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:
SEPTEMBER 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 October 31, 2003
was 3,486,794
OHIO VALLEY BANC CORP
FORM 10-Q
QUARTER ENDED SEPTEMBER 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)
================================================================================
September 30, December 31,
2003 2002
------------ ------------
ASSETS
Cash and noninterest-bearing deposits with banks $ 16,301 $ 18,826
Federal funds sold 4,500 4,625
------------ ------------
Total cash and cash equivalent 20,801 23,451
Interest-bearing balances with banks 877 1,505
Securities available-for-sale 69,242 75,264
Securities held-to-maturity (estimated fair
value: 2003 - $14,945 , 2002 - $14,834) 14,227 13,990
Total loans 565,715 559,561
Less: Allowance for loan losses (7,442) (7,069)
------------ ------------
Net loans 558,273 552,492
Premises and equipment, net 8,926 8,247
Accrued income receivable 3,113 3,144
Goodwill 1,267 1,267
Bank owned life insurance 13,113 12,673
Other assets 7,346 4,323
------------ ------------
Total assets $ 697,185 $ 696,356
============ ============
LIABILITIES
Noninterest-bearing deposits $ 62,094 $ 58,997
Interest-bearing deposits 451,555 438,407
------------ ------------
Total deposits 513,649 497,404
Securities sold under agreements to repurchase 22,195 33,052
Other borrowed funds 87,320 95,435
Obligated mandatorily redeemable capital securities
of subsidiary trust 13,500 13,500
Accrued liabilities 7,558 6,590
----------- ------------
Total liabilities 644,222 645,981
----------- ------------
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2003 - 3,644,550 shares
issued, 2002 - 3,620,335 shares issued) 3,645 3,620
Additional paid-in capital 30,623 30,092
Retained earnings 22,120 19,339
Accumulated other comprehensive income 706 1,439
Treasury stock at cost (2003 - 157,756 shares,
2002 - 157,115 shares) (4,131) (4,115)
----------- ------------
Total shareholders' equity 52,963 50,375
----------- ------------
Total liabilities and
shareholders' equity $ 697,185 $ 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 Nine months ended
September 30, September 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Interest and dividend income:
Loans, including fees $ 10,280 $ 11,159 $ 31,518 $ 32,746
Securities:
Taxable 658 652 2,037 1,949
Tax exempt 173 190 519 551
Dividends 51 58 151 169
Other Interest 17 60 59 200
--------- --------- --------- ---------
11,179 12,119 34,284 35,615
Interest expense:
Deposits 2,951 3,827 9,441 11,467
Securities sold under agreements
to repurchase 48 85 148 280
Other borrowed funds 1,035 1,114 3,176 3,316
Obligated mandatorily redeemable
capital securities of
subsidiary trust 233 254 709 644
--------- --------- --------- ---------
4,267 5,280 13,474 15,707
--------- --------- --------- ---------
Net interest income 6,912 6,839 20,810 19,908
Provision for loan losses 996 1,541 3,627 3,495
--------- --------- --------- ---------
Net interest income after provision 5,916 5,298 17,183 16,413
Noninterest income:
Service charges on deposit accounts 832 806 2,332 2,301
Trust fees 54 51 165 164
Income from bank owned insurance 172 172 516 512
Net gain on sale of loans 84 5 435 26
Other 343 390 1,010 1,115
--------- --------- --------- ---------
1,485 1,424 4,458 4,118
Noninterest expense:
Salaries and employee benefits 2,938 2,726 8,621 8,045
Occupancy 331 324 980 959
Furniture and equipment 267 280 744 814
Data processing 177 144 475 435
Other 1,438 1,278 4,294 4,682
--------- --------- --------- ---------
5,151 4,752 15,114 14,935
--------- --------- --------- ---------
Income before income taxes 2,250 1,970 6,527 5,596
Provision for income taxes 660 560 1,905 1,582
--------- --------- --------- ---------
NET INCOME $ 1,590 $ 1,410 $ 4,622 $ 4,014
========= ========= ========= =========
Earnings per share $ 0.46 $ 0.41 $ 1.33 $ 1.16
========= ========= ========= =========
================================================================================
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 Nine months ended
September 30, September 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Balance at beginning of period $ 52,451 $ 47,991 $ 50,375 $ 46,300
Comprehensive income:
Net income 1,590 1,410 4,622 4,014
Net change in unrealized
gain on available-for-sale
securities (604) 340 (733) 398
--------- --------- --------- ---------
Total comprehensive income 986 1,750 3,889 4,412
Proceeds from issuance of common
stock through dividend reinvestment
plan 168 237 555 568
Cash dividends (627) (588) (1,841) (1,729)
Shares acquired for treasury (15) (241) (15) (402)
--------- --------- --------- ---------
Balance at end of period $ 52,963 $ 49,149 $ 52,963 $ 49,149
========= ========= ========= =========
Cash dividends per share $ 0.18 $ 0.17 $ 0.53 $ 0.50
========= ========= ========= =========
Shares from common stock issued
through dividend reinvestment plan 6,955 9,890 24,215 23,604
========= ========= ========= =========
Shares acquired for treasury 641 10,400 641 17,125
========= ========= ========= =========
================================================================================
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)
================================================================================
Nine months ended September 30,
2003 2002
------------ ------------
Net cash provided by operating activities $ 6,978 $ 8,207
Investing activities
Proceeds from maturities of
securities available-for-sale 32,796 26,413
Purchases of securities available-
for-sale (27,879) (27,467)
Proceeds from maturities of
securities held-to-maturity 771 602
Purchases of securities held-to-maturity (1,040) (1,779)
Change in interest-bearing deposits
in other banks 628 (231)
Net change in loans (9,408) (54,670)
Purchases of premises and equipment (1,468) (513)
------------ ------------
Net cash used in investing
activities (5,600) (57,645)
Financing activities
Change in deposits 16,245 50,773
Cash dividends (1,841) (1,729)
Proceeds from issuance of common stock 555 568
Purchases of treasury stock (15) (402)
Change in securities sold under
agreements to repurchase (10,857) (3,111)
Proceeds from obligated mandatorily redeemable
capital securities of subsidiary trust 8,500
Proceeds from long-term borrowings 3,457 9,040
Repayment of long-term borrowings (10,634) (10,317)
Change in other short-term borrowings (938) 1,720
------------ ------------
Net cash from (used) in financing
activities (4,028) 55,042
------------ ------------
Change in cash and cash equivalents (2,650) 5,604
Cash and cash equivalents at beginning of period 23,451 26,288
------------ ------------
Cash and cash equivalents at end of period $ 20,801 $ 31,892
============ ============
SUPPLEMENTAL DISCLOSURE
- -----------------------
Cash paid for interest $ 14,674 $ 16,851
Cash paid for income taxes 2,235 2,270
Non-cash tranfers from loans to other real
estate owned 3,663 128
================================================================================
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
BASIS OF PRESENTATION
- ---------------------
The accompanying consolidated financial statements include the accounts of Ohio
Valley Banc Corp and its wholly-owned subsidiaries, The Ohio Valley Bank Company
(the "Bank"), 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 September 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.
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.
INCOME TAX
- ----------
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 be realized.
CASH FLOW
- ---------
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
- ------------------
Earnings per share is computed based on the weighted average shares outstanding
during the period. Weighted average shares outstanding were 3,483,994 and
3,459,337 for the three months ending September 30, 2003 and 2002, respectively.
Weighted average shares outstanding were 3,476,898 and 3,459,768 for the nine
months ending September 30, 2003 and 2002, respectively.
================================================================================
(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)
LOANS
- -----
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.
ALLOWANCE FOR LOAN LOSSES
- -------------------------
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 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 evaluates loans that are where a loss is thought to have been incurred
either in part or whole. 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 specific loss
allocation 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 (84%), to the real estate (12%) and to the consumer
(4%). The total specific allocation, this reporting period, is $2,365.
Impaired loans consist of loans $100 or more on nonaccrual status or
non-performing in nature. These loans are also 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 loan balances continue to decline
from the previous quarter (8%). Any changes in the allocation will be reflected
in the specific allocation component. As of September 30, 2003, the total
allocation for impaired loans is $750 which is reflected in the specific
allocation of $2,365.
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 (of $550 or greater), which include: 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
$4,601.
The final component used to complete our allocation calculation is economic risk
for unallocated allowance. Even though the Company evaluates certain loans for
probable 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 15% 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 allocation for this component
is $710.
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. The Company has determined
the estimated adequate allowance as of September 30, 2003 to be $7,442.
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 ----------- ------------ ---------
September 30, 2003
- ------------------
U.S. Government agency
securities $ 1,347 $ (48) $ 40,614
Mortgage-backed securities 63 (292) 23,476
Marketable equity securities 5,152
----------- ------------ ---------
Total securities $ 1,410 $ (340) $ 69,242
=========== ============ =========
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 --------- ----------- ------------ ---------
September 30, 2003
- ------------------
Obligations of state and
political subdivisions $ 14,096 $ 780 $ (58) $ 14,818
Mortgage-backed securities 131 (4) 127
--------- ----------- ------------ ---------
Total securities $ 14,227 $ 780 $ (62) $ 14,945
========== =========== ============ =========
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 September 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 $ 14,148 $ 2,040 $ 2,071
Due in one to
five years 26,466 2,902 3,083
Due in five to
ten years 6,802 7,261
Due after ten years 2,352 2,403
Mortgage-backed securities 23,476 131 127
----------- ----------- -----------
Total debt
securities $ 64,090 $ 14,227 $ 14,945
=========== =========== ===========
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 nine 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:
September 30, December 31,
2003 2002
---------------- ----------------
Real estate loans $ 213,454 $ 224,212
Commercial and industrial loans 217,832 205,508
Consumer loans 133,263 128,662
Other loans 1,166 1,179
---------------- ----------------
$ 565,715 $ 559,561
================ ================
At September 30, 2003 and December 31, 2002, loans on nonaccrual status were
approximately $4,708 and $6,569, respectively. Loans past due more than 90 days
and still accruing at September 30, 2003 and December 31, 2002 were $737 and
$1,491, respectively.
A summary of activity in the allowance for loan losses for the nine months
ended September 30 is as follows:
2003 2002
---------------- ----------------
Balance - January 1, $ 7,069 $ 6,251
Loans charged off:
Real estate 561 482
Commercial 2,171 929
Consumer 1,897 2,095
---------------- ----------------
Total loans charged off 4,629 3,506
Recoveries of loans:
Real estate 220 110
Commercial 459 137
Consumer 696 495
---------------- ----------------
Total recoveries 1,375 742
---------------- ----------------
Net loan charge-offs (3,254) (2,764)
Provision charged to operations 3,627 3,495
---------------- ----------------
Balance - September 30, $ 7,442 $ 6,982
================ ================
Information regarding impaired loans is as follows:
September 30, December 31,
2003 2002
-------------- ---------------
Balance of impaired loans $ 4,507 $ 4,780
============== ===============
Less portion for which no specific
allowance is allocated $ 1,115 $ 840
============= ===============
Portion of impaired loan balance for
which a specific allowance for credit
losses is allocated $ 3,392 $ 3,940
============== ===============
Portion of allowance for loan losses
specifically allocated for the
impaired loan balance $ 750 $ 500
============== ===============
Average investment in impaired loans
year-to-date $ 4,569 $ 5,308
============== ===============
Interest on impaired loans was not material for the periods ended September 30,
2003 and 2002, respectively.
================================================================================
(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
4.22% of total loans were unsecured at September 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
September 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 $57,291 as compared to $55,150 at
December 31, 2002.
NOTE 5 - OTHER BORROWED FUNDS
Other borrowed funds at September 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 $ 77,413 $ 6,521 $ 3,386 $ 87,320
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 $116,120
and $5,152 at September 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 September 30, 2003, scheduled principal payments through December 31 over the
next five years are to be:
FHLB borrowings Promissory notes FRB Notes Totals
--------------- ---------------- --------- ----------
2003 $ 4,924 $ 4,312 $ 3,386 $ 12,622
2004 17,489 2,109 19,598
2005 17,117 100 17,217
2006 17,608 17,608
2007 4,062 4,062
Thereafter 16,213 16,213
---------------- ---------------- ---------- ----------
$ 77,413 $ 6,521 $ 3,386 $ 87,320
================ ================ ========== ==========
Letters of credit issued on the Bank's behalf by the FHLB to collateralize
certain public unit deposits as required by law totaled $28,000 at September 30,
2003 and $30,425 at December 31, 2002. Various investment securities from the
Bank used to collateralize FRB notes totaled $5,925 at September 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 September 30, 2003, compared to December 31, 2002, and the
consolidated results of operations for the quarterly and year-to-date periods
ending September 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 $829
during the first nine months of 2003 to finish at $697,185. This increase in
assets was primarily due to an increase in the Company's loan balances,
particularly commercial and consumer loans in the third quarter, which are up
$6,154 from year-end 2002. Loan growth in the third quarter had an impact on the
Company's cash and cash equivalents which are down 11% from year-end 2002. Also
partially offsetting the Company's growth in loans are investment securities
which have declined $5,785 from year-end 2002. The Company's total deposits
increased $16,245 or 3.3% which were completely offset by a decrease in
securities sold under agreements to repurchase ("repurchase agreements") of
$10,857 and other borrowed funds of $8,115.
During the first nine months of 2003, total loans were up $6,154 or 1.1%
impacted by an increase in the Company's commercial loans of $12,324 or 6.0%.
This growth came mostly from loan originations within the primary market areas
of Gallia, Jackson, Pike and Franklin counties in Ohio which accounted for 70%
of the total increase. In addition, approximately 25% of commercial loan
originations came from the growing West Virginia market areas. Furthermore,
consumer loans increased by $4,601 or 3.6%. The majority of the consumer loan
growth occurred during the third quarter within automobile loans and home equity
capital lines. Partially offsetting this increase in loans was a decrease in
real estate mortgages which were down $10,758 or 4.8%. 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 are fixed rate loans
with fifteen and thirty year terms, will help minimize the Bank's exposure to
interest rate risk in a "rising" rate environment. As a result, the Bank has
realized a 28% decline in its fifteen and thirty year fixed rate real estate
loans.
================================================================================
(continued)
11
During the first nine months of 2003, investment securities declined $5,785 or
6.5% led by a decline in U.S. government agency securities of $26,224 or 39.2%
offset partially by an increase in mortgage-backed securities of $20,014. The
Company's demand for U.S. government agency securities has primarily been to
satisfy pledging requirements for repurchase agreements. During the first nine
months of 2003, the Bank's repurchase agreements have declined 32.8%, 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 higher rate of return and a more rapid repayment of principal
as compared to U.S. government agency securities.
During the first nine months of 2003, the Company experienced a $490 increase in
net charge offs from the same time period last year consisting primarily of
commercial nonperforming loans. Nonperforming loans decreased to $5,445 at
September 30, 2003 compared to $8,060 at December 31, 2002 which lowered the
Company's nonperforming loans to total loans ratio to .96% compared to 1.44% for
the same time periods. However, the Company has recognized only a minimal
decline in its nonperforming assets to total assets ratio, which lowered to
1.18% at September 30, 2003 compared to 1.21% at December 31, 2002. This was due
to a shift in nonperforming loans and nonperforming assets in the second quarter
of 2003 related to two commercial loans totaling over $3 million that moved from
nonaccrual status to other real estate owned, which is classified within other
assets on the Company's balance sheet. This has contributed to the Company's
increase in other assets, which were up $3,023 over year-end 2002. However, on
October 16, 2003, the Bank executed a contract for the sale of significant
assets held as collateral on a nonperforming loan which was previously
disclosed. The contract calls for the escrow of the sale proceeds pending the
recordation, assignment and transfer of certain post closing documents. The
satisfaction of the terms of the escrow agreement and transfer of escrowed funds
is anticipated to occur in the fourth quarter of 2003. The allowance for loan
losses stands at 1.32% of total loans at September 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, as well as the resolution of the
above referred commercial line, 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 nine months of 2003 was primarily in
savings and interest-bearing demand deposits, which increased $14,420 or 9.7%.
This increase was impacted mostly by a $10,700 increase in NOW accounts,
primarily from the third quarter collection of almost $6,000 in real estate
taxes by local municipalities who maintain various deposit accounts within the
bank. These deposits from tax collections are short-term in nature. Also
impacting NOW accounts was a $5,000 increase in the Company's new Shareholder
Gold product, which offers a NOW account and many banking benefits to Company
shareholders. Further contributing to total deposit growth was non-interest
bearing demand deposits which increased $3,097 or 5.2%. Partially offsetting
total deposit growth was a decrease in the Company's interest-bearing time
deposits which are down $1,272 or .4%.
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 $8,115 from December 31, 2002. The need to fund interest-earning
asset growth has declined during the first nine months of 2003 contributing to
this 8.5% decrease in other borrowings. Additionally, repurchase agreements are
down $10,857 or 32.8% from December 31, 2002. This decline was mostly related to
the normal fluctuations of a single account during the first quarter of 2003.
================================================================================
(continued)
12
Total shareholders' equity at September 30, 2003 of $52,963 was up by $2,588 as
compared to the balance of $50,375 on December 31, 2002. Contributing most to
this increase was year-to-date net income of $4,622 plus proceeds of $555 from
the issuance of common stock through the dividend reinvestment plan less cash
dividends paid of $1,841, or $.53 per share year-to-date. While cash dividends
represented 40.0% of year-to-date net income, dividends net of proceeds from the
dividend reinvestment plan represented 27.8% of year-to-date net income.
RESULTS OF OPERATIONS
Ohio Valley Banc Corp's net income was $1,590 for the third quarter and $4,622
for the first nine months of 2003, up by 12.8% and 15.1% compared to $1,410 and
$4,014 for the same periods in 2002. Comparing year-to-date September 30, 2003
to September 30, 2002, return on assets increased from .81% to .89% and return
on equity increased from 11.33% to 11.95%. Third quarter earnings per share was
$.46 per share, up 12.2% over last year's $.41 per share. During the first nine
months of 2003, earnings per share was $1.33 per share, up 14.7% over last
year's $1.16 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 increases in noninterest income impacted mostly from the
gains on sale of loans.
The third quarter and year-to-date increases to net interest income of 1.1% and
4.5% were primarily due to the declines in total interest expense of $1,013 or
19.2% and $2,233 or 14.2% which completely offset the declines in interest
income for the same time periods. Although average earning assets have increased
by $30,800 compared to the first nine months of 2002, the yield on interest
earning assets has declined by 61 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 65 basis point decrease in its
average funding costs. The benefits of a historical low interest rate
environment have helped to minimize the drop in net interest margin for the
first nine months of 2003 which finished at 4.33% as compared to 4.36% for the
same period in 2002, and also maintain a consistent net interest margin of 4.28%
for the third quarter of 2003 as compared to the same margin in the third
quarter of 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 third quarter of 2003 was positively
impacted by a $545 decline in provision expense as compared to the third quarter
of 2002. This decline in provision expense was related to the provision
associated with a large commercial line that became nonperforming in the third
quarter of 2002, the resolution of which was discussed previously. The increase
in net interest income for the year-to-date period of 2003 was negatively
impacted by a $132 increase in provision expense as compared to the same period
in 2002. The increase to provision expense was in large part from an 17.7%
increase in the Company's net charge-offs realized during the first nine months
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.
Providing additional revenue growth was an increase in noninterest income of $61
or 4.3% and $340 or 8.3% for the third quarter and year-to-date periods of 2003
as compared to 2002. Driving this growth was the Bank's secondary market sales
of new real estate loan originations which generated an additional $78 and $409
in noninterest revenue for the third 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.
================================================================================
(continued)
13
Total noninterest expense increased $399 or 8.4% and $179 or 1.2% for the third
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,
grew $212 or 7.8% and $576 or 7.2% for the third quarter and year-to-date
periods of 2003 as compared to the same periods in 2002. The increase was
related to the rising cost of medical insurance and annual merit increases.
Offsetting the year-to-date 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 $389. The remaining
noninterest expense categories were collectively down from 2002.
CAPITAL RESOURCES
All of the capital ratio's exceeded the regulatory minimum and well capitalized
guidelines as identified in the following table:
Company Ratios Regulatory Well
9/30/03 12/31/02 Minimum Capitalized
Tier 1 risk-based capital 11.9% 11.0% 4.00% 6.0%
Total risk-based capital ratio 13.2% 12.2% 8.00% 10.0%
Leverage ratio 9.3% 9.2% 4.00% 5.0%
Cash dividends paid of $1,841 for the first nine months of 2003 represents a
6.5% 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 net income
which allowed the Company to increase the dividend rate paid per share. At
September 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 $92,960 represented 13.3%
of total assets at September 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 September 30, 2003, the Bank could borrow
an additional $36 million from the Federal Home Loan Bank. The Company
experienced a decrease of $2,650 in cash and cash equivalents for the nine
months ended September 30, 2003. See the condensed consolidated statement of
cash flows on page 4 for further cash flow information.
================================================================================
(continued)
14
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.
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.
================================================================================
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 income 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:
September 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 .78% (1.75%)
+200 .27% (1.52%)
+100 (.31%) (.92%)
-100 1.48% 2.56%
The Company is well within the policy guidelines established by the Board. The
Company's balance sheet is considered asset sensitive which contributes to the
increase in net interest income in the rates up 200 and 300 basis points. Net
interest income declines in rates up 100 basis points due to the index rate on a
portion of variable rate real estate loans being below the current interest rate
floor by approximately 75 basis points. In a declining rate environment, net
interest income increases from the interest rate floors on variable rate
commercial and real estate loans. Due to historically low interest rates,
management moved the balance sheet to an asset sensitive position 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
- ------------------------------------------------------------
None
Item 5 - Other Information
- --------------------------
None
Item 6 - Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibit 31.1 - Certification of Principal Executive Officer (Section 302
Certification)
(b) Exhibit 31.2 - Certification of Principal Financial Officer (Section 302
Certification)
(c) Exhibit 32 - Certification of Periodic Financial Report (Section 906
Certification)
(d) Reports on Form 8-K:
The Company filed a report on Form 8-K dated July 11, 2003 related to the
issuance of a news release announcing its earnings for the second quarter and
year-to-date periods ending June 30, 2003.
OHIO VALLEY BANC CORP
-------------------------------------------
Date November 14, 2003 /s/ Jeffrey E. Smith
------------------- -------------------------------------------
Jeffrey E. Smith
President and Chief Executive Officer
Date November 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: November 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: November 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 September 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: November 14, 2003 Dated: November 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