EXHIBIT 99.1
January 14, 2005 - 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 December 31, 2004, of $1,894,000 representing
an increase of 2.4 percent over the same period in the prior year. Earnings per
share for the fourth quarter of 2004 were $.55, up 3.8 percent from the $.53
earned the fourth quarter of 2003. For the fiscal year ended December 31, 2004,
consolidated net income was $8,381,000, or $2.42 per share, compared to
$6,472,000, or $1.86 per share, for the same 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 fiscal year ended December 31,
2004 were $6,756,000, up 4.4 percent compared to $6,472,000 a year ago.
Operating earnings per share were $1.95 for the fiscal year of 2004 versus $1.86
last year, an increase of 4.8 percent. On an operating basis, return on average
assets and return on average equity were .94 percent and 12.35 percent for the
full year of 2004, versus .93 percent and 12.43 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 .50 percent at December 31, 2004, as compared to .58 percent at December 31,
2003 and the ratio of nonperforming assets to total assets decreased to .69
percent at December 31, 2004 from .76 percent the prior year end. With improved
asset quality in commercial and consumer loans, the Company's net charge-offs
for the fiscal year of 2004 were down $1,046,000 from the same time period the
prior year. Based on the evaluation of the adequacy of the allowance for loan
losses, management provided $2,353,000 to the allowance for loan losses for the
twelve months ended December 31, 2004, a decrease of $1,986,000 from the same
time period the prior year. Management feels that the allowance for loan losses
is reflective of probable losses in the portfolio. The allowance for loan losses
was 1.20 percent of total loans at December 31, 2004, as compared to 1.32
percent at December 31, 2003.
For the twelve months ended December 31, 2004, net interest income decreased
$171,000 from last year. For the fourth quarter of 2004, net interest income
increased $77,000 from the prior year fourth quarter. The decline in annual net
interest income was in relation to the net interest margin for the twelve months
ending December 31, 2004 decreasing to 4.06 percent from 4.28 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 fiscal year of 2004, average earning assets grew $30,765,000 or 4.7 percent
from the same time period last year.
Noninterest income totaled $7,992,000 for the twelve months ended December 31,
2004, as compared to $5,982,000 for the same time period last year. For the
three months ended December 31, 2004, noninterest income totaled $1,506,000
compared to $1,523,000 for 2003's fourth 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 year of 2004
was down $381,000 from the same time period last year. The decline in the sales
of secondary market real estate loans was 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 $158,000 or 5.0 percent.
On a year-to-date basis, noninterest expense totaled $20,926,000 in 2004, an
increase of $1,109,000 or 5.6 percent compared to $19,817,000 the previous year.
On a quarter-to-date basis, noninterest expense increased $344,000 or 7.3
percent from the fourth quarter in 2003. Salaries and employee benefits grew
$1,021,000 or 8.8 percent for the twelve months ended December 31, 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 $177,000 on a year-to-date
basis. The remaining noninterest expense categories were down $89,000
collectively from 2003 driven by negotiating lower data processing fees for
debit and credit cards.
Total assets increased $21,793,000 from year end 2003 to reach $729,120,000 at
December 31, 2004. Driving asset growth for 2004 was loan growth of $26,870,000,
which equals an annual growth rate of 4.7 percent as compared to the 2.5 percent
growth rate for 2003. Consumer loan growth of 9.1 percent and real estate loan
growth of 4.4 percent were the primary contributors. Total deposits grew
$27,644,000 and securities sold under agreements to repurchase grew $15,735,000
from year end 2003 to fund loan growth and to reduce borrowed funds, which are
down $25,012,000. The growth in deposits was primarily in noninterest-bearing
checking accounts and certificates of deposit originated from local and national
markets.
"We are pleased with the earnings growth delivered by our employees in both the
fourth quarter and the full year of 2004," stated Jeffrey E. Smith, President
and CEO. "Their efforts resulted in the twelfth consecutive year of earnings
growth, reflecting their commitment to consistency in financial performance and
the enhancement of our shareholders' return. In addition to increased earnings,
our employees increased asset quality resulting in a 46% reduction in the
provision for loan loss expense. On December 15, 2004, the Company paid a fifth
cash dividend of $.19 per share in order that our shareholders may share in the
successful return on their Company's investment in ProCentury. Finally, on
December 31, 2004, OVBC common stock closed at $32.88 per share, a 23% increase
over the December 31, 2003 closing price. The credit goes to the work of our
employees, the loyalty of our customers, the guidance of our Board, and the
support of our shareholders in making 2004 another successful year."
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 fiscal year ended
December 31, 2004 and 2003.
Three months ended Twelve months ended
(in $000's, except per share data) December 31, December 31,
2004 2003 2004 2003
-------- -------- -------- --------
Net income $ 1,894 $ 1,850 $ 8,381 $ 6,472
Gain on sale of investment ---- ---- (2,463) ----
Tax effect ---- ---- 838 ----
After-tax non-operating items ---- ---- (1,625) ----
Operating earnings $ 1,894 $ 1,850 $ 6,756 $ 6,472
Earnings per share $ 0.55 $ 0.53 $ 2.42 $ 1.86
Gain on sale of investment ---- ---- (0.71) ----
Tax effect ---- ---- 0.24 ----
After-tax non-operating items ---- ---- (0.47) ----
Operating earnings per share $ 0.55 $ 0.53 $ 1.95 $ 1.86
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
PER SHARE DATA
Operating earnings per share $0.55 $0.53 $1.95 $1.86
Earnings per share $0.55 $0.53 $2.42 $1.86
Dividend per share $0.38 $0.18 $0.94 $0.71
Book value per share $16.49 $15.55 $16.49 $15.55
Dividend payout ratio 69.34% 33.92% 38.89% 38.14%
Weighted average shares
outstanding 3,451,740 3,490,118 3,470,878 3,480,230
PERFORMANCE RATIOS
Operating return on
average equity 13.62% 13.80% 12.35% 12.43%
Return on average equity 13.23% 13.80% 15.02% 12.43%
Operating return on
average assets 1.03% 1.05% 0.94% 0.93%
Return on average assets 1.03% 1.05% 1.16% 0.93%
Net interest margin 3.98% 4.10% 4.06% 4.28%
Operating efficiency ratio 60.41% 56.56% 63.11% 58.54%
Efficiency ratio 60.41% 56.56% 58.74% 58.54%
Average earning assets
(in 000's) $691,925 $656,614 $681,312 $650,547
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Twelve months ended
(in $000's) December 31, December 31,
2004 2003 2004 2003
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 10,040 $ 9,944 $ 39,821 $ 41,462
Interest and dividends on
securities 925 933 3,669 3,698
Total interest income 10,965 10,877 43,490 45,160
Interest expense:
Deposits 2,947 2,882 11,326 12,322
Borrowings 1,236 1,290 4,820 5,323
Total interest expense 4,183 4,172 16,146 17,645
Net interest income 6,782 6,705 27,344 27,515
Provision for loan losses 741 712 2,353 4,339
Noninterest income:
Service charges on deposit
accounts 875 828 3,318 3,160
Trust fees 49 50 203 215
Income from bank owned insurance 148 141 606 657
Gain on sale of loans 32 8 63 444
Gain on sale of ProCentury Corp. ---- ---- 2,463 ----
Other 402 496 1,339 1,506
Total noninterest income 1,506 1,523 7,992 5,982
Noninterest expense:
Salaries and employee benefits 3,288 2,950 12,592 11,571
Occupancy 322 328 1,285 1,308
Furniture and equipment 290 287 1,208 1,031
Data processing (39) 79 504 554
Other 1,186 1,059 5,337 5,353
Total noninterest expense 5,047 4,703 20,926 19,817
Income before income taxes 2,500 2,813 12,057 9,341
Income taxes 606 963 3,676 2,869
NET INCOME $ 1,894 $ 1,850 $ 8,381 $ 6,472
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(in $000's, except
share and per share data) December 31, December 31,
2004 2003
---------------- ----------------
ASSETS
Cash and cash equivalents $ 16,279 $ 17,753
Interest-bearing deposits in other banks 525 859
Securities available-for-sale 74,239 76,352
Securities held-to-maturity
(estimated fair value: 2004 -
$12,580, 2003 - $13,547) 11,910 12,835
Total loans 600,574 573,704
Less: Allowance for loan losses (7,177) (7,593)
Net loans 593,397 566,111
Premises and equipment, net 8,860 9,142
Accrued income receivable 2,643 2,700
Goodwill 1,267 1,267
Bank owned life insurance 13,988 13,222
Other assets 6,012 7,086
Total assets $ 729,120 $ 707,327
LIABILITIES
Noninterest-bearing deposits $ 69,936 $ 62,235
Interest-bearing deposits 465,217 445,274
Total deposits 535,153 507,509
Securities sold under agreements to
repurchase 39,753 24,018
Other borrowed funds 76,550 101,562
Subordinated debentures 13,500 13,500
Accrued liabilities 7,585 6,330
Total liabilities 672,541 652,919
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
10,000,000 shares authorized; 2004 -
3,689,828 shares issued, 2003 -
3,658,212 shares issued) 3,690 3,658
Additional paid-in capital 31,931 30,962
Retained earnings 28,465 23,343
Accumulated other comprehensive income (219) 624
Treasury stock at cost (2004 - 258,970 shares,
2003 - 159,611 shares) (7,288) (4,179)
Total shareholders' equity 56,579 54,408
Total liabilities and
shareholders' equity $ 729,120 $ 707,327