EXHIBIT 99.1
October 14, 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 September 30, 2004, of $1,670,000 representing
an increase of 5.0 percent over the same period in the prior year. Earnings per
share for the third quarter of 2004 were $.48, up 4.3 percent from the $.46
earned the third quarter of 2003. For the nine months ended September 30, 2004,
consolidated net income was $6,487,000, or $1.87 per share, compared to
$4,622,000, or $1.33 per share, for the same nine month period a year ago. The
year-to-date earnings include the previously disclosed sale of OVBC's investment
in ProCentury Corp. [Nasdaq: PROS]. The second quarter sale resulted in an
after-tax gain of $1,625,000 or $.47 per share. Excluding the sale of the
ProCentury investment, operating earnings for the nine months ended September
30, 2004 were $4,862,000, up 5.2 percent compared to $4,622,000 a year ago.
Operating earnings per share were $1.40 for the first nine months of 2004 versus
$1.33 last year, an increase of 5.3 percent. On an operating basis, return on
average assets and return on average equity were .90 percent and 11.92 percent
for the first nine months of 2004, versus .89 percent and 11.95 percent for the
prior year.
The increase in operating earnings reflects the reduction in provision for loan
loss expense which was driven by a decline in nonperforming loans and net loan
charge-offs. The Company's ratio of nonperforming loans to total loans decreased
to .45 percent at September 30, 2004, as compared to .96 percent at September
30, 2003 and the ratio of nonperforming assets to total assets decreased to .63
percent at September 30, 2004 from 1.18 percent the prior year. With improved
asset quality in commercial and consumer loans, the Company's net charge-offs
for the first nine months of 2004 were down $990,000 from the same time period
the prior year. Based on the evaluation of the adequacy of the allowance for
loan losses, management provided $1,612,000 to the allowance for loan losses for
the nine months ended September 30, 2004, a decrease of $2,015,000 from the same
time period the prior year. Management feels that the allowance for loan losses
is adequate to absorb probable losses in the portfolio. The allowance for loan
losses was 1.15 percent of total loans at September 30, 2004, as compared to
1.32 percent at September 30, 2003.
For the nine months ended September 30, 2004, net interest income decreased
$248,000 or 1.2 percent from last year. For the third quarter of 2004, net
interest income decreased $20,000 from the prior year third quarter. The decline
in net interest income was in relation to the net interest margin for the nine
months ending September 30, 2004 decreasing to 4.10 percent from 4.33 percent
for the same time period the prior year. The lower net interest margin was
attributable to lower asset yields due to the Company's desire to shift from
higher-yielding fixed rate assets to variable rate assets. Partially offsetting
the impact in net interest margin compression was the growth in average earning
assets. For the first nine months of 2004, average earning assets grew
$26,902,000 or 4.1 percent from the same time period last year. Comparing
sequential quarters, net interest income for the third quarter of 2004 was up
$145,000 or 2.1 percent from the second quarter of 2004 as the net interest
margin began to improve.
Noninterest income totaled $6,486,000 for the nine months ended September 30,
2004, as compared to $4,458,000 for the same time period last year. For the
three months ended September 30, 2004, noninterest income totaled $1,375,000
compared to $1,485,000 for 2003's third quarter. Included in the year-to-date
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 nine
months of 2004 was down $404,000 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 which
management does not intend to sell. Offsetting a portion of this decline was a
year-to-date increase in service charges on deposit accounts of $112,000 or 4.8
percent.
On a year-to-date basis, noninterest expense totaled $15,879,000 in 2004, an
increase of $765,000 or 5.1 percent compared to $15,114,000 the previous year.
On a quarter-to-date basis, noninterest expense increased $194,000 or 3.8
percent from the third quarter in 2003. Salaries and employee benefits grew
$684,000 or 7.9 percent for the first nine months of 2004, as compared to the
same time period in 2003. The increase was related to annual merit increases,
rising benefit costs and additional employees. With the renovation of the Milton
office and upgrade in personal computers within various departments, furniture
and equipment expense was up $174,000 on a year-to-date basis. The remaining
noninterest expense categories were down $93,000 collectively from 2003.
Total assets increased $22,719,000 from year end 2003 to reach $730,046,000 at
September 30, 2004. Driving asset growth for 2004 was loan growth of
$28,024,000, which equals an annual growth rate of 6.5 percent as compared to
the 2.5 percent growth rate for all of 2003. Consumer loan growth of 8.3 percent
and real estate loan growth of 5.2 percent were the primary contributors. Total
deposits grew $32,192,000 from year end 2003 to fund loan growth and to reduce
borrowed funds, which are down $16,513,000. The growth in deposits was primarily
in certificates of deposit originated from local and national markets
"I would like to thank our employees for their hard work and dedication in
continuing the earnings momentum through the third quarter," stated Jeffrey E.
Smith, President and CEO. "I continue to be pleased with the significant
improvement in the Company's objective of enhanced asset quality. With the
efforts to reduce nonperforming loans, our provision for loan losses was reduced
to less than half of last year's amount."
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 16 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 nine months ended
September 30, 2004 and 2003.
Three months ended Nine months ended
(in $000's, except per share data) September 30, September 30,
2004 2003 2004 2003
-------- -------- -------- --------
Net income $ 1,670 $ 1,590 $ 6,487 $ 4,622
Gain on sale of investment ---- ---- (2,463) ----
Tax effect ---- ---- 838 ----
After-tax non-operating items ---- ---- (1,625) ----
Operating earnings $ 1,670 $ 1,590 $ 4,862 $ 4,622
Earnings per share $ 0.48 $ 0.46 $ 1.87 $ 1.33
Gain on sale of investment ---- ---- (0.71) ----
Tax effect ---- ---- 0.24 ----
After-tax non-operating items ---- ---- (0.47) ----
Operating earnings per share $ 0.48 $ 0.46 $ 1.40 $ 1.33
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Nine months ended
September 30, September 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------
PER SHARE DATA
Operating earnings per share $0.48 $0.46 $1.40 $1.33
Earnings per share $0.48 $0.46 $1.87 $1.33
Dividend per share $0.19 $0.18 $0.56 $0.53
Book value per share $16.51 $15.19 $16.51 $15.19
Dividend payout ratio 39.37% 39.41% 30.00% 39.82%
Weighted average shares
outstanding 3,462,871 3,483,994 3,477,305 3,476,898
PERFORMANCE RATIOS
Operating return on
average equity 12.23% 11.96% 11.92% 11.95%
Return on average equity 11.87% 11.96% 15.64% 11.95%
Operating return on
average assets 0.92% 0.91% 0.90% 0.89%
Return on average assets 0.92% 0.91% 1.21% 0.89%
Net interest margin 4.05% 4.28% 4.10% 4.33%
Operating efficiency ratio 64.11% 60.69% 64.02% 59.18%
Efficiency ratio 64.11% 60.69% 58.24% 59.18%
Average earning assets
(in 000's) $683,326 $649,616 $677,756 $650,854
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended
(in $000's) September 30, September 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 10,023 $ 10,280 $ 29,781 $ 31,518
Interest and dividends on
securities 888 899 2,744 2,766
Total interest income 10,911 11,179 32,525 34,284
Interest expense:
Deposits 2,825 2,951 8,379 9,441
Borrowings 1,194 1,316 3,584 4,033
Total interest expense 4,019 4,267 11,963 13,474
Net interest income 6,892 6,912 20,562 20,810
Provision for loan losses 471 996 1,612 3,627
Noninterest income:
Service charges on deposit
accounts 845 832 2,444 2,332
Trust fees 48 54 154 165
Income from bank owned insurance 148 172 458 516
Gain on sale of loans 21 84 31 435
Gain on sale of ProCentury Corp. ---- ---- 2,463 ----
Other 313 343 936 1,010
Total noninterest income 1,375 1,485 6,486 4,458
Noninterest expense:
Salaries and employee benefits 3,185 2,938 9,305 8,621
Occupancy 311 331 962 980
Furniture and equipment 317 267 918 744
Data processing 183 177 543 475
Other 1,349 1,438 4,151 4,294
Total noninterest expense 5,345 5,151 15,879 15,114
Income before income taxes 2,451 2,250 9,557 6,527
Income taxes 781 660 3,070 1,905
NET INCOME $ 1,670 $ 1,590 $ 6,487 $ 4,622
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except
share and per share data) September 30, December 31,
2004 2003
---------------- ----------------
ASSETS
Cash and noninterest-bearing
deposits with banks $ 14,249 $ 17,753
Federal funds sold 5,075 ----
Total cash and cash equivalents 19,324 17,753
Interest-bearing deposits in other banks 526 859
Securities available-for-sale 70,401 76,352
Securities held-to-maturity
(estimated fair value: 2004 -
$13,609, 2003 - $13,547) 12,938 12,835
Total loans 601,728 573,704
Less: Allowance for loan losses (6,941) (7,593)
Net loans 594,787 566,111
Premises and equipment, net 8,969 9,142
Accrued income receivable 2,769 2,700
Goodwill 1,267 1,267
Bank owned life insurance 13,593 13,222
Other assets 5,472 7,086
Total assets $ 730,046 $ 707,327
LIABILITIES
Noninterest-bearing deposits $ 61,660 $ 62,235
Interest-bearing deposits 478,041 445,274
Total deposits 539,701 507,509
Securities sold under agreements to
repurchase 25,026 24,018
Other borrowed funds 85,049 101,562
Subordinated debentures 13,500 13,500
Accrued liabilities 9,764 6,330
Total liabilities 673,040 652,919
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
10,000,000 shares authorized; 2004 -
3,680,035 shares issued, 2003 -
3,658,212 shares issued) 3,680 3,658
Additional paid-in capital 31,626 30,962
Retained earnings 27,884 23,343
Accumulated other comprehensive income 88 624
Treasury stock at cost (2004 - 227,710 shares,
2003 - 159,611 shares) (6,272) (4,179)
Total shareholders' equity 57,006 54,408
Total liabilities and
shareholders' equity $ 730,046 $ 707,327