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:
JUNE 30, 2003
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 by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
X Yes
No
The number of common shares of the Registrant outstanding as of July 31, 2003
was 3,480,480
OHIO VALLEY BANC CORP
FORM 10-Q
QUARTER ENDED JUNE 30, 2003
================================================================================
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
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....... 11
Item 3 - Quantitative and Qualitative Disclosure About
Market Risk......................................... 16
Item 4 - Controls and Procedures ............................... 17
Part II - Other Information
Other Information and Signatures................................ 17
Exhibit Index:
31.1 Certification of Principal Executive Officer (Section
302 Certification) ............................ 18
31.2 Certification of Principal Financial Officer (Section
302 Certification) ............................ 19
32 Certification of Periodic Financial Report (Section
906 Certification) ............................ 20
OHIO VALLEY BANC CORP
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands, except share and per share data)
================================================================================
June 30, December 31,
2003 2002
------------ ------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 17,082 $ 18,826
Federal funds sold 9,600 4,625
------------ ------------
Total cash and cash equivalent 26,682 23,451
Interest-bearing balances with banks 1,542 1,505
Securities available-for-sale 74,469 75,264
Securities held-to-maturity (estimated fair
value: 2003 - $15,572 , 2002 - $14,834) 14,495 13,990
Total loans 555,069 559,561
Less: Allowance for loan losses (7,341) (7,069)
------------ ------------
Net loans 547,728 552,492
Premises and equipment, net 8,587 8,247
Accrued income receivable 3,049 3,144
Goodwill 1,267 1,267
Bank owned life insurance 12,966 12,673
Other assets 7,861 4,323
------------ ------------
Total assets $ 698,646 $ 696,356
============ ============
LIABILITIES
Noninterest-bearing deposits $ 63,061 $ 58,997
Interest-bearing deposits 447,744 438,407
------------ ------------
Total deposits 510,805 497,404
Securities sold under agreements to repurchase 25,335 33,052
Other borrowed funds 89,091 95,435
Obligated mandatorily redeemable capital securities
of subsidiary trust 13,500 13,500
Accrued liabilities 7,464 6,590
----------- ------------
Total liabilities 646,195 645,981
----------- ------------
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2003 - 3,637,595 shares
issued, 2002 - 3,620,335 shares issued) 3,638 3,620
Additional paid-in capital 30,461 30,092
Retained earnings 21,157 19,339
Accumulated other comprehensive income 1,310 1,439
Treasury stock at cost (2003 and
2002 - 157,115 shares) (4,115) (4,115)
----------- ------------
Total shareholders' equity 52,451 50,375
----------- ------------
Total liabilities and
shareholders' equity $ 698,646 $ 696,356
=========== ============
================================================================================
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 Six months ended
June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Interest and dividend income:
Loans, including fees $ 10,551 $ 10,940 $ 21,239 $ 21,587
Securities:
Taxable 694 641 1,379 1,298
Tax exempt 172 185 345 361
Dividends 50 57 100 110
Other Interest 26 64 42 140
--------- --------- --------- ---------
11,493 11,887 23,105 23,496
Interest expense:
Deposits 3,174 3,740 6,490 7,640
Securities sold under agreements
to repurchase 48 111 101 195
Other borrowed funds 1,052 1,088 2,140 2,201
Obligated mandatorily redeemable
capital securities of
subsidiary trust 237 251 476 390
--------- --------- --------- ---------
4,511 5,190 9,207 10,426
--------- --------- --------- ---------
Net interest income 6,982 6,697 13,898 13,070
Provision for loan losses 1,246 813 2,632 1,954
--------- --------- --------- ---------
Net interest income after provision 5,736 5,884 11,266 11,116
Noninterest income:
Service charges on deposit accounts 803 801 1,500 1,495
Trust fees 58 60 111 114
Income from bank owned insurance 172 168 344 340
Net gain on sale of loans 155 13 352 21
Other 340 372 667 724
--------- --------- --------- ---------
1,528 1,414 2,974 2,694
Noninterest expense:
Salaries and employee benefits 2,885 2,700 5,682 5,319
Occupancy 317 324 649 635
Furniture and equipment 240 271 477 534
Data processing 139 145 299 291
Other 1,458 1,970 2,856 3,404
--------- --------- --------- ---------
5,039 5,410 9,963 10,183
--------- --------- --------- ---------
Income before income taxes 2,225 1,888 4,277 3,627
Provision for income taxes 652 535 1,245 1,022
--------- --------- --------- ---------
NET INCOME $ 1,573 $ 1,353 $ 3,032 $ 2,605
========= ========= ========= =========
Earnings per share $ 0.45 $ 0.39 $ 0.87 $ 0.75
========= ========= ========= =========
================================================================================
See notes to the consolidated financial statements.
2
OHIO VALLEY BANC CORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY (UNAUDITED)
(dollars in thousands, except share and per share data)
================================================================================
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Balance at beginning of period $ 51,324 $ 47,015 $ 50,375 $ 46,300
Comprehensive income:
Net income 1,573 1,353 3,032 2,605
Net change in unrealized
gain on available-for-sale
securities 27 372 (129) 58
--------- --------- --------- ---------
Total comprehensive income 1,600 1,725 2,903 2,663
Proceeds from issuance of common
stock through dividend reinvestment
plan 153 387 331
Cash dividends (626) (588) (1,214) (1,142)
Shares acquired for treasury (161) (161)
--------- --------- --------- ---------
Balance at end of period $ 52,451 $ 47,991 $ 52,451 $ 47,991
========= ========= ========= =========
Cash dividends per share $ 0.18 $ 0.17 $ 0.35 $ 0.33
========= ========= ========= =========
Shares from common stock issued
through dividend reinvestment plan 6,713 8 17,260 13,714
========= ========= ========= =========
Shares acquired for treasury 6,725 6,725
========= ========= ========= =========
================================================================================
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)
================================================================================
Six months ended June 30,
2003 2002
------------ ------------
Net cash provided by operating activities $ 3,370 $ 4,558
Investing activities
Proceeds from maturities of
securities available-for-sale 21,653 21,324
Purchases of securities available-
for-sale (21,023) (17,437)
Proceeds from maturities of
securities held-to-maturity 513 421
Purchases of securities held-to-maturity (1,040) (1,773)
Change in interest-bearing deposits
in other banks (37) (228)
Net change in loans 2,132 (37,594)
Purchases of premises and equipment (850) (156)
------------ ------------
Net cash from (used) in investing
activities 1,348 (35,443)
Financing activities
Change in deposits 13,401 25,059
Cash dividends (1,214) (1,142)
Proceeds from issuance of common stock 387 331
Purchases of treasury stock (161)
Change in securities sold under
agreements to repurchase (7,717) (3,153)
Proceeds from obligated mandatorily redeemable
capital securities of subsidiary trust 8,500
Proceeds from long-term borrowings 3,415 4,040
Repayment of long-term borrowings (9,879) (7,557)
Change in other short-term borrowings 120 1,449
------------ ------------
Net cash from (used)in financing
activities (1,487) 27,366
------------ ------------
Change in cash and cash equivalents 3,231 (3,519)
Cash and cash equivalents at beginning of period 23,451 26,288
------------ ------------
Cash and cash equivalents at end of period $ 26,682 $ 22,769
============ ============
SUPPLEMENTAL DISCLOSURE
- -----------------------
Cash paid for interest $ 9,693 $ 11,455
Cash paid for income taxes 1,395 1,415
Non-cash tranfers from loans to other real
estate owned 3,598 62
================================================================================
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, Loan Central, Inc., Ohio Valley Financial Services Agency, LLC. and
Ohio Valley Statutory Trusts I and II, together referred to as the Company. 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 June 30, 2003, 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 accounting principles generally accepted in the United States of
America (US GAAP) that might otherwise be necessary in the circumstances. The
Annual Report for Ohio Valley Banc Corp for the year ended December 31, 2002,
contains consolidated financial statements and related notes which should be
read in conjunction with the accompanying consolidated financial statements.
The accounting and reporting policies followed by the Company conform to US
GAAP. The preparation of financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates. The allowance for loan losses is particularly subject to
change.
Income tax expense is the sum of the current year income tax due or refundable
and the change in deferred tax assets and liabilities. Deferred tax assets and
liabilities are the expected future tax consequences of temporary differences
between the carrying amounts and tax bases of assets and liabilities, computed
using enacted tax rates. A valuation allowance, if needed, reduces deferred tax
assets to the amount expected to realized.
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. Generally, federal funds are
purchased and sold for one-day periods. The Company reports net cash flows for
customer loan transactions, deposit transactions, short-term borrowings and
interest-bearing deposits with other financial institutions.
Earnings per share is computed based on the weighted average shares outstanding
during the period. Weighted average shares outstanding were 3,477,455 and
3,460,731 for the three months ending June 30, 2003 and June 30, 2002,
respectively. Weighted average shares outstanding were 3,473,290 and 3,459,987
for the six months ending June 30, 2003 and June 30, 2002, respectively.
The majority of the Company's income is derived from commercial and retail
lending activities. Management considers the Company to operate in one segment,
banking.
Loans are reported at the principal balance outstanding, net of unearned
interest, deferred loan fees and costs, and an allowance for loan losses.
Interest income on loans is reported on the interest method and includes
amortization of net deferred loan fees and costs over the loan term. Interest
income on loans is not reported when full loan repayment is in doubt, typically
when the loan is impaired or payments are past due over 90 days. Payments
received on such loans are reported as principal reductions.
================================================================================
(Continued)
5
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Management believes the process to evaluate the adequacy of the allowance for
loan losses is one of the largest and most important estimates the Company must
determine. To arrive at the total dollars necessary to maintain an allowance
level sufficient to absorb the probable losses at a specific financial statement
date, management has developed policy and procedures it believes is acceptable
to our regulators. In our assessment of the allowance, management has created
procedures to establish and then evaluate the allowance once determined. The
allowance consists of the following components: specific allocation, general
allocation and other estimated general allocation.
To arrive at the amount required for the specific allocation component, the
Company must evaluate loans that are thought to have some potential loss either
in part or whole in the future. To achieve this task, the Company has created a
quarterly report "Watchlist" which lists loans from each loan portfolio that
management deems a potential credit risk. The criteria to be placed in this
report are: past due 60 or more days, nonaccrual and loans management has
determined to be a potential problem loan. These loans are reviewed and analyzed
for potential loss by the Large Loan Review Committee (1). The committee has
established a grading system which evaluates borrowers from 1 (least risk) to 10
(greatest risk) to evaluate the credit risk for each commercial borrower. After
the committee evaluates each relationship listed in the report, a loss factor
may be assessed. These dollars are set aside for the specific allocation
component. This allocation is made up of dollars allocated to the commercial
loan portfolio (79%), to the real estate (14%) and to the consumer (7%). The
total specific allocation, this reporting period, is $1,890.
Note: Impaired loans consist of loans $100,000 or more on nonaccrual status or
non-performing in nature. These loans are individually analyzed and a specific
allocation may be assessed based on expected future credit loss. Collateral
dependent loans will be evaluated to determine a fair value of the collateral
securing the loan. Non-performing and nonaccrual loan balances have decreased
significantly from the previous quarter (39%). This reduction is primarily
attributable to $3,100 which was reclassified to other real estate owned. Any
allocation will be reflected in the specific allocation component. As of June
30, 2003, the total allocation for impaired loans is $550 which is reflected in
the specific allocation.
The second component (general allowance) consists of the total loan portfolio
balances minus loan balances already reviewed (specific allocation). A quarterly
large loan report, is prepared to provide management a "snapshot" of information
on larger-balance loans, which includes: loan grades, collateral values, etc.
This tool allows management to monitor this group of borrowers. Therefore, only
small balance commercial loans and homogeneous loans (consumer and real estate
loans) have not been specifically reviewed to determine minor delinquencies,
current collateral values and present credit risk. The Company will
================================================================================
(1) Large Loan Review Committee consists of the President and Senior Management
with lending capacity. The function of the committee is to review and analyze
large borrowers for credit risk, scrutinize the Watchlist and evaluate the
adequacy of the Allowance for Loan Losses and other credit risk related issues.
(Continued)
6
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
use a loss risk factor (2) to calculate the dollars necessary to absorb losses
for this component. The total general allowance, this reporting period, is
$4,494.
The final component used to complete our allocation calculation is economic risk
for unallocated allowance. Even though the Company evaluates certain loans for
potential loss and uses a loss risk factor on the remaining loan portfolio,
other factors may affect the allowance at any given time. Therefore, there are
five additional areas that management believes can have an impact on collecting
all principal and interest due. These areas are: 1) delinquency trends, 2)
economic risk, 3) non-performing loans; 4) recovery vs charge off and 5)
personnel changes. Each of these areas is given a percentage factor, from a low
of 10% to a high of 30%, determined by the importance of the impact it may have
on the allowance. After evaluating each area, an overall factor of 16% was
determined for this reporting period. To calculate the impact of other economic
conditions on the allowance, the total general allowance is multiplied by this
factor. These dollars are then added to the other two components to provide for
economic conditions in our assessment area (3). The total dollars allocated for
this component is $743.
The adequacy of the allowance may be determined by certain specific and
nonspecific allocations; however, the total allocation is available for any
credit losses that may impact the loan portfolios by unforeseen circumstances.
The Company has determined the estimated adequate allowance as of June 30, 2003
to be approximately $7,341.
In May, 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
Statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatorily redeemable
financial instruments of nonpublic entities. The adoption of this statement did
not have a material impact on the Company's financial statements.
================================================================================
(2) Loss Risk Factor - The Company has implemented a new method to calculate the
allowance necessary to absorb current losses. The new risk factor will reflect
an actual 12 months performance evaluation of credit losses per loan portfolio.
The new factor is achieved by taking the average charge off, per loan portfolio,
for the last 12 consecutive months and dividing it by the average loan balance
for each loan portfolio over the same time period. We believe that by using a 12
months "rolling" average loss risk factor, the estimated allowance will more
accurately reflect current losses.
(3) The Company's assessment area takes in ten counties in two states, Ohio and
West Virginia. Each assessment area has its individual economic conditions;
however, the Company has chosen to average the risk factors for compiling the
economic risk factor.
(Continued)
7
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
Unrealized Unrealized Fair
Gains Losses Values
Securities Available-for-Sale ----------- ------------ ---------
June 30, 2003
- --------------
U.S. Government agency
securities $ 1,824 $ 49,665
Mortgage-backed securities 172 $ (9) 19,704
Marketable equity securities 5,100
----------- ------------ ---------
Total securities $ 1,996 $ (9) $ 74,469
=========== ============ =========
December 31, 2002
- -----------------
U.S. Government agency
securities $ 2,099 $ 66,838
Mortgage-backed securities 81 $ (6) 3,425
Marketable equity securities 5,001
----------- ------------ ---------
Total securities $ 2,180 $ (6) $ 75,264
=========== ============ =========
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Values
Securities Held-to-Maturity --------- ----------- ------------ ---------
June 30, 2003
- --------------
Obligations of state and
political subdivisions $ 14,353 $ 1,100 $ (20) $ 15,433
Mortgage-backed securities 142 (3) 139
--------- ----------- ------------ ---------
Total securities $ 14,495 $ 1,100 $ (23) $ 15,572
========== =========== ============ =========
December 31, 2002
- -----------------
Obligations of state and
political subdivisions $ 13,821 $ 881 $ (31) $ 14,671
Mortgage-backed securities 169 (6) 163
--------- ----------- ------------ ---------
Total securities $ 13,990 $ 881 $ (37) $ 14,834
========== =========== ============ =========
The amortized cost and estimated fair value of debt securities at June 30,
2003, 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
Fair Amortized Fair
Value Cost Value
----------- ----------- -----------
Debt securities:
Due in one year
or less $ 11,095 $ 2,093 $ 2,145
Due in one to
five years 38,570 3,000 3,219
Due in five to
ten years 6,903 7,582
Due after ten years 2,357 2,487
Mortgage-backed securities 19,704 142 139
----------- ----------- -----------
Total debt
securities $ 69,369 $ 14,495 $ 15,572
=========== =========== ===========
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 six months of 2003 and 2002.
================================================================================
(Continued)
8
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 3 - LOANS & ALLOWANCE FOR LOAN LOSSES
Total loans as presented on the balance sheet are comprised of the following
classifications:
June 30, December 31,
2003 2002
---------------- ----------------
Real estate loans $ 211,579 $ 224,212
Commercial and industrial loans 213,480 205,508
Consumer loans 129,412 128,662
Other loans 598 1,179
---------------- ----------------
$ 555,069 $ 559,561
================ ================
At June 30, 2003 and December 31, 2002, loans on nonaccrual status were
approximately $4,661 and $6,569, respectively. Loans past due more than 90 days
and still accruing at June 30, 2003 and December 31, 2002 were $1,250 and
$1,491, respectively.
A summary of activity in the allowance for loan losses for the six months
ended June 30 is as follows:
2003 2002
---------------- ----------------
Balance - January 1, $ 7,069 $ 6,251
Loans charged off:
Real estate 276 289
Commercial 1,670 326
Consumer 1,376 1,422
---------------- ----------------
Total loans charged off 3,322 2,037
Recoveries of loans:
Real estate 148 106
Commercial 374 133
Consumer 440 339
---------------- ----------------
Total recoveries 962 578
---------------- ----------------
Net loan charge-offs (2,360) (1,459)
Provision charged to operations 2,632 1,954
---------------- ----------------
Balance - June 30, $ 7,341 $ 6,746
================ ================
Information regarding impaired loans is as follows:
June 30, December 31,
2003 2002
-------------- ---------------
Balance of impaired loans $ 3,774 $ 4,780
============== ===============
Portion of impaired loan balance for
which an allowance for credit
losses is allocated $ 3,774 $ 4,780
============== ===============
Portion of allowance for loan losses
allocated to the impaired loan balance $ 550 $ 500
============== ===============
Average investment in impaired loans
year-to-date $ 3,801 $ 5,308
============== ===============
Interest on impaired loans was not material for the periods ended June 30,
2003 and June 30, 2002.
================================================================================
(Continued)
9
OHIO VALLEY BANC CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
================================================================================
NOTE 4 - 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
4.34% of total loans were unsecured at June 30, 2003 as compared to 4.16% at
December 31, 2002.
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 June
30, 2003, 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 $60,341 as compared to $55,150 at December 31,
2002.
NOTE 5 - OTHER BORROWED FUNDS
Other borrowed funds at June 30, 2003 and December 31, 2002 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
--------------- ---------------- --------- ----------
2003 $ 78,127 $ 6,419 $ 4,545 $ 89,091
2002 $ 84,590 $ 5,345 $ 5,500 $ 95,435
Pursuant to collateral agreements with the FHLB, advances are secured by
certain qualifying first mortgage loans and by FHLB stock which total $117,190
and $5,100 at June 30, 2003. Fixed rate FHLB advances mature through 2010 and
have interest rates ranging from 3.28% to 6.62%.
Promissory notes, issued primarily by the parent company, have fixed rates
of 1.75% to 5.25% and are due at various dates through a final maturity date of
September 30, 2005.
At June 30, 2003, scheduled principal payments through December 31 over the
next five years are to be:
FHLB borrowings Promissory notes FRB Notes Totals
--------------- ---------------- --------- ----------
2003 $ 5,672 $ 4,210 $ 4,545 $ 14,427
2004 17,488 2,109 19,597
2005 17,116 100 17,216
2006 17,608 17,608
2007 4,061 4,061
Thereafter 16,182 16,182
---------------- ---------------- ---------- ----------
$ 78,127 $ 6,419 $ 4,545 $ 89,091
================ ================ ========== ==========
Letters of credit issued on the Bank's behalf by the FHLB to collateralize
certain public unit deposits as required by law totaled $25,950 at June 30,
2003 and $30,425 at December 31, 2002. Various investment securities from the
Bank used to collateralize FRB notes totaled $5,925 at June 30, 2003 and
$6,010 at December 31, 2002.
================================================================================
10
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 June 30, 2003, compared to December 31, 2002, and the
consolidated results of operations for the quarterly and year-to-date periods
ending June 30, 2003, compared to the same period in 2002. 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. have increased $2,290 or
..3% during the first half of 2003 to finish at $698,646. The increase in assets
was primarily due to an increase in the Company's cash and cash equivalents,
primarily in federal funds sold which are up $4,975 from year-end 2002. This
increase in cash and cash equivalents was a result of decreases in loans of
$4,492 and investment securities of $290. The Company's total deposits increased
$13,401 which were offset by a decrease in securities sold under agreements to
repurchase ("repurchase agreements") of $7,717 and other borrowed funds of
$6,344.
During the first six months of 2003, total loans were down $4,492 or .8%
impacted by real estate mortgages which declined by $12,633 or 5.6%. The Bank's
emphasis on selling a large portion of its new real estate loan originations to
the Federal Home Loan Mortgage Corporation ("Freddie Mac") continues to be the
primary contributor in 2003 to the decline in new real estate loan volume.
Secondary market sales of these real estate loan originations, which have fixed
rates with fifteen and thirty year terms, have helped minimize the Bank's
exposure to interest rate risk. As a result, the Bank has realized a 20% decline
in its fifteen and thirty year fixed rate real estate loans. Partially
offsetting this decrease in real estate mortgages was an increase in the
Company's commercial loans of $7,972 or 3.9%. This growth came mostly from loan
originations within the primary market areas of Gallia, Jackson, Pike and
Franklin counties in Ohio which accounted for 68% of the total increase. In
addition, approximately 26% of commercial loan originations came from the
growing West Virginia market areas. Furthermore, consumer loans increased by
$750 or .6%.
During the first six months of 2003, investment securities declined $290 or .3%
led by a decline in U.S. government agency securities of $17,173 or 25.7% offset
partially by an increase in mortgage-backed securities of $16,252. The Company's
demand for U.S. government agency securities has primarily been to satisfy
pledging requirements for repurchase agreements. In the first half of 2003, the
Bank's repurchase agreements declined 23%, lowering the need to secure these
balances with agency security investments. The increase in mortgage-backed
securities is anticipated to enhance the Company's investment portfolio with a
================================================================================
(continued)
11
higher rate of return and a more rapid repayment of principal as compared to
U.S. government agency securities.
During the first six months of 2003, the Company experienced a $901 increase in
net charge offs from the same time period last year consisting primarily of
commercial nonperforming loans. Nonperforming loans decreased to $5,911 at June
30, 2003 compared to $8,060 at December 31, 2002 which lowered the Company's
nonperforming loans to total loans ratio to 1.08% compared to 1.44% for the same
time periods. However, nonperforming assets to total assets increased to 1.36%
at June 30, 2003 from 1.21% at December 31, 2002. This shift in nonperforming
loans and nonperforming assets was in relation to two commercial loans totaling
over $3 million moving from nonaccrual status to other real estate owned, which
is classified within other assets on the Company's balance sheet. This
contributed to the Company's increase in other assets, which were up $3,538 over
year-end 2002. The allowance for loan losses was 1.32% of total loans at June
30, 2003 compared to 1.26% at December 31, 2002. Management has increased the
ratio of allowance to total loans largely due to the recent 12-month average
growth in nonperforming loans that is included in the Company's adequacy of the
allowance for loan losses evaluation. Based on this quarterly evaluation,
management feels that the allowance for loan losses continues to be adequate to
absorb probable losses in the loan portfolio.
Total deposit growth during the first six months of 2003 was primarily in
savings and interest-bearing demand deposits which increased $7,830 or 5.3%.
Contributing to this increase was a $4,200 increase in NOW accounts,
particularly the Company's new Shareholder Gold product, which offers a NOW
account and many banking benefits to Company shareholders. Additionally,
statement savings deposits were up 14.3% over year-end 2002. Also contributing
to total deposit growth was non-interest bearing demand deposits which increased
$4,064 or 6.9%, impacted mostly by the Company's pay-it-safe, official checking
and e-checking products. Furthermore, interest-bearing time deposits increased
$1,507 or .5%. This growth was partially driven by increases in the Company's
brokered CD issues which totaled $2,033 during the first six months of 2003.
Management continues to utilize these deposit sources to supplement deposit
growth when necessary to lengthen maturities while protecting against the
possibility of rising interest rates.
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 down $6,344 from December 31, 2002. The need to fund interest-earning
asset growth, particularly loans, has declined in the first half of 2003
contributing to this 6.6% decrease in other borrowings. Additionally, repurchase
agreements are down $7,717 or 23.3% from December 31, 2002. This decline was
mostly related to the normal fluctuations of a single account during the first
quarter of 2003.
Total shareholders' equity at June 30, 2003 of $52,451 was up by $2,076 as
compared to the balance of $50,375 on December 31, 2002. Contributing most to
this increase was year-to-date income of $3,032 plus proceeds of $387 from the
issuance of common stock through the dividend reinvestment plan less cash
dividends paid of $1,214, or $.18 per share year-to-date. While cash dividends
represented 40.0% of year-to-date income, dividends net of proceeds from the
dividend reinvestment plan represented 27.3% of year-to-date income.
================================================================================
(continued)
12
RESULTS OF OPERATIONS
Ohio Valley Banc Corp's net income was $1,573 for the second quarter and $3,032
for the first six months of 2003, up by 16.3% and 16.4% compared to $1,353 and
$2,605 for the same periods in 2002. Comparing year-to-date June 30, 2003 to
June 30, 2002, return on assets increased from .81% to .89% and return on equity
increased from 11.20% to 11.95%. Second quarter earnings per share was $.45 per
share, up 15.4% over last year's $.39 per share. During the first six months of
2003, earnings per share was $.87 per share, up 16.0% from last year's $.75 per
share. The double-digit growth in net income for the quarter and year-to-date
periods in 2003 was driven by an increase in net interest income combined with a
decline in operating expenses.
The second quarter and year-to-date increases to net interest income of 4.3% and
6.3% were primarily due to the declines in total interest expense of $679 or
13.1% and $1,219 or 11.7% which completely offset the declines in interest
income for the same time periods. Although average earning assets have increased
by $43,200 compared to the first half of 2002, the yield on interest earning
assets has declined by 59 basis points which resulted in the overall decrease to
interest income. However, the Company benefited from a decline in interest
expense which was largely impacted by a 63 basis point decrease in its average
funding costs. The benefits of a low interest rate environment have helped to
minimize the drop in net interest margin for the second quarter of 2003 which
finished at 4.36% as compared to 4.42% for the same time period in 2002, and the
drop in net interest margin for the first half of 2003 which was 4.36% as
compared to 4.40% for the same period in 2002. 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 16.
The increase in net interest income for the second quarter and year-to-date
periods of 2003 were negatively impacted by increases to provision expense of
$433 and $678 for the same periods as compared to 2002. These increases to
provision expense were in large part from the increase in the Company's
nonperforming assets which contributed to a 62% increase in net charge-offs
realized in the first half of 2003 compared to the same period in 2002. The
increase in net charge-offs reduces the amount of nonperforming loans in the
portfolio. This decline in nonperforming loans, along with sound underwriting
policies, have improved the asset quality within the Company's loan portfolio.
Net interest income after provision for the second quarter and year-to-date
periods of 2003 were positively impacted by decreases in net noninterest expense
of $485 or 12.1% and $500 or 6.7% for the same periods as compared to 2002.
Total noninterest income increased $114 or 8.1% for the second quarter and $280
or 10.4% for the first six months in 2003 as compared to the same periods in
2002. Driving this growth was the Bank's secondary market sales of new real
estate loan originations which generated an additional $143 and $331 in
noninterest revenue for the second quarter and year-to-date periods of 2003.
Additional growth in noninterest revenue related to overdraft fees, service
charge income and loan service fees was completely offset by a decrease in loan
insurance commission revenue due to state mandated reductions in insurance
premiums and less opportunities to sell insurance relative to the decrease in
the real estate loan portfolio as well as the minimal growth in the consumer
loan portfolio.
Total noninterest expense decreased $371 or 6.9% and $220 or 2.2% for the second
quarter and year-to-date periods of 2003 as compared to the same periods in
2002. Salaries and employee benefits, the Company's largest noninterest expense,
================================================================================
(continued)
13
grew $185 or 6.9% and $363 or 6.9% for the second quarter and year-to-date
periods of 2003 as compared to the same periods in 2002. This increase was
related to the rising cost of medical insurance and annual merit increases.
Completely offsetting the rise in salaries and employee benefits was the one
time net charge-off of fraudulent check kiting activity during the second
quarter of 2002 with the impact net of recoveries being $454. The remaining
noninterest expense categories were collectively down from 2002.
CAPITAL RESOURCES
All of the capital ratio's exceeded the regulatory minimum guidelines as
identified in the following table:
Company Ratios Regulatory
June 30, 2003 December 31, 2002 Minimum
------------- ----------------- ----------
Tier 1 risk-based capital 10.9% 11.0% 4.00%
Total risk-based capital ratio 12.1% 12.2% 8.00%
Leverage ratio 9.1% 9.2% 4.00%
Cash dividends paid of $1,214 for the first six months of 2003 represents a 6.3%
increase over the cash dividends paid during the same period in 2002. The
increase in cash dividends paid is largely due to the increase in retained
earnings which allowed the Company to increase the dividend rate paid per share.
At June 30, 2003, approximately 76% of the shareholders were enrolled in the
dividend reinvestment plan. As part of the Company's stock repurchase program,
management will continue to utilize reinvested dividends and voluntary cash to
make open market purchases of shares, when available, to be redistributed
through the dividend reinvestment plan.
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 $104,786 represented 15.0%
of total assets at June 30, 2003. 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 June 30, 2003, the Bank could borrow an additional
$40 million from the Federal Home Loan Bank. The Company experienced an increase
of $3,231 in cash and cash equivalents for the six months ended June 30, 2003.
See the condensed consolidated statement of cash flows on page 4 for further
cash flow information.
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 and, when possible,
geographic concentrations.
================================================================================
(continued)
14
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.
================================================================================
(continued)
15
OHIO VALLEY BANC CORP
(dollars in thousands, except per share data)
================================================================================
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
The Company's goal for interest rate sensitivity management is to maintain a
balance between steady net interest income growth and the risks associated with
interest rate fluctuations. Interest rate risk ("IRR") is the exposure of the
Company's financial condition to adverse movements in interest rates. Accepting
this risk can be an important source of profitability, but excessive levels of
IRR can threaten the Company's earnings and capital.
The Company evaluates IRR through the use of an earnings simulation model to
analyze net interest income sensitivity to changing interest rates. The modeling
process starts with a base case simulation, which assumes a flat interest rate
scenario. The base case scenario is compared to rising and falling interest rate
scenarios assuming a parallel shift in all interest rates. Comparisons of net
interest income and net incom fluctuations from the flat rate scenario
illustrate the risks associated with the projected balance sheet structure.
The Company's ALCO monitors and manages IRR within Board approved policy limits.
The current IRR policy limits anticipated changes in net interest income over a
12 month horizon to plus or minus 10% of the base net interest income assuming a
parallel rate shock of up 100, 200 and 300 basis points and down 100 basis
points. Based on the current interest rate environment, management did not test
interest rates down 200 and 300 basis points.
The following table presents the Company's estimated net interest income
sensitivity:
June 30, 2003 December 31, 2002
Change in Interest Rates Percentage Change in Percentage Change in
in Basis Points Net Interest Income Net Interest Income
- ------------------------ -------------------- --------------------
+300 (.72%) (1.75%)
+200 (.92%) (1.52%)
+100 (.95%) (.92%)
-100 2.98% 2.56%
The Company is well within the policy guidelines established by the Board. The
Company's balance sheet is considered liability sensitive which contributes to
the increase in net interest income in the declining rate scenario and to the
decrease in net interest income in the rising rate scenarios. In a declining
rate environment, the Company further benefits from the interest rate floors on
variable rate commercial and real estate loans. Due to historically low interest
rates, management has been moving closer to being asset sensitive by
implementing various strategies. Management has been targeting variable rate
commercial and residential real estate loans while selling long-term, fixed-rate
residential mortgages upon origination. Furthermore, management has secured
longer-term funding by pricing the Company's certificates of deposits to attract
longer maturities and by extending the maturity structure of wholesale funds
such as Federal Home Loan Bank advances. As compared to December 31, 2002, the
Company has reduced its exposure to net interest income fluctuations due to
interest rate changes.
================================================================================
16
Item 4. Controls and Procedures
Within the 90-day period prior to the filing date of this report, an evaluation
was carried out under the supervision and with the participation of Ohio Valley
Banc Corp.'s management, including our Chief Executive Officer and Treasurer, of
the effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934). Based on their evaluation, our Chief Executive Officer and Treasurer have
concluded that the Company's disclosure controls and procedures are, to the best
of their knowledge, effective to ensure that information required to be
disclosed by Ohio Valley Banc Corp. in reports that it files or submits under
the Exchange Acts is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, our Chief Executive Officer and
Treasurer have concluded that there were no significant changes in Ohio Valley
Banc Corp.'s internal controls or in other factors that could significantly
affect its internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Part II - Other Information
Item 1 - Legal Proceedings
- --------------------------
None
Item 2 - Changes in Securities and Use of Proceeds
- --------------------------------------------------
None
Item 3 - Defaults Upon Senior Securities
- ----------------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
Ohio Valley Banc Corp held its Annual Meeting of Shareholders on April 9, 2003,
for the purpose of electing directors. Shareholders received proxy materials
containing the information required by this item. Three directors, Anna P.
Barnitz, Lannes C. Williamson and Thomas E. Wiseman were nominated for
reelection and were reelected. The summary of voting of the 2,633,774 shares
outstanding were as follows:
Director Candidate Shares voted: For Against Abstain
- ------------------ --- ------- -------
Anna P. Barnitz 2,602,640 31,134
Lannes C. Williamson 2,604,710 29,064
Thomas E. Wiseman 2,623,351 10,423
Directors with terms expiring in 2004 are Steven B. Chapman, Robert H. Eastman
and Jeffrey E. Smith. Directors with terms expiring in 2005 are Phil A. Bowman,
W. Lowell Call and James L. Dailey.
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- ------------------------------------------
B. The Company filed a report on Form 8-K dated April 10, 2003 related to the
issuance of a news release announcing its earnings for the first quarter period
ending March 31, 2003.
OHIO VALLEY BANC CORP.
-------------------------------------------
Date August 14, 2003 /s/ Jeffrey E. Smith
------------------- -------------------------------------------
Jeffrey E. Smith
President and Chief Executive Officer
Date August 14, 2003 /s/ Larry E. Miller, II
------------------- -------------------------------------------
Larry E. Miller, II
Senior Vice President and Treasurer
================================================================================
17
Exhibit 31.1
Certification of Principal Executive Officer
RULE 13a-14(a)/15d-14(a)
I, Jeffrey E. Smith, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc
Corp.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report
is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: August 14, 2003
Printed Name: /s/ Jeffrey E. Smith
---------------------
Title: President and Chief Executive Officer
-------------------------------------
(Principal Executive Officer)
18
Exhibit 31.2
Certification of Principal Financial Officer
RULE 13a-14(a)/15d-14(a)
I, Larry E. Miller, II, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ohio Valley Banc
Corp.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report
is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors:
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal control over financial reporting.
Date: August 14, 2003
Printed Name: /s/ Larry E. Miller, II
-----------------------
Title: Senior Vice President and Treasurer
-----------------------------------
(Principal Financial Officer)
19
EXHIBIT 32
CERTIFICATION PURSUANT TO TITLE 18, UNITED STATES CODE,
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES - OXLEY ACT OF 2002
In connection with the Quarterly Report of Ohio Valley Banc Corp. (the
"Corporation") on Form 10-Q for the quarterly period ended June 30, 2003, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned Jeffrey E. Smith, President and Chief Executive
Officer of the Corporation, and Larry E. Miller, II, Senior Vice President and
Treasurer (Principal Financial Officer) of the Corporation, each certify,
pursuant to Title 18, United States Code, Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Corporation.
* /s/ Jeffrey E. Smith * /s/ Larry E. Miller, II
- ---------------------- -------------------------
Jeffrey E. Smith, Larry E. Miller, II
President and Chief Executive Officer Senior Vice President and
Treasurer (Principal
Financial Officer)
Dated: August 14, 2003 Dated: August 14, 2003
* A signed original of this written statement required by Section 906 has been
provided to Ohio Valley Banc Corp. and will be retained by Ohio Valley Banc
Corp. and furnished to the Securities and Exchange Commission or its staff
upon request.
20