EXHIBIT 99.1
July 15, 2005 - For immediate release
Contact: Scott Shockey, CFO (740) 446-2631
Ohio Valley Banc Corp Reports Earnings
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GALLIPOLIS, Ohio - Ohio Valley Banc Corp [Nasdaq: OVBC] reported consolidated
net income for the quarter ended June 30, 2005, of $1,733,000, or $.40 per
share, compared to net income of $3,252,000, or $.75 a share, for the quarter
ended June 30, 2004. For the six months ended June 30, 2005, consolidated net
income was $3,303,000, or $.77 per share, compared to $4,817,000, or $1.11 per
share, for the same time period a year ago. Included in the 2004 earnings was
the previously disclosed sale of OVBC's ownership in ProCentury Corp. [Nasdaq:
PROS]. The second quarter sale contributed an after-tax gain of $1,625,000 or
$.37 per share.
Operating earnings for the quarter ended June 30, 2005, were $1,733,000
representing an increase of 6.5 percent over the $1,627,000 earned for the
second quarter of 2004, excluding the sale of the ProCentury investment.
Operating earnings per share for the second quarter of 2005 were $.40, up 5.3
percent from the $.38 earned the second quarter of 2004. For the six months
ended June 30, 2005, operating earnings were $3,303,000, up 3.5 percent compared
to $3,192,000 a year ago. Operating earnings per share were $.77 for the first
six months of 2005 versus $.74 for the first six months of 2004, an increase of
4.1 percent. On an operating basis, return on average assets and return on
average equity were .93 percent and 11.71 percent for the first six months of
2005, versus .90 percent and 11.76 percent for same time period the prior year.
Earnings per share amounts have been retroactively adjusted to reflect the
five-for-four stock split effective May 10, 2005.
The increase in operating earnings reflects the reduction in provision for loan
loss expense which was driven by a decline in net loan charge-offs. For the six
months ended June 30, 2005, provision for loan losses decreased $493,000 from
the same time period the prior year. The Company's net charge-offs for the six
months ending June 30, 2005 are down $635,000 from the same six month time
period in 2004 due to an increase in commercial loan recoveries and stable asset
quality. The Company's ratio of nonperforming loans to total loans stood at .48
percent at June 30, 2005, as compared to .42 percent at June 30, 2004, and the
ratio of nonperforming assets to total assets was .67 percent at June 30, 2005,
as compared to .61 percent at June 30, 2004. The allowance for loan losses was
1.15 percent of total loans at June 30, 2005, as compared to 1.21 percent at
June 30, 2004. Management feels that the allowance for loan losses is adequate
to absorb probable losses in the portfolio.
With comparable average earning assets and net interest margin for the first six
months of 2005 as in 2004, the Company's net interest income has been relatively
level. For the six months ended June 30, 2005, net interest income decreased
$39,000 from last year, but for the second quarter of 2005, net interest income
increased $47,000 from the prior year second quarter. The net interest margin
for the six months ending June 30, 2005 was 4.10 percent compared to 4.12
percent for the same time period the prior year. With the rise in interest
rates, the Company's net interest margin has stabilized. Comparing the second
quarter of 2005 to the second quarter of 2004, the net interest margin has
improved to 4.07 percent from 4.01 percent.
Noninterest income totaled $2,670,000 for the six months ended June 30, 2005, as
compared to $5,111,000 for the same time period last year. For the three months
ended June 30, 2005, noninterest income totaled $1,417,000 compared to
$3,805,000 for 2004's second quarter. Included in the 2004 noninterest income
was the pre-tax gain of $2,463,000 on the aforementioned sale of ProCentury. For
the first six months of 2005, interchange fees on the Company's debit and credit
cards were up $51,000 and gain on sale of secondary market real estate loans
were up $46,000 compared to the first six months of 2004. For the same time
period, service charges on deposit accounts decreased $83,000 in relation to
overdraft volume being down.
On a year-to-date basis, noninterest expense totaled $10,818,000 in 2005, an
increase of $284,000 or 2.7 percent compared to $10,534,000 the previous year.
On a quarter-to-date basis, noninterest expense decreased $12,000 from the
second quarter in 2004. Salaries and employee benefits grew $205,000 or 3.3
percent for the first six months of 2005, as compared to the same time period in
2004. The increase was related to annual merit compensation increases and rising
benefit costs. The remaining noninterest expense categories were up $79,000
collectively from 2004 led by the cost of complying with the Sarbanes-Oxley Act
of 2002, specifically the implementation of Section 404.
Total assets decreased $7,386,000 from year end 2004 and total $721,734,000 at
June 30, 2005. The decline in assets was related to a decrease in loans of
$6,270,000 due to various commercial borrowers selling their respective
business. Compared to the first quarter of 2005, loan demand has increased and
Management is more optimistic regarding future loan growth. Total deposits
decreased $5,887,000 from year end 2004 primarily within certificates of deposit
originated from national markets. Securities sold under agreements to repurchase
decreased $13,268,000 from a seasonally high balance at December 31, 2004.
Offsetting a portion of the decline in the previous funding sources was an
increase in other borrowed funds of $8,350,000.
"We are pleased with the work of our employees in delivering another quarter of
earnings growth," stated Jeffrey E. Smith, President and CEO. "Our focus on
asset quality and strong collection efforts led to a significant reduction in
provision for loan losses. Heading into the second half of 2005, our attention
continues to be focused on asset quality, as well as profitable loan growth to
increase revenues. Lastly, we were pleased to reward our loyal shareholders with
a 25 percent stock split in May. Thank you 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 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
June 30, 2005 and 2004.
Three months ended Six months ended
(in $000's, except per share data)* June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Net income $ 1,733 $ 3,252 $ 3,303 $ 4,817
Gain on sale of investment ---- (2,463) ---- (2,463)
Tax effect ---- 838 ---- 838
After-tax non-operating items ---- (1,625) ---- (1,625)
Operating earnings $ 1,733 $ 1,627 $ 3,303 $ 3,192
Earnings per share $ 0.40 $ 0.75 $ 0.77 $ 1.11
Gain on sale of investment ---- (0.57) ---- (0.57)
Tax effect ---- 0.20 ---- 0.20
After-tax non-operating items ---- (0.37) ---- (0.37)
Operating earnings per share $ 0.40 $ 0.38 $ 0.77 $ 0.74
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
PER SHARE DATA*
Operating earnings per share $0.40 $0.38 $0.77 $0.74
Earnings per share $0.40 $0.75 $0.77 $1.11
Dividend per share $0.16 $0.15 $0.31 $0.29
Book value per share $13.57 $12.93 $13.57 $12.93
Dividend payout ratio 39.60% 20.26% 40.51% 26.75%
Weighted average shares
outstanding 4,287,619 4,336,053 4,288,093 4,355,750
PERFORMANCE RATIOS
Operating return on
average equity 12.19% 11.98% 11.71% 11.76%
Return on average equity 12.19% 23.49% 11.71% 17.57%
Operating return on
average assets 0.97% 0.90% 0.93% 0.90%
Return on average assets 0.97% 1.80% 0.93% 1.35%
Net interest margin 4.07% 4.01% 4.10% 4.12%
Operating efficiency ratio 64.48% 65.51% 65.86% 63.97%
Efficiency ratio 64.48% 50.33% 65.86% 55.65%
Average earning assets
(in 000's) $674,905 $684,149 $677,348 $674,377
* Restated for stock split as appropriate.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Six months ended
(in $000's) June 30, June 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 10,245 $ 9,798 $ 20,326 $ 19,757
Interest and dividends on
securities 870 924 1,741 1,857
Total interest income 11,115 10,722 22,067 21,614
Interest expense:
Deposits 3,084 2,813 5,942 5,554
Borrowings 1,237 1,162 2,494 2,390
Total interest expense 4,321 3,975 8,436 7,944
Net interest income 6,794 6,747 13,631 13,670
Provision for loan losses 330 373 648 1,141
Noninterest income:
Service charges on deposit
accounts 810 839 1,515 1,598
Trust fees 53 54 107 106
Income from bank owned insurance 144 148 292 311
Gain on sale of loans 28 3 56 10
Gain on sale of ProCentury Corp. ---- 2,463 ---- 2,463
Other 382 298 700 623
Total noninterest income 1,417 3,805 2,670 5,111
Noninterest expense:
Salaries and employee benefits 3,143 3,080 6,325 6,120
Occupancy 317 322 651 651
Furniture and equipment 296 318 592 601
Data processing 168 182 331 360
Other 1,410 1,444 2,919 2,802
Total noninterest expense 5,334 5,346 10,818 10,534
Income before income taxes 2,547 4,833 4,835 7,106
Income taxes 814 1,581 1,532 2,289
NET INCOME $ 1,733 $ 3,252 $ 3,303 $ 4,817
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except
share and per share data) June 30, December 31,
2005 2004
------------ ------------
ASSETS
Cash and cash equivalents $ 16,271 $ 16,279
Interest-bearing deposits in other banks 531 525
Securities available-for-sale 72,908 74,155
Securities held-to-maturity
(estimated fair value: 2005 - $11,851,
2004 - $12,534) 11,349 11,994
Total loans 594,304 600,574
Less: Allowance for loan losses (6,863) (7,177)
Net loans 587,441 593,397
Premises and equipment, net 8,791 8,860
Accrued income receivable 2,724 2,643
Goodwill 1,267 1,267
Bank owned life insurance 14,218 13,988
Other assets 6,234 6,012
Total assets $ 721,734 $ 729,120
LIABILITIES
Noninterest-bearing deposits $ 66,145 $ 69,936
Interest-bearing deposits 463,121 465,217
Total deposits 529,266 535,153
Securities sold under agreements to
repurchase 26,485 39,753
Other borrowed funds 84,900 76,550
Subordinated debentures 13,500 13,500
Accrued liabilities 9,542 7,585
Total liabilities 663,693 672,541
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2005 - 4,611,860 shares
issued, 2004 - 3,689,828 shares issued) 4,612 3,690
Additional paid-in capital 31,931 31,931
Retained earnings 29,560 28,465
Accumulated other comprehensive income (428) (219)
Treasury stock at cost (2005 - 334,471 shares,
2004 - 258,970 shares) (7,634) (7,288)
Total shareholders' equity 58,041 56,579
Total liabilities and
shareholders' equity $ 721,734 $ 729,120