EXHIBIT 99.1
July 15, 2004 - For immediate release Contact:
Scott Shockey, CFO or Bryna Butler, Corporate Communications
1-800-468-6682 or (740) 446-2631
Ohio Valley Banc Corp Continues Earnings Growth
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GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] reported consolidated
net income for the quarter ended June 30, 2004, of $3,252,000, or $.94 per
share, compared to net income of $1,573,000, or $.45 a share, a year ago. For
the six months ended June 30, 2004, consolidated net income was $4,817,000, or
$1.39 per share, compared to $3,032,000, or $.87 per share, a year ago. Earnings
in the second quarter of 2004 include the impact of the previously disclosed
sale of OVBC's ownership in ProCentury Corp. [Nasdaq: PROS], a Columbus-based
property and casualty insurer. The transaction resulted in an after-tax gain of
$1,625,000 or $.47 per share.
Operating earnings, earnings not including the gain on the sale of the
ProCentury investment, for the quarter ended June 30, 2004, were $1,627,000
representing an increase of 3.4 percent over the prior year. Operating earnings
per share for the second quarter of 2004 were $.47, up 4.4 percent from the $.45
earned the second quarter of 2003. For the six months ended June 30, 2004,
operating earnings were $3,192,000, up 5.3 percent compared to $3,032,000 a year
ago. Operating earnings per share were $.92 for the first six months of 2004
versus $.87 last year, an increase of 5.7 percent. On an operating basis, return
on average assets and return on average equity were .90 percent and 11.76
percent for the first six months of 2004, versus .89 percent and 11.95 percent
for the prior year.
The increase in operating earnings reflects the benefit of OVBC's continuing
improvement in asset quality. For the six months ended June 30, 2004, provision
for loan losses decreased $1,491,000 from the same time period the prior year.
The decrease in provision for loan losses was attributable to both a decline in
nonperforming loans and net charge-offs in both the commercial and consumer
lending portfolios. The Company's ratio of nonperforming loans to total loans
stood at .42 percent at June 30, 2004, as compared to 1.08 percent at June 30,
2003. The ratio of nonperforming assets to total assets decreased to .61 percent
at June 30, 2004 from 1.36% at June 30, 2003. The Company's net charge-offs for
the first six months of 2004 were down $764,000 from the same time period the
prior year. With improving credit quality, management feels that the allowance
for loan losses is adequate to absorb probable losses in the portfolio. The
allowance for loan losses was 1.21 percent of total loans at June 30, 2004, as
compared to 1.32 percent at June 30, 2003.
For the six months ended June 30, 2004, net interest income decreased $228,000
or 1.6 percent from last year. For the second quarter of 2004, net interest
income decreased $235,000 or 3.4 percent from the prior year second quarter. The
net interest margin for the six months ending June 30, 2004 was 4.12 percent
compared to 4.36 percent for the same time period the prior year reflecting the
extended low interest rate environment and the Company's desire to shift from
higher-yielding fixed rate assets to variable rate assets. The Company's average
earning assets for the first six months of 2004 increased $22,941,000 or 3.5
percent from the same time period last year.
Noninterest income totaled $5,111,000 for the six months ended June 30, 2004, as
compared to $2,974,000 for the same time period last year. For the three months
ended June 30, 2004, noninterest income totaled $3,805,000 compared to
$1,528,000 for 2003's second quarter. Included in the increase in noninterest
income was the pre-tax gain of $2,463,000 on the aforementioned sale of
ProCentury. Gain on sale of loans for the first six months of 2004 was down
$342,000 from the same time period last year caused by a decline in the sales of
secondary market real estate loans due to lower mortgage refinance volume and a
shift to variable rate mortgage originations. Offsetting a portion of this
decline was an increase in service charges on deposit accounts of $98,000 or 6.5
percent.
On a year-to-date basis, noninterest expense totaled $10,534,000 in 2004, an
increase of $571,000 or 5.7 percent compared to $9,963,000 the previous year. On
a quarter-to-date basis, noninterest expense increased $307,000 or 6.1 percent
from the second quarter in 2003. Salaries and employee benefits grew $438,000 or
7.7 percent for the first six months of 2004, as compared to the same time
period in 2003. The increase was related to annual merit increases and rising
benefit costs. With the renovation of the Milton office and upgrade in personal
computers within various departments, furniture and equipment expense was up
$124,000 on a year-to-date basis. The remaining noninterest expense categories
were up $9,000 collectively from 2003.
Total assets increased $9,852,000 from year end 2003 to reach $717,179,000 at
June 30, 2004. Driving asset growth for 2004 was loan growth of $17,118,000
which equals an annual growth rate of 6.0 percent as compared to the 2.5 percent
growth rate for all of 2003. Loan growth came equally from all segments of the
portfolio. Total deposits grew $32,149,000 from year end 2003 to fund loan
growth and to reduce borrowed funds, which are down $23,191,000. The growth in
deposits was primarily in certificates of deposit originated from local and
national markets.
"We are pleased with the work of our employees in delivering another quarter of
earnings growth," stated Jeffrey E. Smith, President and CEO. "The decline in
nonperforming loans and the associated decrease in provision for loan losses
represent a significant achievement. Our focus on asset quality led to
additional earnings and a stronger balance sheet for the Company. In addition,
the gain on the sale of our ProCentury investment has generated an after-tax
benefit of $1.6 million which will be invested in the renovation and/or
relocation of facilities in existing markets as well as expansion in new
markets. Thanks to the hard work and dedication of the employees of OVBC for
making these financial results possible."
Ohio Valley Banc Corp common stock is traded on the NASDAQ Stock Market under
the symbol OVBC. The holding company owns three subsidiaries: Ohio Valley Bank,
with 17 offices in Ohio and West Virginia; Loan Central, with five consumer
finance offices in Ohio, and Ohio Valley Financial Services, an insurance agency
based in Jackson, Ohio. Learn more about Ohio Valley Banc Corp at www.ovbc.com.
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP), this press release
contains certain non-GAAP financial measures. OVBC believes that providing
certain non-GAAP financial measures provides investors with information useful
in understanding OVBC's financial performance. OVBC provides measures based on
"operating earnings," which exclude significant non-recurring gains, losses or
expenses that are not reflective of continuing operations. A reconciliation of
these non-GAAP measures to the most comparable GAAP equivalent is included in
the attached financial tables.
Forward-Looking Information
Certain statements contained in this earnings release which are not statements
of historical fact constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as "believes,"
"anticipates," "expects," "intends," "targeted" and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying those statements. Forward-looking statements involve risks and
uncertainties. Actual results may differ materially from those predicted by the
forward-looking statements because of various factors and possible events,
including: (i) changes in political, economic or other factors such as inflation
rates, recessionary or expansive trends, and taxes; (ii) competitive pressures;
(iii) fluctuations in interest rates; (iv) the level of defaults and prepayment
on loans made by the Company; (v) unanticipated litigation, claims, or
assessments; (vi) fluctuations in the cost of obtaining funds to make loans; and
(vii) regulatory changes. Forward-looking statements speak only as of the date
on which they are made and Ohio Valley undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made to reflect unanticipated events.
OHIO VALLEY BANC CORP - Non-GAAP Disclosure Reconciliation
Operating earnings are net income adjusted to exclude the results of certain
significant transactions not representative of continuing operations. The
following reconciles GAAP net income and earnings per share to operating
earnings and operating earnings per share for the quarter and six months ended
June 30, 2004 and 2003.
Three months ended Six months ended
(in $000's, except per share data) June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Net income $ 3,252 $ 1,573 $ 4,817 $ 3,032
Gain on sale of investment (2,463) (2,463)
Tax effect 838 838
After-tax non-operating items (1,625) (1,625)
Operating earnings $ 1,627 $ 1,573 $ 3,192 $ 3,032
Earnings per share $ 0.94 $ 0.45 $ 1.39 $ 0.87
Gain on sale of investment (0.71) (0.71)
Tax effect 0.24 0.24
After-tax non-operating items (0.47) (0.47)
Operating earnings per share $ 0.47 $ 0.45 $ 0.92 $ 0.87
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
PER SHARE DATA
Operating earnings per share $0.47 $0.45 $0.92 $0.87
Earnings per share $0.94 $0.45 $1.39 $0.87
Dividend per share $0.19 $0.18 $0.37 $0.35
Book value per share $16.16 $15.07 $16.16 $15.07
Dividend payout ratio 20.26% 39.76% 26.75% 40.04%
Weighted average shares
outstanding 3,468,842 3,477,455 3,484,600 3,473,290
PERFORMANCE RATIOS
Operating return on
average equity 11.98% 12.22% 11.76% 11.95%
Return on average equity 23.49% 12.22% 17.57% 11.95%
Operating return on
average assets 0.90% 0.91% 0.90% 0.89%
Return on average assets 1.80% 0.91% 1.35% 0.89%
Net interest margin 4.01% 4.36% 4.12% 4.36%
Operating efficiency ratio 65.51% 58.60% 63.97% 58.43%
Efficiency ratio 50.33% 58.60% 55.65% 58.43%
Average earning assets
(in 000's) $684,149 $650,898 $674,377 $651,436
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Six months ended
(in $000's) June 30, June 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 9,798 $ 10,551 $ 19,757 $ 21,239
Interest and dividends on
securities 924 942 1,857 1,866
Total interest income 10,722 11,493 21,614 23,105
Interest expense:
Deposits 2,813 3,174 5,554 6,490
Borrowings 1,162 1,337 2,390 2,717
Total interest expense 3,975 4,511 7,944 9,207
Net interest income 6,747 6,982 13,670 13,898
Provision for loan losses 373 1,246 1,141 2,632
Noninterest income:
Service charges on deposit
accounts 839 803 1,598 1,500
Trust fees 54 58 106 111
Income from bank owned insurance 148 172 311 344
Gain on sale of loans 3 155 10 352
Gain on sale of ProCentury Corp. 2,463 2,463
Other 298 340 623 667
Total noninterest income 3,805 1,528 5,111 2,974
Noninterest expense:
Salaries and employee benefits 3,080 2,885 6,120 5,682
Occupancy 322 317 651 649
Furniture and equipment 318 240 601 477
Data processing 182 139 360 299
Other 1,444 1,458 2,802 2,856
Total noninterest expense 5,346 5,039 10,534 9,963
Income before income taxes 4,833 2,225 7,106 4,277
Income taxes 1,581 652 2,289 1,245
NET INCOME $ 3,252 $ 1,573 $ 4,817 $ 3,032
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except
share and per share data) June 30, December 31,
2004 2003
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ASSETS
Cash and noninterest-bearing
deposits with banks $ 15,517 $ 17,753
Federal funds sold 1,125
Total cash and cash equivalents 16,642 17,753
Interest-bearing deposits in other banks 1,255 859
Securities available-for-sale 70,142 76,352
Securities held-to-maturity
(estimated fair value: 2004 -
$13,455, 2003 - $13,547) 13,054 12,835
Total loans 590,822 573,704
Less: Allowance for loan losses (7,137) (7,593)
Net loans 583,685 566,111
Premises and equipment, net 9,098 9,142
Accrued income receivable 2,732 2,700
Goodwill 1,267 1,267
Bank owned life insurance 13,476 13,222
Other assets 5,828 7,086
Total assets $ 717,179 $ 707,327
LIABILITIES
Noninterest-bearing deposits $ 63,901 $ 62,235
Interest-bearing deposits 475,757 445,274
Total deposits 539,658 507,509
Securities sold under agreements to
repurchase 20,779 24,018
Other borrowed funds 78,371 101,562
Subordinated debentures 13,500 13,500
Accrued liabilities 8,833 6,330
Total liabilities 661,141 652,919
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
10,000,000 shares authorized; 2004 -
3,674,314 shares issued, 2003 -
3,658,212 shares issued) 3,674 3,658
Additional paid-in capital 31,451 30,962
Retained earnings 26,872 23,343
Accumulated other comprehensive income (374) 624
Treasury stock at cost (2004 - 205,985 shares,
2003 - 159,611 shares) (5,585) (4,179)
Total shareholders' equity 56,038 54,408
Total liabilities and
shareholders' equity $ 717,179 $ 707,327