- ---------------------------
Obligations of state and
political subdivisions $ 15,503 $ 383 $ (25) $ 15,861
Mortgage-backed securities 264 1 (15) 250
----------- ------------ ------------ ---------
Total securities $ 15,767 $ 384 $ (40) $ 16,111
=========== ============ ============ =========
================================================================================
(Continued)
6
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 2 - SECURITIES (Continued)
The amortized cost and estimated fair value of debt securities at March 31,
2001, by contractual maturity, are shown below. Actual maturities may differ
from contractual maturities because certain issuers may have the right to call
or prepay the debt obligations prior to their contractual maturities.
Available-for-Sale Held-to-Maturity
-------------------------- --------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
------------ ----------- ----------- -----------
Debt securities:
Due in one year
or less $ 9,031 $ 9,116 $ 1,884 $ 1,897
Due in one to
five years 35,594 36,743 6,852 7,151
Due in five to
ten years 1,000 1,009 3,523 3,671
Due after ten years 2,952 3,085
Mortgage-backed sec. 1,998 2,000 252 243
------------ ----------- ----------- -----------
Total debt
securities $ 47,623 $ 48,868 $ 15,463 $ 16,047
============ =========== =========== ===========
Gains and losses on the sale of securities are determined using the specific
identification method. There were no sales of debt and equity securities during
the first three months of 2001 and 2000.
NOTE 3 - LOANS
Total loans as presented on the balance sheet are comprised of the following
classifications:
March 31, December 31,
2001 2000
---------------- ----------------
Real estate loans $ 208,068 $ 209,724
Commercial and industrial loans 144,436 139,826
Consumer loans 97,940 98,013
Other loans 605 740
---------------- ----------------
$ 451,049 $ 448,303
================ ================
At March 31, 2001 and December 31, 2000, loans on nonaccrual status were
approximately $2,812 and $2,948, respectively. Loans past due more than 90 days
and still accruing at March 31, 2001 and December 31, 2000 were $2,449 and
$3,691, respectively.
================================================================================
(Continued)
7
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
A summary of activity in the allowance for loan losses for the three months
ended March 31 is as follows:
2001 2000
---------------- ----------------
Balance - January 1, $ 5,385 $ 5,055
Loans charged off:
Real estate 43 3
Commercial 5 15
Consumer 516 407
---------------- ----------------
Total loans charged off 564 425
Recoveries of loans:
Real estate 4
Commercial 5
Consumer 153 59
---------------- ----------------
Total recoveries 162 59
---------------- ----------------
Net loan charge-offs (402) (366)
Provision charged to operations 427 302
---------------- ----------------
Balance - March 31, $ 5,410 $ 4,991
================ ================
Information regarding impaired loans is as follows:
March 31, December 31,
2001 2000
-------------- ---------------
Balance of impaired loans $ 1,003 $ 1,233
============== ===============
Portion of impaired loan balance for
which an allowance for credit
losses is allocated $ 1,003 $ 1,233
============== ===============
Portion of allowance for loan losses
allocated to the impaired loan balance $ 540 $ 530
============== ===============
Average investment in impaired loans
year-to-date $ 1,118 $ 1,266
============== ===============
Interest on impaired loans was not material for the periods ended March 31,
2001 and December 31, 2000.
================================================================================
(Continued)
8
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 5 - CONCENTRATIONS OF CREDIT RISK AND FINANCIAL
INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company, through its subsidiaries, grants residential, consumer, and
commercial loans to customers located primarily in the central and southeastern
areas of Ohio as well as the western counties of West Virginia. Approximately
5.88% of total loans were unsecured at March 31, 2001 as compared to 6.25% at
December 31, 2000.
The Corporation is a party to financial instruments with off-balance sheet
risk. These instruments are required in the normal course of business to meet
the financial needs of its customers. The contract or notional amounts of these
instruments are not included in the consolidated financial statements. At March
31, 2001, the contract or notional amounts of these instruments, which primarily
include commitments to extend credit and standby letters of credit and financial
guarantees, totaled approximately $51,252 as compared to $52,135 at December 31,
2000.
NOTE 6 - OTHER BORROWED FUNDS
Other borrowed funds at March 31, 2001 and December 31, 2000 are comprised
of advances from the Federal Home Loan Bank (FHLB), promissory notes and Federal
Reserve Bank Notes.
FHLB borrowings Promissory notes FRB Notes Totals
--------------- ---------------- --------- ----------
2001 $ 50,686 $ 5,897 $ 5,500 $ 62,083
2000 $ 44,753 $ 5,594 $ 3,275 $ 53,622
Pursuant to collateral agreements with the FHLB, advances are secured by
certain qualifying first mortgage loans and by FHLB stock which total $76,029
and $4,547 at March 31, 2001. Fixed rate FHLB advances of $50,686 mature through
2010 and have interest rates ranging from 4.88% to 7.08%.
Promissory notes, issued primarily by the parent company, have fixed rates
of 5.00% to 7.25% and are due at various dates through a final maturity date of
May 29, 2002.
Scheduled principal payments over the next five years are to be:
FHLB borrowings Promissory notes FRB Notes Totals
--------------- ---------------- --------- ----------
2001 $ 8,436 $ 5,399 $ 5,500 $ 19,335
2002 11,042 498 11,540
2003 9,929 9,929
2004 4,484 4,484
2005 2,611 2,611
Thereafter 14,184 14,184
---------------- ---------------- ---------- ----------
$ 50,686 $ 5,897 $ 5,500 $ 62,083
================ ================ ========== ==========
Letters of credit issued on the Bank's behalf by the FHLB to collateralize
certain public unit deposits as required by law totaled $44,845 at March 31,
2001 and $33,100 at December 31, 2000. Various investment securities from the
Bank used to collateralize FRB notes totaled $6,315 at March 31, 2001 and $9,165
at December 31, 2000. Promissory notes were unsecured at March 31, 2001 and
December 31, 2000.
================================================================================
9
OHIO VALLEY BANC CORP
(dollars in thousands, except per share data)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
INTRODUCTION
The following discussion focuses on the consolidated financial condition of Ohio
Valley Banc Corp. at March 31, 2001, compared to December 31, 2000, and the
consolidated results of operations for the quarterly period ending March 31,
2001, compared to the same period in 2000. The purpose of this discussion is to
provide the reader a more thorough understanding of the consolidated financial
statements. This discussion should be read in conjunction with the interim
consolidated financial statements and the footnotes included in this Form 10-Q.
The Registrant is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on the liquidity,
capital resources or operations except as discussed herein. Also, the Registrant
is not aware of any current recommendations by regulatory authorities which
would have such effect if implemented.
FINANCIAL CONDITION
The consolidated total assets of Ohio Valley Banc Corp. increased $8,892 or 1.6%
to reach $570,550 at March 31, 2001. Contributing to this asset growth was the
increase in federal funds sold which grew $13,300 during the first three months
of 2001. With the anticipation of upcoming commercial loan originations,
management will use the federal funds sold balances as a funding source. The
large increase in federal funds sold was funded partially by the maturities of
various government agency securities which lead to a total investment decrease
of $6,708. The demand for these types of investments decreased due to the
decline in yield on reinvestment opportunities as well as the reduced pledging
requirements to support public fund deposits.
Also contributing to asset growth was loans, which grew $2,746 during the first
three months of 2001. Loans were funded by growth in deposits of $5,193 or 1.2%,
of which a portion was used to reduce securities sold under agreements to
repurchase which are down $6,220. During the first three months of 2001, loan
growth was led by commercial loans expanding $4,610 or 3.3%. Approximately 84%
of these loans were originated in the primary market areas of Gallia, Jackson,
Pike and Franklin counties in Ohio and 9% was from the West Virginia market
areas. Real estate mortgages decreased $1,656 and consumer loans decreased $73
during the first three months in 2001. Management believes the allowance is
adequate to absorb inherent losses in the portfolio based on collateral values
as well as a large portfolio mix of real estate mortgages. A comprehensive
analysis of the allowance for loan and lease loss is performed on a quarterly
basis to ensure its adequacy. As a percentage of total loans, the allowance for
loan losses at March 31, 2001 and December 31, 2000 was 1.20%.
Total deposit growth was primarily in savings and interest-bearing demand
deposits increasing $8,996 or 7.7%. While the Company's Gold Club account
continues to impact this area of deposit growth, the largest portion of this
increase was related to the collection of real estate taxes by local
municipalities who maintain various deposit accounts within the bank. These
deposits from tax collections are short-term in nature and also had an impact on
the increase in federal funds which represent overnight
10
investments. This growth was offset by decreases in time deposits of $3,134 and
non-interest bearing deposits of $669 during the first three months of 2001.
Management utilized this net deposit growth to help fund the growth in loans and
to reduce securities sold under agreements to repurchase.
Other borrowed funds are primarily advances from the Federal Home Loan Bank,
which are used to fund loan growth or short-term liquidity needs. Other borrowed
funds are up $8,461 from December 31, 2000, with the increase occurring
primarily in long-term FHLB borrowings. Securities sold under agreements to
repurchase are down $6,220 from December 31, 2000.
Total shareholders' equity at March 31, 2001 of $44,957 was up by $465 as
compared to the balance of $44,492 on December 31, 2000. Contributing to this
increase was year-to-date income of $1,107 less cash dividends paid of $523, or
$.15 per share. The cash dividend represents 47.2% of the year-to-date income.
There were minimal proceeds from the issuance of common stock through the
dividend reinvestment plan during the first three months of 2001. Management has
instead utilized the proceeds from reinvested dividends and voluntary cash to
purchase shares on the open market and redistribute these dollars back into the
plan without the need for the issuance of common stock. Furthermore, as part of
the stock repurchase program, the Company purchased 20,000 additional treasury
shares during the first three months of 2001. The stock repurchase program
limits the purchase of shares to 5% of the total shares outstanding. As of April
30, 2001, the Company had over 80,800 shares available to purchase.
RESULTS OF OPERATIONS
Ohio Valley Banc Corp's net income was $1,107 for the first quarter of 2001, up
5.2% compared to $1,052 for the first quarter of 2000. Comparing March 31, 2001
to March 31, 2000, return on assets was unchanged at .80% and return on equity
increased from 9.90% to 10.11%. First quarter earnings per share was $.32 per
share, up 6.7% over last year's $.30 per share. The primary contributors to the
gain in net income was a $404 or 53% increase in noninterest income offset by a
$103 decline in net interest income and a $125 increase in provision for loan
losses.
The decrease in net interest income was primarily due to the increase in the
Bank's funding costs resulting in a lower net interest margin. Earning assets
increased $9,390 from December 31, 2000 largely due to the growth in federal
funds sold. This growth was offset be declines in investment securities and
moderate growth in loans. Additionally, the Company's $5,000 trust preferred
security that was issued in the fourth quarter of 2000 brought an additional
$133 in interest expense during the first three months of 2001 that was not
present during the same period last year. As a result, net interest income was
negatively impacted in the first three months of 2001 as compared to the same
period in 2000 by a decline in the net interest margin due to the Bank's cost of
funds increasing 43 basis points and asset yields only increasing by 23 basis
points. For additional discussion on the Company's rate sensitive assets and
liabilities, please see Item 3, Quantitative and Qualitative Disclosure About
Market Risk on page 14.
The decrease in net interest income was offset by net noninterest expense
decreasing $298 or 8.5% for the first quarter in 2001 compared to the same
period in 2000. Total noninterest income increased $404
11
or 53.0% for the first three months in 2001 compared to the same period in 2000.
Contributing most to this gain was service charge income, impacted by the
addition of new products and services, which contributed an additional $365
during the first quarter compared to the same period in 2000. Total noninterest
expense increased $106 or only 2.5% for the first quarter compared to the same
period in 2000. Contributing the most to this minimal increase was the decline
in salary and employee benefits, which are down $8 over the first three months
of 2000. This decline can be attributed to the decrease in the Company's
full-time equivalent employee base from 257 at March 31, 2000 to 239 at March
31, 2001, as more emphasis has been placed on reallocating employee
responsibilities as opposed to employee expansion. The growth in additional
offices and fixed assets experienced in 1999 and 2000 has been stable throughout
the first quarter of 2001. This has provided for the decrease in occupancy
expense and furniture and equipment expense which are collectively down $30.
Furthermore, data processing and other operating expense are up $144 over the
first quarter of 2000 due to computer software depreciation and general
increases in overhead expenses.
CAPITAL RESOURCES
All of the capital ratio's exceeded the regulatory minimum guidelines as
identified in the following table:
Company Ratios Regulatory
March 31, 2001 December 31, 2000 Minimum
---------------- ------------------ ----------
Tier 1 risk-based capital 11.1% 11.2% 4.00%
Total risk-based capital ratio 12.4% 12.5% 8.00%
Leverage ratio 8.5% 8.5% 4.00%
Cash dividends paid of $523 for the first three months of 2001 represents a 5.4%
increase over the cash dividends paid during the same period in 2000. The
increase in cash dividends paid is largely due to the increase in the dividend
rate paid per share. At March 31, 2001, approximately 73% of the shareholders
were enrolled in the dividend reinvestment plan. As part of the Company's stock
repurchase program, management has continued to utilize reinvested dividends and
voluntary cash to purchase shares on the open market to be redistributed through
the dividend reinvestment plan.
On February 28, 2001, the Registrant along with two other financial holding
companies acquired BSG Title Services, a title insurance company based in
Delaware, Ohio. The Registrant secured a 40% minority interest in this company
by investing $20. The new acquisition takes advantage of the Gramm-Leach-Bliley
Act and further expands the Registrant's products and services.
LIQUIDITY
Liquidity relates to the Bank's ability to meet the cash demands and credit
needs of its customers and is provided by the ability to readily convert assets
to cash and raise funds in the market place. Total cash and cash equivalents,
interest-bearing deposits with banks, held-to-maturity securities maturing
within one year and securities available-for-sale of $82,947 represented 14.5%
of total assets at March 31, 2001. In addition, the Federal Home Loan Bank in
Cincinnati offers advances to the Bank which further enhances the Bank's ability
to meet liquidity demands. At March 31, 2001, the Bank could borrow an
additional $47 million from the Federal Home Loan Bank. The Company experienced
an increase of $12,211 in cash and cash equivalents for the three months ended
March 31, 2001. See the condensed consolidated statement of cash flows on page 4
for further cash flow information.
12
CONCENTRATION OF CREDIT RISK
The Company maintains a diversified credit portfolio, with real estate loans
comprising the most significant portion. Credit risk is primarily subject to
loans made to businesses and individuals in central and southeastern Ohio as
well as western West Virginia. Management believes this risk to be general in
nature, as there are no material concentrations of loans to any industry or
consumer group. To the extent possible, the Company diversifies its loan
portfolio to limit credit risk by avoiding industry concentrations.
FORWARD LOOKING STATEMENTS
Except for the historical statements and discussions contained herein,
statements contained in this report constitute "forward looking statements'
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Act of 1934 and as defined in the Private Securities
Litigation Reform Act of 1995. Such statements are often, but not always,
identified by the use of such words as "believes," "anticipates," "expects," and
similar expressions. Such statements involve various important assumptions,
risks, uncertainties, and other factors, many of which are beyond our control,
that could cause actual results to differ materially from those expressed in
such forward looking statements. These factors include, but are not limited to:
changes in political, economic or other factors such as inflation rates,
recessionary or expansive trends, and taxes; competitive pressures; fluctuations
in interest rates; the level of defaults and prepayment on loans made by the
Company; unanticipated litigation, claims, or assessments; fluctuations in the
cost of obtaining funds to make loans; and regulatory changes. Readers are
cautioned not to place undue reliance on such forward looking statements, which
speak only as of the date hereof. The Company undertakes no obligation and
disclaims any intention to republish revised or updated forward looking
statements, whether as a result of new information, unanticipated future events
or otherwise.
13
OHIO VALLEY BANC CORP.
MATURITY ANALYSIS
(dollars in thousands)
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The following table provides information about the Company's financial instruments that are sensitive to changes in interest
rates. The table presents repricing opportunities strictly by maturity date without regard for repricing dates for variable
rate products. As compared to 12/31/00, there were no significant changes through the first three months of 2001.
As of March 31, 2001 Principal Amount Maturing in:
There- Fair Value
2001 2002 2003 2004 2005 after Total 03/31/01
Rate-Sensitive Assets:
Fixed interest rate loans $ 8,228 $ 8,264 $ 14,306 $ 22,242 $ 21,761 $204,870 $279,671 $282,513
Average interest rate 10.66% 11.85% 11.80% 10.55% 9.73% 8.23% 8.90%
Variable interest rate loans $ 35,541 $ 15,228 $ 2,084 $ 4,660 $ 5,347 $108,518 $171,378 $172,025
Average interest rate 10.08% 9.68% 8.89% 8.86% 9.27% 8.52% 8.98%
Fixed interest rate securities $ 8,244 $ 11,274 $ 13,358 $ 10,687 $ 8,792 $ 15,278 $ 67,633 $ 69,462
Average interest rate 6.47% 6.24% 6.23% 6.57% 7.30% 6.94% 6.61%
Federal Funds Sold $ 13,300 $ 13,300 $ 13,300
Average interest rate 4.87% 4.87%
Other interest-bearing assets $ 868 $ 868 $ 868
Average interest rate 3.08% 3.08%
Rate-Sensitive Liabilities:
Noninterest-bearing checking $ 6,767 $ 5,793 $ 4,958 $ 4,244 $ 3,633 $ 21,597 $ 46,992 $ 46,992
Savings & Interest-bearing checking $ 21,022 $ 17,401 $ 14,426 $ 11,977 $ 9,959 $ 51,146 $125,931 $125,931
Average interest rate 3.35% 3.37% 3.40% 3.43% 3.45% 3.58% 3.47%
Time deposits $150,163 $ 80,896 $ 26,286 $ 3,373 $ 1,848 $ 2,075 $264,641 $268,532
Average interest rate 6.24% 6.08% 6.26% 6.01% 6.60% 6.83% 6.20%
Fixed interest rate borrowings $ 13,834 $ 11,540 $ 9,929 $ 4,484 $ 2,611 $ 19,184 $ 61,582 $ 61,708
Average interest rate 6.32% 5.65% 5.52% 5.47% 5.49% 6.90% 6.15%
Variable interest rate borrowings $ 17,775 $ 17,775 $ 17,775
Average interest rate 4.47% 4.47%
(Continued)
14
OHIO VALLEY BANC CORP
MATURITY ANALYSIS
================================================================================
Item 3. Quantitative and Qualitative Disclosure About Market Risk (continued)
The decline in prime rate during the first quarter of 2001 had an immediate
impact on the Company's net interest margin due to variable rate assets tied to
prime outweighing variable rate liabilities tied to prime. As the year
progresses, management expects that impact to be offset by a larger volume of
fixed rate liabilities repricing downward quicker than fixed rate assets. Based
on the gap model, the Company's one year cumulative gap is liability sensitive,
which should benefit the Company over the long term in a declining rate
environment.
Part II - Other Information
Item 1 - Legal Proceedings
- --------------------------
None
Item 2 - Changes in Securities
- ------------------------------
None
Item 3 - Defaults Upon Senior Securities
- ----------------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- ------------------------------------------
B. No reports on Form 8-K were filed for the quarter ending March 31, 2001.
OHIO VALLEY BANC CORP.
-------------------------------------------
Date May 14, 2001 /s/ Jeffrey E. Smith
------------------- -------------------------------------------
Jeffrey E. Smith
President and Chief Executive Officer
Date May 14, 2001 /s/ Larry E. Miller, II
------------------- -------------------------------------------
Larry E. Miller, II
Senior Vice President and Treasurer
================================================================================
15