EXHIBIT 99.1
October 13, 2005 - For immediate release
Contact: Scott Shockey, CFO (740) 441-9148
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, 2005, of $1,736,000 representing
an increase of 4.0 percent over the same period in the prior year. Earnings per
share for the third quarter of 2005 were $.41, up 7.9 percent from the $.38
earned the third quarter of 2004. For the nine months ended September 30, 2005,
consolidated net income was $5,038,000, or $1.18 per share, compared to
$6,487,000, or $1.49 per share, for the same nine month period a year ago.
Included in the 2004 year-to-date earnings was 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 $.37 per share. Operating
earnings for the nine months ended September 30, 2005 were $5,038,000, up 3.6
percent compared to $4,862,000 a year ago, excluding the sale of the ProCentury
investment. Operating earnings per share were $1.18 for the first nine months of
2005 versus $1.12 last year, an increase of 5.4 percent. On an operating basis,
return on average assets and return on average equity were .93 percent and 11.76
percent for the first nine months of 2005, versus .90 percent and 11.92 percent
for 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 an improvement in asset quality and an
associated decline in net loan charge-offs. For the nine months ended September
30, 2005, provision for loan losses decreased $464,000 from the same time period
the prior year. The Company's net charge-offs for the nine months ending
September 30, 2005 were down $943,000 from the same nine month period in 2004
occurring primarily in commercial loans. The ratio of nonperforming loans to
total loans was .48 percent at September 30, 2005, as compared to .50 percent at
December 31, 2004 and .45 percent at September 30, 2004. The ratio of
nonperforming assets to total assets was .67 percent at September 30, 2005, as
compared to .69 percent at December 31, 2004 and .63 percent at September 30,
2005. 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, 2005, as compared to 1.20 percent at December
31, 2004 and 1.15 percent at September 30, 2004.
With a modest increase in average earning assets and steady improvement in the
net interest margin, the Company's largest revenue source, net interest income,
has begun to improve over the prior year. For the nine months ended September
30, 2005, net interest income increased $164,000 from the same time period last
year. For the third quarter of 2005, net interest income increased $203,000 or
2.9 percent from the prior year third quarter and increased $301,000 or 4.4
percent from the linked quarter. With the increase in market interest rates and
emphasis on profitable loan pricing, the net interest margin improved to 4.13
percent for the third quarter of 2005, as compared to 4.07 percent for the
linked quarter and 4.05 percent for the third quarter of 2004.
Noninterest income totaled $4,064,000 for the nine months ended September 30,
2005, as compared to $6,486,000 for the same time period last year. Included in
the 2004 noninterest income was the pre-tax gain of $2,463,000 on the
aforementioned sale of ProCentury. For the three months ended September 30,
2005, noninterest income totaled $1,393,000 compared to $1,375,000 for 2004's
third quarter. For the first nine months of 2005, interchange fees on the
Company's debit and credit cards were up $70,000 and secondary market real
estate loan income was up $57,000 compared to the first nine months of 2004. For
the same time period, service charges on deposit accounts decreased $145,000 in
relation to overdraft volume being down.
On a year-to-date basis, noninterest expense totaled $16,276,000 in 2005, an
increase of $397,000 or 2.5 percent compared to $15,879,000 the previous year.
On a quarter-to-date basis, noninterest expense increased $112,000 or 2.1
percent from the third quarter in 2004. Salaries and employee benefits grew
$265,000 or 2.8 percent for the first nine 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 $132,000 collectively from 2004 led by the cost of complying with the
Sarbanes-Oxley Act of 2002, specifically the implementation of Section 404.
Driven by solid loan growth during the third quarter, total assets of
$732,007,000 at September 30, 2005, now exceeds the total assets at December 31,
2004 of $729,120,000. For the third quarter, total loans increased $13,154,000
which contributed to year-to-date loan growth of $6,884,000 over the balance of
total loans at December 31, 2004. Management does not anticipate loan growth
will continue at the third quarter pace into the fourth quarter based on current
loan commitments. Total deposits increased $9,745,000 from year end 2004
primarily within certificates of deposit. In addition, borrowed funds increased
$5,703,000 and securities sold under agreements to repurchase decreased
$16,662,000 from December 31, 2004.
"I am pleased with the many positive trends exhibited during the third quarter,"
stated Jeffrey E. Smith, President and CEO. "Earnings momentum was enhanced by
the combination of an increase in loan growth and net interest margin
improvement. Furthermore, our strong asset quality continues to positively
impact our earnings through a significant reduction in provision for loan
losses. Thank you to the employees for delivering another quarter of solid
earnings growth."
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
September 30, 2005 and 2004.
Three months ended Nine months ended
(in $000's, except per share data)* September 30, September 30,
2005 2004 2005 2004
-------- -------- -------- --------
Net income $ 1,736 $ 1,670 $ 5,038 $ 6,487
Gain on sale of investment ---- ---- ---- (2,463)
Tax effect ---- ---- ---- 838
After-tax non-operating items ---- ---- ---- (1,625)
Operating earnings $ 1,736 $ 1,670 $ 5,038 $ 4,862
Earnings per share $ 0.41 $ 0.38 $ 1.18 $ 1.49
Gain on sale of investment ---- ---- ---- (0.57)
Tax effect ---- ---- ---- 0.20
After-tax non-operating items ---- ---- ---- (0.37)
Operating earnings per share $ 0.41 $ 0.38 $ 1.18 $ 1.12
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
PER SHARE DATA*
Operating earnings per share $0.41 $0.38 $1.18 $1.12
Earnings per share $0.41 $0.38 $1.18 $1.49
Dividend per share $0.16 $0.15 $0.47 $0.44
Book value per share $13.71 $13.21 $13.71 $13.21
Dividend payout ratio 39.42% 39.37% 40.14% 30.00%
Weighted average shares
outstanding 4,270,276 4,328,589 4,282,089 4,346,631
PERFORMANCE RATIOS
Operating return on
average equity 11.86% 12.23% 11.76% 11.92%
Return on average equity 11.86% 11.87% 11.76% 15.64%
Operating return on
average assets 0.94% 0.92% 0.93% 0.90%
Return on average assets 0.94% 0.92% 0.93% 1.21%
Net interest margin 4.13% 4.05% 4.11% 4.10%
Operating efficiency ratio 63.84% 64.11% 65.17% 64.02%
Efficiency ratio 63.84% 64.11% 65.17% 58.24%
Average earning assets
(in 000's) $686,856 $683,326 $680,546 $677,756
* Restated for the five-for-four stock split effective May 10, 2005.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Nine months ended
(in $000's) September 30, September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 10,933 $ 10,023 $ 31,259 $ 29,781
Interest and dividends on
securities 840 888 2,581 2,744
Total interest income 11,773 10,911 33,840 32,525
Interest expense:
Deposits 3,349 2,825 9,291 8,379
Borrowings 1,329 1,194 3,823 3,584
Total interest expense 4,678 4,019 13,114 11,963
Net interest income 7,095 6,892 20,726 20,562
Provision for loan losses 501 471 1,148 1,612
Noninterest income:
Service charges on deposit
accounts 783 845 2,299 2,444
Trust fees 54 48 161 154
Income from bank owned insurance 149 148 440 458
Gain on sale of loans 32 21 88 31
Gain on sale of ProCentury Corp. ---- ---- ---- 2,463
Other 375 313 1,076 936
Total noninterest income 1,393 1,375 4,064 6,486
Noninterest expense:
Salaries and employee benefits 3,244 3,185 9,570 9,305
Occupancy 327 311 978 962
Furniture and equipment 310 317 902 918
Data processing 170 183 501 543
Other 1,406 1,349 4,325 4,151
Total noninterest expense 5,457 5,345 16,276 15,879
Income before income taxes 2,530 2,451 7,366 9,557
Income taxes 794 781 2,328 3,070
NET INCOME $ 1,736 $ 1,670 $ 5,038 $ 6,487
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except
share and per share data) September 30, December 31,
2005 2004
------------ ------------
ASSETS
Cash and cash equivalents $ 15,364 $ 16,279
Interest-bearing deposits in other banks 492 525
Securities available-for-sale 69,767 74,155
Securities held-to-maturity
(estimated fair value: 2005 - $12,666,
2004 - $12,534) 12,285 11,994
Total loans 607,458 600,574
Less: Allowance for loan losses (7,004) (7,177)
Net loans 600,454 593,397
Premises and equipment, net 8,510 8,860
Accrued income receivable 2,832 2,643
Goodwill 1,267 1,267
Bank owned life insurance 14,731 13,988
Other assets 6,305 6,012
Total assets $ 732,007 $ 729,120
LIABILITIES
Noninterest-bearing deposits $ 70,437 $ 69,936
Interest-bearing deposits 474,461 465,217
Total deposits 544,898 535,153
Securities sold under agreements to
repurchase 23,091 39,753
Other borrowed funds 82,253 76,550
Subordinated debentures 13,500 13,500
Accrued liabilities 9,790 7,585
Total liabilities 673,532 672,541
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2005 - 4,611,878 shares
issued, 2004 - 3,689,828 shares issued) 4,612 3,690
Additional paid-in capital 31,932 31,931
Retained earnings 30,547 28,465
Accumulated other comprehensive income (764) (219)
Treasury stock at cost (2005 - 345,475 shares,
2004 - 258,970 shares) (7,852) (7,288)
Total shareholders' equity 58,475 56,579
Total liabilities and
shareholders' equity $ 732,007 $ 729,120