EXHIBIT 99.1
January 17, 2006 - For immediate release
Contact: Scott Shockey, CFO (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, 2005, of $1,979,000 representing
an increase of 4.5 percent over the same period the prior year. Earnings per
share for the fourth quarter of 2005 were $.46, up 4.5 percent from the $.44
earned the fourth quarter of 2004. For the fiscal year ended December 31, 2005,
consolidated net income was $7,017,000, or $1.64 per share, compared to
$8,381,000, or $1.93 per share, for the same 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
fiscal year ended December 31, 2005 were $7,017,000, up 3.9 percent compared to
$6,756,000 a year ago, excluding the sale of the ProCentury investment.
Operating earnings per share were $1.64 for the fiscal year of 2005 versus $1.56
last year, an increase of 5.1 percent. On an operating basis, return on average
assets and return on average equity were .97 percent and 12.18 percent for the
full year of 2005, versus .94 percent and 12.35 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 for 2005 was driven by a reduction in
provision for loan loss expense, while generating a modest increase in net
interest income and controlling overhead expense. The decrease in provision for
loan loss expense was reflective of the improvement in asset quality and an
associated decline in net loan charge-offs. Based on the evaluation of the
adequacy of the allowance for loan losses, management provided $1,797,000 to the
allowance for loan losses for the twelve months ended December 31, 2005, a
decrease of $556,000 from the same time period the prior year. The Company's net
charge-offs for the twelve months ending December 31, 2005 were down $928,000
from the same twelve month period in 2004 occurring primarily in commercial
loans. The ratio of nonperforming loans to total loans was .41 percent at
December 31, 2005, as compared to .50 percent at December 31, 2004. The ratio of
nonperforming assets to total assets was .62 percent at December 31, 2005, as
compared to .69 percent at December 31, 2004. Management feels that the
allowance for loan losses is adequate to absorb probable losses in the
portfolio. The allowance for loan losses was 1.16 percent of total loans at
December 31, 2005, as compared to 1.20 percent at December 31, 2004.
The Company's largest revenue source, net interest income, continued to build
momentum during the fourth quarter. Net interest income growth was driven by
stronger loan growth during the second half of 2005 in conjunction with a steady
increase in the net interest margin. For the fourth quarter of 2005, net
interest income increased $426,000 or 6.3 percent from the prior year fourth
quarter. For the twelve months ended December 31, 2005, net interest income
increased $590,000 or 2.2 percent from the same time period last year. With the
increase in market interest rates and emphasis on profitable loan pricing, the
net interest margin improved to 4.14 percent for the fourth quarter of 2005, as
compared to 4.13 percent for the previous quarter and 3.94 percent for the
fourth quarter of 2004. The fiscal year 2005 net interest margin was 4.11
percent, as compared to 4.06 percent for the fiscal year 2004.
Noninterest income totaled $5,522,000 for the twelve months ended December 31,
2005, as compared to $7,992,000 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 December 31, 2005,
noninterest income totaled $1,459,000 compared to $1,506,000 for 2004's fourth
quarter. Comparing fiscal year 2005 to fiscal year 2004, interchange fees on the
Company's debit and credit cards were up $87,000 and secondary market real
estate loan income was up $57,000. For the same time period, service charges on
deposit accounts decreased $222,000 due to a $167,000 decrease in overdraft fees
in relation to overdraft volume being down. In addition, the growth in the
number of service charge free checking accounts contributed to a $36,000
decrease in monthly service charge fees.
On a year-to-date basis, noninterest expense totaled $21,359,000 in 2005, an
increase of $433,000 or only 2.1 percent compared to $20,926,000 the previous
year. On a quarter-to-date basis, noninterest expense increased $37,000 or .7
percent from the fourth quarter in 2004. Salaries and employee benefits grew
$245,000 or 1.9 percent for the fiscal year 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 $188,000 collectively from 2004 led by the cost of complying with the
Sarbanes-Oxley Act of 2002, specifically the implementation of Section 404.
Total assets increased $20,599,000 or 2.8 percent from year end 2004 to reach
$749,719,000 at December 31, 2005. Driving asset growth for 2005 was loan growth
of $16,958,000, occurring primarily in commercial and residential real estate
loans. Funding loan growth was deposit growth of $27,713,000 or 5.2 percent from
year end 2004. The increase in certificates of deposit and money market account
balances contributed to 2005's deposit growth. The growth in retail deposits
permitted the Company's borrowed funds to remain relatively stable.
"The employees of Ohio Valley Banc Corp produced many positive accomplishments
in fiscal year 2005," stated Jeffrey E. Smith, President and CEO, "including
increased asset quality, increased loan volume, increased net interest income,
increased net interest margin; while, at the same time, controlling overhead
costs. Their efforts in 2005 generated the thirteenth consecutive year of
operating earnings growth accompanied by record total assets. As they now look
forward to building on the many positive trends in 2006, it gives me the
opportunity to thank every employee in each of our operating companies for
making 2005 such a 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, 2005 and 2004.
Three months ended Twelve months ended
(in $000's, except per share data)* December 31, December 31,
2005 2004 2005 2004
-------- -------- -------- --------
Net income $ 1,979 $ 1,894 $ 7,017 $ 8,381
Gain on sale of investment ---- ---- ---- (2,463)
Tax effect ---- ---- ---- 838
After-tax non-operating items ---- ---- ---- (1,625)
Operating earnings $ 1,979 $ 1,894 $ 7,017 $ 6,756
Earnings per share $ 0.46 $ 0.44 $ 1.64 $ 1.93
Gain on sale of investment ---- ---- ---- (0.57)
Tax effect ---- ---- ---- 0.20
After-tax non-operating items ---- ---- ---- (0.37)
Operating earnings per share $ 0.46 $ 0.44 $ 1.64 $ 1.56
OHIO VALLEY BANC CORP - Financial Highlights (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
PER SHARE DATA*
Operating earnings per share $0.46 $0.44 $1.64 $1.56
Earnings per share $0.46 $0.44 $1.64 $1.93
Dividend per share $0.16 $0.31 $0.63 $0.75
Book value per share $13.90 $13.19 $13.90 $13.19
Dividend payout ratio 34.49% 69.34% 38.55% 38.89%
Weighted average shares
outstanding 4,268,096 4,314,675 4,278,562 4,338,598
PERFORMANCE RATIOS
Operating return on
average equity 13.38% 13.62% 12.18% 12.35%
Return on average equity 13.38% 13.23% 12.18% 15.02%
Operating return on
average assets 1.06% 1.03% 0.97% 0.94%
Return on average assets 1.06% 1.03% 0.97% 1.16%
Net interest margin 4.14% 3.94% 4.11% 4.06%
Operating efficiency ratio 58.26% 60.41% 63.49% 63.11%
Efficiency ratio 58.26% 60.41% 63.49% 58.74%
Average earning assets
(in 000's) $696,985 $691,901 $684,690 $681,312
* Restated for the five-for-four stock split effective May 10, 2005.
OHIO VALLEY BANC CORP - Consolidated Statements of Income (Unaudited)
Three months ended Twelve months ended
(in $000's) December 31, December 31,
2005 2004 2005 2004
--------- --------- --------- ---------
Interest income:
Interest and fees on loans $ 11,362 $ 10,040 $ 42,621 $ 39,821
Interest and dividends on
securities 869 925 3,450 3,669
Total interest income 12,231 10,965 46,071 43,490
Interest expense:
Deposits 3,682 2,947 12,973 11,326
Borrowings 1,341 1,236 5,164 4,820
Total interest expense 5,023 4,183 18,137 16,146
Net interest income 7,208 6,782 27,934 27,344
Provision for loan losses 649 741 1,797 2,353
Noninterest income:
Service charges on deposit
accounts 797 875 3,096 3,318
Trust fees 51 49 211 203
Income from bank owned insurance 149 148 589 606
Gain on sale of loans 32 32 120 63
Gain on sale of ProCentury Corp. ---- ---- ---- 2,463
Other 430 402 1,506 1,339
Total noninterest income 1,459 1,506 5,522 7,992
Noninterest expense:
Salaries and employee benefits 3,268 3,288 12,837 12,592
Occupancy 330 322 1,309 1,285
Furniture and equipment 305 290 1,206 1,208
Other 1,181 1,147 6,007 5,841
Total noninterest expense 5,084 5,047 21,359 20,926
Income before income taxes 2,934 2,500 10,300 12,057
Income taxes 955 606 3,283 3,676
NET INCOME $ 1,979 $ 1,894 $ 7,017 $ 8,381
OHIO VALLEY BANC CORP - Consolidated Balance Sheets (Unaudited)
(dollars in thousands, except
share and per share data) December 31, December 31,
2005 2004
------------ ------------
ASSETS
Cash and noninterest-bearing deposits
with banks $ 18,516 $ 16,279
Federal funds sold 1,100 ----
Total cash and cash equivalents 19,616 16,279
Interest-bearing deposits in other banks 510 525
Securities available-for-sale 72,025 74,155
Securities held-to-maturity
(estimated fair value: 2005 - $12,373,
2004 - $12,534) 12,088 11,994
Total loans 617,532 600,574
Less: Allowance for loan losses (7,133) (7,177)
Net loans 610,399 593,397
Premises and equipment, net 8,299 8,860
Accrued income receivable 2,819 2,643
Goodwill 1,267 1,267
Bank owned life insurance 15,962 13,988
Other assets 6,734 6,012
Total assets $ 749,719 $ 729,120
LIABILITIES
Noninterest-bearing deposits $ 82,561 $ 69,936
Interest-bearing deposits 480,305 465,217
Total deposits 562,866 535,153
Securities sold under agreements to
repurchase 29,070 39,753
Other borrowed funds 76,173 76,550
Subordinated debentures 13,500 13,500
Accrued liabilities 8,839 7,585
Total liabilities 690,448 672,541
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value, 10,000,000
shares authorized; 2005 - 4,626,336 shares
issued, 2004 - 3,689,828 shares issued) 4,626 3,690
Additional paid-in capital 32,282 31,931
Retained earnings 31,843 28,465
Accumulated other comprehensive income (1,231) (219)
Treasury stock at cost (2005 - 361,365 shares,
2004 - 258,970 shares) (8,249) (7,288)
Total shareholders' equity 59,271 56,579
Total liabilities and
shareholders' equity $ 749,719 $ 729,120